Stratechery (with Ben Thompson)
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Ooh, market's got a nice bump today. You had a good feeling about Jerome? Yes. I get these vibes from him, you know? I want Jerome to, like, wake up on his 2021 side of the bed one day. Just be like, you know what? Times were good back then. We caused cataclysmic damage that needed to get unwound at some point, but while it was up, it was all good. Do I really need to keep bringing down the ham rail? Let's take this FOMC meeting off. I'm going to post a story on Instagram just on a beach with a drink.

Who got the truth? Is it you? Is it you? Is it you? Who got the truth now?

Welcome to Season 11, Episode 8 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I am the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures. And I'm David Rosenthal, and I'm an angel investor based in San Francisco. And

And we are your hosts. Today, we are telling the entire history and strategy of Stratechery. And we are joined by the man himself, Ben Thompson, on the eve of Stratechery's 10-year anniversary.

Stratechery is innocently billed on his website as the business strategy and impact of technology. Stratechery, as Ben puts it, started as some guy in Taiwan with no access. Today, Stratechery is a powerhouse, shaping the thoughts and conversation of the entire technology industry around the world at the highest levels.

Ben has interviewed Mark Zuckerberg, Jensen Huang, Satya Nadella, Sundar Pichai, Rich Barton, Meredith Kopit-Levian of the New York Times, Pat Gelsinger of Intel, and John Collison, and many, many more, many of which are regular readers. He is the father of aggregation theory, the most important business framework developed in the last 20 years.

And Ben really pioneered the internet subscription newsletter business model. We sat down with him to talk about a bunch of his recent changes, going big into podcasting, bringing on co-hosts and expanding the empire, and even now launching a Stratechery property that he does not appear on at all.

Regardless of what your business model is, regardless even almost of what your content is, I don't think there's any creator, certainly not any business creator out there today, who doesn't directly or indirectly look to Ben and say, you inspired me, you paved the way for what I do. I mean, we certainly feel that way. I feel that way. David, I even feel like you're and my friendship developed early on from reading Ben.

Ben's pieces and sharing them with each other with our thoughts. We have these old email threads in 2014 of you and I discussing Ben's writing. Ah, totally. We might talk about that on the episode here.

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So why is ServiceNow so important to both NVIDIA and Microsoft, companies we've explored deeply in the last year on the show? Well, AI in the real world is only as good as the bedrock platform it's built into. So whether you're looking for AI to supercharge developers in IT, empower and streamline customer service, or enable HR to deliver better employee experiences, ServiceNow is the platform that can make it possible.

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With ServiceNow's platform, your business can put AI to work today. It's pretty incredible that ServiceNow built AI directly into their platform. So all the integration work to prepare for it that otherwise would have taken you years is already done. So if you want to learn more about the ServiceNow platform and how it can turbocharge the time to deploy AI for your business, go over to servicenow.com slash acquired. And when you get in touch, just tell them Ben and David sent you. Thanks, ServiceNow.

After this episode, come hang out with the other 13,000 smart, thoughtful members of the Acquired community at acquired.fm slash slack. We'll all be talking about it. Without further ado, this is not investment advice. This show is for informational and entertainment purposes only. And now on to our interview with Ben.

Ben Thompson, welcome to Acquired. Thank you. Happy to be here. It's great to have you with us. We've done surveys over the years of our audience and we say, what is the number one topic that you'd want to see us cover or a person we should have on the show? And your name comes up many, many times. So I'm excited to be doing this. You promised me I was number one. Now I feel like there's a bit of a letdown going on. We asked who the number one was and you were very high in the rankings. Well, we have another number one, though, that is very near and dear to our hearts.

Ben was searching his email today, and he sent me an image over text that was very sweet. It was the first email between us, and it was about Stratechery. Okay, fine. I'll take that. David and I, I think, got drinks, and we're talking about Uber, and it was your Don't Blame Uber piece from 2014. Yeah, well, it's kind of interesting in retrospect to think about that. I think that was about healthcare and rights and workers and things along those lines.

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

You built that for yourself. I completely forgot that. I wrote about that. And usually I would go back and read it. I'm like, oh, that isn't bad. Sometimes you go back like, I don't know about that one. But yeah, it is what it is. That is what happens. You've written thousands of posts over approaching 10 years now. It's just prolific. It's interesting. I went back and just read the early days preparing for this. You've posted you imported from a Tumblr in 2009 that are like all the way back in the back catalog. Yeah, I've started multiple blogs through the years.

I thought they were relevant and interesting. And also, I think it's useful to have a back catalog when you launch. And that's something that I do when I launch podcasts now is it's important to sort of establish the first time someone encounters you that this isn't just a flash in the pan sort of thing. It's something that is interesting. You mean like doing 30 episodes of dithering before you released a single one?

You know, in that case, we really wanted to figure out what that podcast should be. And then also working with Johnny can be a bit of a perfectionist. So it took us that long to get the website looking just how we wanted it to. Guys, I don't know anybody else like that. There was a technical component that went into that as well. But I think it's good for both sides. It's good for the creator because.

If you can't have the discipline and sort of stamina to build up a back catalog, you're probably not going to have the discipline and stamina to keep going for a long time. So it's almost good internally to sort of get that done. But then also when someone encounters it and then they feel, wow, there's an excitement, not just an anticipation, but

of new episodes that'll be down the road. But wow, there's already a whole bunch of stuff here for me to listen to. And if you like the first one, you can listen to a second one. And I think that sort of second one is super important. This is a point I've made about writing in general. Anyone can come up with one really good post or one really good podcast. I don't mean to say that dismissively. I think there's a lot of people out there with very smart insights. I think it's a very distinct skill and capability to come up with interesting things consistently.

And the sooner you can demonstrate that to someone, the sooner they are going to take advantage of whatever means you have to follow or to subscribe or whatever it might be. Because it's not just a promise of consistency, but it's evidence of that. And I think that's really important to online businesses in general.

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

Yeah, I mean, well, thanks for putting the pressure on me right up there. I better make sure this is interesting. But it's interesting because I would push back against that a little bit. And this is why the consistency part is important. I mean, there's an ongoing discussion. I think there's that new social network post news or something. And I just saw a thing on Twitter. I didn't actually follow through, but they want to do micropayments for articles, which I think are terrible. And there's a tendency in a lot of things to get overly indexed on the consumer, which kind of sounds bad.

Like why wouldn't you want to give the consumer exactly what they want?

But just to take the most obvious example, if a creator is not making money, well, the consumer may get what they want, which is free content, but they're not going to get it for very long. There is a short term perspective versus a long term perspective, which well, no, by charging for this, I can do this over the long run. But from a microtransaction perspective, I think one of the issues is to create the piece of content is very time consuming. And then obviously you get the free distribution on the back end. You have zero marginal cost on the back end.

But the problem is you have a timing mismatch with microtransactions between when the payment's made and when the investment is made. And so you want to put a lot of time into an article and then hope it gets traction so I can not just make money, but also repay what I'm doing from there. And I think that the way to think about publishing online is

is what are you selling? I think when you get in the trap of thinking you're selling a single episode or selling a single article, that's actually getting the incentives wrong. What I'm selling to my subscribers is consistency and consistency

Yes, certainly a quality bar. When I write something that I'm not happy with, I'm miserable for the next 24 hours. Or if it's the end of the week, I have to wait till next week. And that really sucks because I certainly have the drive and compulsion to make sure that what I put out is high quality. But at the same time, there's an aspect of what I'm actually selling to my subscribers. And this is more of an implicit promise, but I think it's the reality is the consistency and the regularity and the knowing that something happens, you're going to be able to get my take on it.

And I think that's where subscription pricing does make much more sense for content production, because in this case, you're actually getting the money up front. The money is funding the work as opposed to the work being a speculative bid for the money. And one thing that I've pushed over time and I'm very happy about is trying to get people to sort of annual subscriptions. So I think my audience at this point is like 70% annual subscriptions. At 150 bucks a year. Is that right?

It's $12 a month or $120 a year. So you do get a $24 discount by being annual. You save on the straight fees. Yeah, it's like a $16 difference. So that certainly makes a big difference. But then also, I just think it's good for me and it's good for my customers to know that, look, I have a chance to make it up to you. Your internet media business about the business of technology is

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

Well, less than I once did, believe it or not. Usually three written pieces, one interview, two Sharp Tech episodes, and two dithering episodes. So I guess that is eight pieces of content. When I first started the daily update, I was doing two free articles, five paid articles, and a podcast. So that was eight. So I guess I'm doing more now, but revealing my secrets, podcasts are easier to do than writing. So it feels easier today than it was back then.

It certainly is a lot. I don't think that will always be the shape of it forever. But yeah, there definitely is a lot more than two per month. So it's a fair pushback. All right. So because this is acquired and I'm playing format police, David, I'm going to take us back to the beginning and we're going to try not to dwell too long. Because Ben, I know you've told your story elsewhere, but I think it's important for context. So you get this inkling of an idea that you can do this

And you have an idea for a way to cover the intersection of strategy and technology in a differentiated way than has been done before. And you decide that you want to start doing it. I think you are still doing it while you're at Microsoft in 2014. Is that right, Ben?

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

And so there was some aspect of like, well, it's a bummer I missed out on that. It's like the famous Marc Andreessen. You show up in Silicon Valley and you feel like, oh, darn, it's already all happened. Without question. So, you know, suddenly people push me, you should write again, you should do it. I think I did those Tumblr posts while I was at business school. And yeah, I mean, it was definitely something that I always wanted to do just from a personal self-interest perspective.

But also, it's not enough to just want to do something. There needs to be a market. There needs to be an opportunity. The way I always put it is there's lots of sites writing about the products and Wall Street is writing about the financial results, but there's a big gap in the middle there. You know, like what is the strategy that goes into the products? Like what are the margins and the business models that undergird those products that drive to the financial results?

How does company culture impact decision-making? Why do companies do stupid things? This was a common question in business school. And you would do these interviews, interview prep when you're the first year doing second year students, then you're helping the first year students. And my favorite question was always, what's a decision or a product this company has made that you think is a bad idea or you disagree with? And everyone would always have an answer to that. But the more interesting question is the follow-up question, which is why did they do that?

And what you would see is a lot of people, their answer really was because they're stupid. And the reality is no one at these companies is stupid. A very popular choice back then is Microsoft making the Zune player. It's like, that's a dumb idea, blah, blah, blah. Well, why did Microsoft do that?

It's not just useful for critique, but it's also useful for saying where companies should go. So I think probably Microsoft, either Microsoft or Facebook are probably my two biggest successes as far as an analyst. You know, I think particularly Microsoft where, you

I think I very clearly articulated what their issues were. And also by understanding those issues, the sort of organization they were, the sort of capabilities they were, and not just the weaknesses that entailed, but also the strengths that entailed where they should go and the sort of strategy they should adopt.

And that's basically the strategy they have adopted. And obviously, it's tremendously successful. But there's no one writing that sort of stuff back in 2013. One of the things we thought about a lot was we are not journalists. And we came at this from having worked in the industries that we're talking about. And obviously, you did too, having been at Microsoft, Apple, and plenty of other places. Was that in your mind? Everybody you mentioned, Ezra Klein, Gruber's different. We'll talk about Gruber later. But they

They were journalists. They came out of the media, whereas we were all coming out of the industry.

Yeah, it's interesting. I wouldn't classify either Klein or Iglesias as journalists. I mean, they were bloggers. That's what they were. And they ended up as somewhat journalists, although I would say both of them, their best work has always been more analysis than journalism. I mean, maybe it's a stupid classification, but I think about journalists as sort of writing about what is happening at best, uncovering facts.

Analysis is explaining why it happened. And opinion is some aspect of saying what you think should happen. You know, those have certainly gotten conflated over the years. That's probably a different discussion.

But analysis and opinion, I think, do go together to some extent. But it's actually a line that I'm actually pretty careful about. I really try to not break news. That's actually an explicit choice on my side. I mean, it was an easy decision to make at the beginning because I knew no one. I had like 400 Twitter followers when I started. Everything that I wrote was self-generated, right? It was just my own insight, my own view of the situation. You didn't have any particular access.

no access a negative access i sort of felt like it part because i couldn't write about microsoft because i was some beyond there i think that of my work experience the microsoft bit was certainly the most impactful not just because of what i learned about microsoft but just what you learn about big companies i think in general and it's very easy on the outside

to anthropomorphize these companies in like a single entity sort of making decisions and doing what you want and doing what you don't. And the reality is it's thousands and thousands of people. There's massive coordination problems. Everyone has a different take, different opinion, which is why the culture stuff is so interesting, which is why the

broad shared understanding of what a company is and is not capable of is so important to understanding why companies do what they do, because actually tends to be much more impactful than single individuals and definitely single individuals below like the CEO level. And even then, what constrains a CEO's actions is a pretty significant thing.

But they had to build a team to get apps for Windows 8. And so I was responsible for social media other than Facebook and Twitter. So I guess blogging. I was responsible for publishing. So the book publishers, Amazon, Kindle, things along those lines. I was responsible for...

lifestyle. So I really got to know the publishing industry very well, both on like the magazine side, the newspaper side, book publishing side. And all that was certainly useful for,

learning for writing about those industries, but also very useful for understanding app store dynamics, developer dynamics. It was super fun, very busy, very hype, trying to get stuff out the door, working with half-built SDKs and flying all over and working with developers. And then Windows 8 launched, it kind of sucked after that, but it was fun up until then. So I was at Microsoft and

I remember my wife and I, it was our first ever trip to Hawaii. I think this was the winter of 2012, 2013. And sat down and talked about it. I was like, yeah, it's probably going to be time to move on pretty soon.

I mean, ending up at Microsoft was always a bit of an upset. I was always sort of an Apple person. That was my obsession. I wanted to work at Apple. I had the good fortune of being able to intern there. And I was at Apple University when Apple University had just started. And the original vision for Apple University was that it's going to be

really focused on Apple has this notion of like the top 200, although I think it's actually today more like top 300 or something. They go to this big company retreat. They're the ones that know all the future plans and everything that's going on. And that's really sort of the decision makers at Apple. And it's not necessarily by management position. Like there's,

ICs that are, you know, we have no manager responsibility, but are, you know, sort of part of that core. That was an amazing experience and really trying to figure out like what makes Apple, Apple sort of defining the culture. And it did seem problematic that it's very hard to write culture down. Cause then that's kind of a recipe, I think for sort of ossification and getting sort of locked into something.

What is interesting is it was written a lot about as this sort of Steve Jobs initiative. And, you know, I'm sure he okayed it, but he had basically no involvement at all. Tim Cook was very heavily involved. Like the whole Tim Cook doctrine thing that folks talked about when he took an earnings call, that was at Apple University first. Did you coin the Cook doctrine?

No, I think Horace Deju did from a Simcoe. Oh, yeah. The reality is, is culture comes from doing and it doesn't come from saying. And there's an issue, like if you make decisions based on data, right? It's inherently backwards looking because the data has to be generated first. And I think there's analogy to culture, right?

along those lines that, and the concern about writing it down and getting focused on that is you're sort of locking yourself in. Cultures are very, very powerful. It's the way that you coordinate a massive company and keep it going in the broadly same direction because there's so many things that you can't articulate. You can't articulate that this is the way we do things. If you did, you would be bogged

down, like the transaction costs of communicating every little detail are massive. And so culture keeps you going in the right direction. But culture is also very dangerous because if you have to change direction, suddenly you realize you're in a straitjacket.

And I do wonder if writing stuff down and saying this is the way we do things is actually like sewing the straitjacket. I'm not sure how that pays off. Right. Culture and process accomplish the same goal in many cases. And so either it can be done in a process light way because the culture sort of facilitates it getting done. But then you have no processes to change something if the culture is no longer facilitating what you want to do.

Yeah, I think that that's an interesting way to put it. Culture is probably the processes that can't be written down to some extent because it's just an understanding of this is how we do it. I left that summer feeling like this is not the right thing for me. You get to business school and you have to get a job. Everyone else is getting jobs and you feel like, you know, and it was pretty tough for me. And you feel like what you do immediately after business school, like had such weight to that career decision. And now you're just like, yeah, whatever. It's like a job. Well, I was...

hell bent on being in tech and I had lots of opportunities and offers. Obviously consulting was an option. It's interesting because I had a very non-traditional background being an English teacher in Taiwan. You know, I built a sort of distributed

presentation system for a group of schools here. So there was some sort of tech angle per se. But really, I was just an English teacher from Taiwan. Back to the Ezra Klein, Matt Iglesias, you were kind of cut from that cloth before getting into tech, right? You were a poli-sci major, right? You worked in politics. Yep. And honestly, a lot of that was my background. And I grew up definitely blue collar, but my parents were ministers. And you're in a small...

town of 2000, like the pastor is like the most educated person around by and large. So there's an aspect. Well, the alternative to working in the factory or on the farm is you go to college and you'd be like a professor or something. There just wasn't even any awareness around,

of any sort of opportunities. And I think this is very not well understood by elites in general and people on the coast where it's not a lack of opportunity. It's a lack of even knowledge that there are opportunities elsewhere. And so for me, going to the University of Wisconsin was like this big act of rebellion and like, oh, I'm not going to go to a Bible college or I'm not going to go to whatever. And in retrospect,

I had the grades and test scores to go somewhere. You know, I mean, Wisconsin is a great school, but I probably could have gone to an Ivy League school. I didn't even apply. That just wasn't on your radar screen. Not even on my radar screen, not on the radar screen of anyone around me. And I think this is a perspective that is probably not very well understood by a lot of our audience. I think to say the least,

And so I actually love tech. I was very into it. I was the first person I knew around me to get an email address, to sort of be online. Did you get the internet at home before you went to college, or was college your first experience with it? No, I pestered and pestered my parents to get internet. I mean, I think we started out with a Juno account, which was just email only. Oh, wait, was Juno the one that was a D. Shaw spin out? Yes.

That was an incubation at D.E. Shaw when Bezos was there before Amazon. Yeah. It was like a standalone client that was email only. And then it merged with Net Zero. Yep.

So even in college, you know, I was super online. Me and my group of friends stayed in the dorms an extra year just because of the broadband connection. Broadband is used very loosely here. I think it's like two megabytes up and down. I worked at the student newspaper, which I loved. One of the things that I did at the newspaper was I took over the editorial section my senior year.

And so we sat down, we had five things that we wanted to see happen. Well, first we decided number one, editorials will only ever be about things that affect students. And what we did was look, we're going to write an editorial every single day, Monday through Thursday, Friday, the whole page will be given away to guest columns. We're going to write an editorial every single day, no matter what. And we're going to write about these five issues.

And did that mean you writing an editorial every single day? Well, so we had an editorial board, but it basically ended up me writing an editorial every single day is what it came down to. Not every day, but the vast majority. And it's interesting because there is certainly, there's an echo of what I ended up doing with my career, right? This sort of daily hitting points, having to generate content. But it was, number one, just from a practical perspective, it was

fun and interesting and something I definitely enjoyed. And number two, it worked. Of our five sort of things, we had goals. We accomplished four of them. So I want to go forward to you're leaving Microsoft. Give me the emotional moment where you're like, it feels like it could work. Like, I think there's something here. I think I have content market fit.

Well, so to go to the back of the Y trip, there was an aspect about going to Microsoft. It's like, well, I should go to a place that is theoretically oppositional to everything I believe in, right? And can I make changes at Microsoft? You know, very sort of arrogant. Really, I learned a lot from Microsoft as opposed to the other way around. I sort of signed up for it knowing this was probably not where I was going to be long term.

And after that trip is when I did start Stratechery. I wanted to figure out a way to get back to Taiwan at some point. My wife's from Taiwan and we enjoyed living here. Also, again, I just felt like there was this hole and opportunity. And I sort of looked at Gruber as someone that was like, well, he did it. But it was also pretty clear that...

an advertising-based model was probably not going to work. I mean, that was obviously a regular theme of mine about the centralization of advertising under Google and Facebook, and that world of starting a blog and throwing up some Google ads was not going to be a viable one. - What made you think that? To my mind at least, there is a very viable and robust alternative history where Stratechery is an advertising business model. - Well, I think that I would have to have started much earlier

And I think Gruber's model is the right one where I think it's actually underrated that I think he actually kind of invented native advertising because you read every piece of content that he writes. And one of them just happens to basically be an ad. It's the same format, same content as what's there. And I would bet that the rate of consumption to encountering it for his ads are like higher than almost anything else out there.

And obviously Facebook does that at scale and it's all automated and self-serve and you scroll through and there's different pieces of content you're interested in and some of them are ads. But you didn't think you could do the same thing that John does? Well, I thought that was a possibility, a potential leg of the stool. But number one, I didn't know that I could do the same format. I mean, what works for him very well is because most of his stuff are short snippets and wink out, it's very easy to sort of check in and read everything.

I ended up moving more towards longer pieces. I mean, I did experiment and play around with that format and it didn't seem right to me. And then also just strategically, you could see where things were going. This idea that users are going to Google, going to social media, and that's the best and most obvious place to put advertising because that's where the users are. There's understanding about them, all those sorts of things. You know, advertising is an ROI measurement, right?

It's not just what's your return, but also how much work do you have to do to get it? And why would someone want to go to a small blog and put the effort of putting an ad there? It didn't seem like a very scalable possibility. And meanwhile, at the same time, there had been this new company that was founded called Stripe. And it seemed viable to me that if you thought through the idea, look, if I produce super highly differentiated content, that is something that

is not going to appeal to the whole world, but to the people who like it, they'll really like it. And if you have that sort of audience, you should maximize your revenue per user. And the way to maximize your revenue per user is to charge them a subscription. And the tools were then becoming available to sort of do that.

Just to validate the point real quick, and David, this is my pushback on there being an alternative history where Stratechery could have been ad-driven. For anybody who doesn't read Daring Fireball and doesn't know who John Gruber is that we're talking about, quick lesson. When Ben says that he invented the in-feed advertisement, you go to daringfireball.net, yes.net, and you see the same exact website that's been there for 10, close to 20 years at this point. And most of it is links out to other things. Some of it's long form, well thought through pieces, and some of it is sponsored posts. And

I consumed, just like many other people, the entire feed in an RSS reader, and the sponsored posts would show up just like any other post in an RSS reader. Now, I think the set of people who are likely to use an RSS reader and who are likely to go directly to daringfireball.net as the place where they're intentionally typing in a URL or clicking a bookmarks bar and going to it, that set of Apple nerds is far more likely to do that behavior than anybody else in the world. The world is shifting away from going directly to pages and a

And a lot of your readers are like, I'm just getting my news from Twitter and wherever else at this point, and I'm not doing the RSS thing.

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

I didn't remember that. How long did you do that for? Like six months. Again, the ROI wasn't there for me either. I couldn't charge that much and it was a big hassle in getting it arranged. And then also, there's a lot of complicating factors like pushing people to email was not a good fit for that. And so...

I started Shrekery pretty clear that subscriptions would be the core model. I was going to try lots of things to monetize. Clear to you, though, but you pioneered that. I mean, there was no Substack. I think in many ways, Substack was, I don't know the exact history, but probably modeled after you. Yeah, no, Substack's seed deck says Shrekery in a box. That was their pitch. So this was a big innovation. Yeah.

Yeah. I mean, I think like the subscriptions did exist, I think on wall street in particular, but they were generally like $20,000 and you would get all the hedge funds to subscribe and the banks and that model still exists. And it's actually a very, very profitable one.

But what I do think Stratechery innovated was sort of subscriptions at scale where you're charging a low price relative to $25,000 or $10,000 and you're doing it on a self-serve basis. People sign up with their credit card. And again, Stripe was a really important part of making this possible. But there were no real subscription tools. Like I had to actually –

hack it all together when I first started. There was like WordPress subscription tools, then there was Stripe and you had to glue them together. And it was sort of a big mess when I started. A year after I started, a company called Memberful then launched, which I switched to them. That made things definitely much easier. And then obviously I have my own system now. You've worked with an outside development agency to custom build software for which you are the only user to publish Stratechery now, right? Yeah.

Yeah. Well, I mean, at the beginning it was all me. Like I built my own page and I did all that integration myself and I'm not really a developer. So it was very hacky. Actually. One of my nightmares was when I watched the paid product. So I started Steckery. I messed around with format a little bit at the beginning. Oh, actually the real pioneer who I should mention was Andrew Sullivan. And he had this manic posting schedule, like tens of posts a day. And he did have a team to help him on the daily dish. And he,

He switched to a subscription when I think he left the Atlantic and it was successful. Like he quickly was doing a million dollars in revenue a year, but he sort of maintained that manic posting schedule that was kind of made sense in an advertising driven world where you want people always coming back and getting lots of impressions and

and the paywall was super loose. It was like 30 posts, and then you hit a paywall or something. And the reality is what happened was he burned out. I think he had some health issues, and he ended up leaving. And it was funny because when he left, everyone's like, blogging's dead, it's finished, it was a failure. And I looked at him, I thought like, no, I think this was actually a huge success. One of the problems was he had this

posting schedule and system. And then he tried to drop a paywall on top of it. And so when I thought about your techery, I want to do the opposite where I wanted a subscription to not feel like from a customer perspective that I was taking stuff away, but that I was giving them more just from a psychological perspective. And so once I realized I definitely want to do the subscription model, I started becoming super disciplined about never writing more than twice a week. This was back in 2013 when I was doing techery because my plan was to

For subscribers, if they subscribe, they get more and it would be like an exciting purchase as opposed to I'm hitting a paywall. This sucks. And your audience that you were building up before putting the paywall in would still keep getting the same. That's right. And so my initial model was still daring fireball like where I figured, oh, I'd have big articles. And then if you subscribe, you're going to get a whole feed of a bunch of little stuff. My commentary on news articles.

I built a new website, again, as a not very good web developer. And the metric I was paying attention to was people who visited the homepage on days I didn't post.

Because to me, those were people that were hoping I had written and they wanted more from me. And I figured classic if I could just X, Y, Z of why. But I thought if I get 10% to this audience, that would be something that would be reasonable. And that metric was pretty high. I mean, I didn't appreciate then just how powerful social media was. And publishers bemoan social media, but those are publishers with old business models. If you have a new business model with a very low cost structure, social media is a godsend because you basically get free marketing for

What a lot of people don't understand is I think a lot of writers give away way too much content on Twitter and they're out there posting. It's like, why should I read your site when you're just telling me everything you think on Twitter? And the reality is the power of social media is not that it gives you another platform. I have a platform. It's striker.com.

What it does do is give all my readers a platform to tell other people, wow, this site's really great. Look how smart I am for having a take on this thing that Ben wrote, which you can read about on his website. Right. If you share something that's great, you get the likes and you get the retweets and you get the status of people feeling like, wow, this person is sharing good stuff.

And that's really powerful. This is probably an angle. You mentioned the Marc Andreessen quote about I thought I was too late. In this case, it turned out I was early. I was the only person doing this sort of model out there. And there was still an era of 2013 Twitter, 2014 Twitter, where people would share links to something and it would break through if it was consistently good. This is also where the principle of

having the second article be good is super important. You know, this is, I think, unique to the social media era where people follow a link to a site and they have paid no attention to what the site is. They don't even know what it is. It's basically a Twitter article for all intents and purposes. So I did want the site to be sort of visually distinct. So I did like a custom font, which back then was very rare. That was sort of a new thing.

I had the orange, you know, there weren't very many orange sites back then. And I did a lot of these sort of hand drawings, which were very visually distinct. The Ben Thompson iPad hand drawing. You're a good artist. The boats, even in the first post, the sailboats was quite good. Yeah. Thank goodness for iPads and the ability to sort of edit endlessly. But the reason for that is what I was really thinking about was, oh, they found an article like, oh, that's a good article.

A day later, a week later, a month later, they follow another link and like, wow, that's great. Wait, I've been on this site before. It's triggering my memory. And that's really, I think, the key moment. It's like, oh, yeah, I'm going to follow this guy on Twitter or I'm going to put this site in my bookmarks or I'm going to put my RSS reader or whatever it might be. And that's sort of the key thing that I think you want to accomplish. This is one of my big criticisms of Substack is.

I mean, it's interesting because Substack, I think, is achieving some degree of network effects where everyone's familiar with it, that your payment's already on file. All that stuff is true, but nothing visually about Substack is memorable. Every single site looks the same. And also, they'll be reading a post and I'll have to bring down the address bar. Who am I reading again? The kerning's also weird. This is a weird typography in it, but I'm like, it always looks slightly wrong to me when I'm reading the body text. Yeah, I agree. Yeah.

The name, I know in many respects, it's a bad name for a word of mouth site to be a name that no one knows how to pronounce. But it's not an audio word of mouth site. It's a word of tweets. It's super memorable for good or bad reasons. It's one of those no exposures, bad exposures sort of things. More importantly, the URL existed. The Twitter handle existed. It didn't exist in Google search. So there was pluses or minuses. When did you come up with it?

The name that I've always been the most jealous of is Asimco, again, to go back to Horace Deju. It has all those qualities with the advantage of being pronounceable and easily spellable. So in retrospect, I always make fun of the Shichekri name because it's easy to make fun of. But I do think there's a lot of positive qualities to it that are underappreciated

from this memorability aspect, but there is an aspect where it is kind of hard to pronounce and people are afraid to say it because they're worried they'll say it wrong. And if they say it, they don't know how to spell it. So it's not perfect by any means. It is based on the strategery movie bit, right? Where it's supposed to be strategery. Yeah. So it's strategy and tech. And yes, there was the strategery bit. And so then I'm like, well, I should pronounce it strategery. That was a terrible idea. I think I did that for like a month. Yeah.

Didn't it even say on the website it's pronounced strate-kery? Yeah, at the very beginning. Yeah. And then I quickly realized that was a very bad idea because it is strategy and tech, so it should be strate-kery. Yeah, lots of poor decisions. It's very easy to look back and see all the good ones.

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

Yeah, and that applied to lots of pieces. I mean, I had my people visiting the homepage of days I didn't post. So in the meantime, once I left, I was really looking for a job at Microsoft where I could still blog. Isn't that all jobs at Microsoft? You just kind of chill and you have plenty of time to blog. But I couldn't write about Microsoft. And also, it was getting a lot of attention. Again, I was surprised at how quickly it blew up. I mean, this is where the other Gruber story comes in, where at appendicitis, I'm laying in a hospital bed getting ready for surgery. And I'm like waiting around for a few hours.

I had waited to email John because for the same principle I said at the beginning, I wanted to have a body of content, not just like an introductory post. Say, oh, check out my new blog. How many emails does he get about that, right? And so I waited a couple months or a month or so, and I emailed him and said, hey, I

Been a big fan. He had just been on a podcast telling his origin story, and he also worked in the student newspaper and XYZ. So I shared that, you know, I'm like, I really related to this. I regret not doing what you did back in 2003, but I'm giving it a shot now. Here's a few articles. I'll be interested. And I heard nothing back. I did no response.

And so I had my surgery. It was very successful. No problems. A couple weeks later, I'm at Microsoft and I get an email from him pointing out that I'd made a grammatical error. I think it was something like jive, jive, jive. Like I used the wrong one. And he's like, I make this mistake all the time. He's like telling me the etymology of each one. And that's all the email said.

No closing, like, I love your work or just like... No, full stop. It was just explaining that I used the wrong word and what different words meant, what I probably meant to use. So I thought, well, he's probably going to post a link to the site. So I was very excited. So I'm like sitting on the analytics page and I'm sitting on Daring Fireball, seeing what he will post. And I was hoping for just a short link, right? He has all those short snippets. Instead, it's a full article and he starts out saying...

All my readers should be reading this new site I've discovered. I've discovered, of course, College of Techery. It's the best new site I've encountered in years. And he whistled like three articles. That I've discovered with the help of its author. Right. He's like, you should read this article, this article, this article. It's like 500 words of just the most glowing praise imaginable.

And then he gets to the end. He's like, but for the first time, I disagree with Thompson. And then he spends another thousand words saying why I was wrong about something, which was fine. I mean, I think he was wrong. And there was the start of a beautiful friendship. Do you remember numerically what happened to your traffic after that?

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

Paid subscribers were a fixed percentage, like people who subscribe to the daily update. Yeah, which meant I knew my limiting factor on subscribers was awareness of who I was. So I had 500 Twitter followers when he posted that. And within 12 hours, I had 1,500 Twitter followers. And that sounds very small. I mean, I have 200 and 1,000 some followers now. Tripling hour over hour is a great rate to compound at. Yeah.

That's right. And also, it was a lot of people that were also bloggers or writers or influential. There was two step changes in Stryker's growth. That was really the first one for sure. The next day, I get reached out by the head of strategy at Microsoft or a week later. He's like, hey, can we have a meeting? I'm like, oh, shit, I'm in trouble now. He gets summoned to the principal's office. At least it's not the head of PR. That would have been way worse.

So he ended up being with him. He wanted to hire me. He's like, look, I'll bump you up to a level 65. You know, I kind of want to go back to Taiwan. Is this Kurt Delbenny? Who was the head of the strategy at the time? No, his name is Charlie Songhurst. Oh, yeah.

So, and I kind of sniffed him out. I knew he was probably leaving soon. He did end up leaving shortly after he's like, no, go live in Taiwan. Just fly back once a month. It'll be fine. But fortunately I turned him down. But all this is a circuitous way to say, I did feel I needed to leave Microsoft. Like this thing was taking off. It wasn't sustainable. Number one, I couldn't write about Microsoft and it was stuff that people at the highest levels cared about. It wasn't like writing about the finer details of VPNs or something along those lines.

And so I'm looking for a job, end up at Automatic. And that's where I met Matt. So you went looking for a job in your heart of hearts. Were you hoping that you could someday not have a job? Without question. No, Shetuckie was my plan. You just felt like you couldn't do it yet. Yeah. I mean, I had a family. I had business school debt. I needed to have a job that paid the bills. I wanted to find a job that would let me continue to do this.

So automatic worked out. It actually worked out even better because I was like hired as like a growth engineer or whatever, which I didn't really know anything about. But then the team I was on pivoted shortly after I was there to building like a new backend to WordPress platform.

And so there was nothing for me to do. We didn't have a product out. But fortunately, there was a little bit of pushback internally because I was becoming this very visible blogger. It's like, what the hell? Like, this guy's working for us? I thought we weren't supposed to have... Because back then, Automatic was one of the few distributed companies. You could live anywhere you wanted to. So as soon as I got the job, we moved back to Taiwan.

And you weren't supposed to have a second job for sort of obvious reasons. And I think Matt did run some interference for me where he's like, no, don't worry. He's good. And the one thing I did do for automatic is I went through a lot of the company, what they were doing. And I wrote this.

big strategy document about where they're at, what they should do. It had some impact, I think, on where they ended up going. You guys should buy Tumblr. Yeah, that was at the time when they were, it had been a very small company. And around that time, they decided to raise a lot of money and grow into being sort of a much bigger one.

Again, I don't know how much impact I had. Matt says I had a big impact. He made me be being generous. I don't know. But I kind of actually ended up working mainly directly with Matt. And he mostly left me alone. And then he would have a question or whatever. And I would think about it and write something up and come back. Well, nominally being the growth engineer for this team that did not have a product in the market. So I owe Automatic a lot.

But it was also very stressful. I felt really guilty because I'm like, I'm really devoting all my energy and time to Shrekery and I'm getting paid by automatic. Just that was internally very stressful to me. And, you know, that wasn't the idea. Like, I mean, I sound cliche, but I, you know, raised in a Midwest blue collar town. Like I'm getting paid far more than I've ever made at any time in my life. And I don't feel like I'm devoting all my time and energy to this company. That was very internally stressing. And so, yeah,

I got this job to be like a consultant for this company that wanted to expand to Asia Pacific. And I'm like, well, I can do this consulting job and then I can make sure check your paid things. I couldn't do that. Why is that automatic? Again, you couldn't have a separate paid job while being there. And so you left automatic to go do this sort of potential consulting thing. Well, no, first I left automatic because I'm like, I need to build this subscription bit and this new website before I started this consulting job. So I left automatic. I'm working on building this.

What happened was that consulting shop fell through. It just didn't materialize. No way. You burned the boats and then there was no car. So I launched the techery. And again, the idea was you would log in, you get this much fuller experience. And...

I watched it, and number one, I had something wrong with the security certificate. So the first 24 hours, no one could make a purchase. And so I'm, like, up 36 hours straight. I barely slept for the week before because I'm, like, finalizing the site. I stupidly had, like, reached out to, like, Kara Swisher at Recode, and so she had a pre-scheduled post that was going to announce I was going paid. And so, like, I had this stupid artificial deadline that made zero difference other than stroking my ego. And so it was awful. It was a horrible experience. But the worst thing was that the product sucked.

It was super confusing. I didn't achieve my goal of having a good experience for non-paying customers that would ideally lure them in. And for paying customers, it didn't work well. It was very janky and it sucked. It was really, really bad. So over the weekend, I'm just miserable. And I know I screwed up and I burned my bridges and all this sort of thing.

And I realized that, look, I messed up. The business model's right, the product's wrong. So over the weekend, I tore the whole thing out. I went back to the old website and I told the people that subscribed, I'm like, look, I appreciate you subscribing. The format's all wrong. What I'm going to do is for your subscription, I'm just going to email you. I'll email you once a day with the extra stuff that I promised you.

And so I felt completely and utterly ass backwards in the email. I thought it would all be on the website. I've been thinking this whole time. I'm like, we have not talked about email once. Yeah. And my mentality has always been to check out the website first and foremost. But it's like, look, I'll deliver you this extra stuff via email. And it will also be on the website on the sidebar. And, you know, it'll be archived there. But you're going to get an email.

And it worked out in the long run. In the short run though, I had a one day goal for new subscribers. Well, I guess a two day goal because the site wasn't operable for the first day. I had a one day goal, a one week goal and a one month goal. And I failed to reach all of them and failed pretty significantly, honestly, to reach all of them. And so I'm there. I've given up this six figure job, living in Taiwan, business school debt, and, and

an idea that I thought could work, but did not seem to be working very well. And it was very, very stressful. I mean, I stopped paying all my credit cards because especially back then, Taiwan was very cash centric. So I needed to preserve cash. I was not sleeping. I also watched a podcast at the time, which was Exponent with James Allworth. So I'm writing, as I mentioned before, seven times a week, plus doing a podcast. I'm doing all the editing for the podcast, all the production, all this sort of stuff.

And I thought I'm going to have to like go teach English again to like pay the bills at the same time. And then I think like the first month when I tore all that out, I screwed up the subscription. So I double charged a whole bunch of people. So I had to process all these refunds, do all this customer support. And it was pretty tough. I launched in April. This is April 2014, 15? 2014. So next year will be 10 years of checkery, but nine years of it being my job.

So fast forward to the summer. We're back in the States. My wife and I had planned a long standing trip. We're going to go to Paris and leave the kids with my parents. You fast forward there a little bit, but you must have had some thoughts in those intervening months where you're like, well, shoot, I'm just going to give up on all this, right? Yeah, but there was certainly a pride factor. I couldn't bail on it. I mean, no one thought I would succeed. I had lots of people reach out and be like, hey, Ben, I love you, but subscriptions are not a thing on the internet. It's not going to work.

And a lot of people in tech, especially VCs. Which is weird because they always know exactly what's right. No, they're very conventional wisdom driven, I think, in general. So I can still picture I was sitting at the kitchen table at my parents' house in Wisconsin.

And you looked at the numbers and my May subscribers were more than April. June was more than May and July was on pace to be more than June. And we're still talking like a couple hundred, not very many. Oh, and I'd also had like multiple levels. So some of our people had like this $300 level where I was supposed to like chat with them and have subscriber calls and all this sort of stuff. Yeah. Everybody starts that way and then quickly gets rid of it. And I'm also trying to do like sponsored posts. It really just an overwhelming amount of stuff. Um,

But I looked at those numbers. I'm like, I think it's going to work. And so I paid off all the credit cards that had been running out for the last few months. My wife's like, should we cancel the trip? Like, no, we're not canceling this trip. You know, she was very mad at me. She's like, you threw away the six-figure job. And so I didn't want to tell her how poorly things were going. You didn't give her access to the analytics? No, of course not. And I'm like, no, we're not canceling our trip. Things are going great. And so we flew to Paris, ran the credit cards all back up again, of course.

And in Paris, I remember I would wake up every morning at 4 a.m., sit in the bathroom and write a daily update. And then my wife would wake up and we sort of like go out for the day. And that ended up being true. It just sort of kept increasing. I mentioned there was two big step changes, the Gruber one being the first one. In November, I actually ended up reaching 1,000, which is my one-year goal. So I hit my one-year goal.

much earlier than I expected. One year, $100 a year, $200,000 run rate. It's a funny thing about exponential growth. You miss the early goals, but you nail the later ones. Yeah, I don't think exponential growth really applies to my business, but maybe more so at the beginning. There's more of an exponential curve. I mean, the problem with a word of mouth business and exponential growth is people run out of people to talk to. And so that's the limiting factor. Right, it's only the new subscribers give you the exponential growth.

Right. There's a little bit of exponential with every new subscriber because they will tell new people, but networks get exhausted. And so it's more than linear, but it's, if you zoom out, it's really linear is the way this sort of growth works. But so what happened was in November,

I put a little post out. First, I simplified my model. I said, no more of this 300 level, cheap level, one price and one product. That's all you're getting. And then number two, I'm like, hey, I got 1,000 subscribers. Business model works. This is definitely going to be my job sort of going forward. And in the next 24 hours, I got 250 new subscribers.

By far the biggest step change in my subscriber growth. Did all the VCs email you again and say, Ben, you're a genius. Will you please come talk to our portfolio companies? I was right about my metric of people visiting the homepage and days I didn't subscribe. What I was wrong about is that the vast majority of people thought I would fail and go out of business. They didn't want to lose their money. And so they didn't subscribe. But once it was clear, I would be an ongoing entity, uh,

Then like, oh, okay, I guess my money will be safe. And so I will now subscribe. I was right about the market. I just, I didn't understand that psychological aspect. One of the things I think is great for sort of the, I went back to Substack making it easy to pay. I think the real great thing for Substack and Substack writers today, it's not just that it's easy to pay, but

people aren't scared to give their money to some random writer on the internet. And they were previously, and now they're not. And I think that's really great. It's something I'm very proud of. Wait, so what was it about yours where they suddenly became not afraid? Because I had a thousand subscribers. I was making $100,000 a year. It was that they thought that before they knew that you were secure, that you might just stop writing and then they would have paid you and then they would get nothing for it. That's right. I think that that was really the case.

And so then since then, I've never had a growth explosion like that since that 25% growth in one day. But it's been sort of slow and steady since that point. That accidental email hack, how do you think about it now? You say you still think about Stratechery primarily as a website, but how do you think about email now? Like, obviously, it's a big part of what you do. Yeah, well, it is, but it's not. I mean, I think if you see the stuff that I've done, for example...

Now you can consume the daily update via a podcast or my articles via podcast. I think that's actually very much in line with my vision and view of Chatechory, which is this is a publication that I write and I will make it as easy for you to consume in the way you want to consume as possible.

And back in 2014, that meant sending emails. And certainly there's all the advantage of emails that everyone's talked about. It's a fee that everyone checks daily. You don't need permission to get into there. There's no algorithm. You know, it's funny because I think once Substack came along, it became overwhelming and people started setting up rules to send other emails to a folder, which they never checked. So you're back in sort of the same problem, a self-imposed algorithm, which is where podcast is great. It's the same idea. It's a feed that people check regularly.

That, I mean, it works through polling, but to people it feels like push. And that's certainly a great thing from an independent publisher perspective. And I think in line with my vision, I mean, one of my criticisms of Substack was I think they were too email centric to start. Again, I think the web experience is important. It's super important for growth because that's where people find out about stuff is often via social media and sharing links.

And email is a tactic. It's not a strategy. And at the end of the day, the strategy is about differentiation. It's about consistency and objectivity.

I want it to be easy to use and fit in your life. And email was a way to do that. Again, sort of backed into now podcast, a way to do that. You can get striking articles on the SMS, which gives you a link and you can read on the website. Obviously I've always had RSS and I just want to make it as easy for you to access the content that you're paying for as possible because that sort of makes the whole thing go. And, you know, you mentioned churn the beautiful thing about this model is

number one, from a writer perspective, all I really need to worry about is keeping my subscribers happy. And so like, you know, should this be a free article? Should it be paid? Well, you know what? If it should have been free, but it made it paid, that's fine. My subscribers feel like they got a great article that they paid for and they feel good about that. And that recurring revenue is really, really powerful. And then also that's my marketing channel. It's them telling other people about that. This is good. And you should sort of check it out. I, one of the things we do with passport is a,

A big way stuff spreads is people forwarding emails. And Passport is the technology infrastructure you've built to enable other people to build Stratechery-like experiences if they're whitelisted by you. How does that work? No, it's just my stuff for now. I mean, obviously, we would love to make it broadly available, but it's not all finished yet. And there's customer support issues and things that would entail that, but something that I would like to do.

But one of the things we did with that is I link to myself a lot, which people make fun of and deservedly so, because it's kind of a running joke between me and my readers. But a way I think about Shachekri is it's a live thing. It's an ongoing sort of journal of my attempt to understand the world, to understand technology. And,

Sometimes I was right about something and it's always fun to point back and say I was right. Sometimes I was wrong. It's like, why was I wrong? What mistakes did I make? Sometimes there's a trend and it's like, well, this happened back then and this happened here. And then again, I think about it as being sort of a live thing. And so linking back to myself is a way to do that. It's also a great way to trigger that second article sensation where you read an article and then there's a link right there and you go read another article. Well, that one was also really good. And then there's XYZ. So one of the things that I want to do with Passport was

how can I really leverage email forwarding to accomplish this, especially when I'm linking to paid articles? So like one of the things we do there is every link to myself in a strategic email is tokenized and that token goes one link deep. So even if that email is forwarded to you, you can go read old stuff. So you get that second article sensation. Now, if you're in that second article, when you click another link, now you're going to pay wall and then you're going to realize, oh, I have to pay to get this. But there's all these little things

bits and pieces that the subscription model makes possible, which is really leaning into just serving your customers, trying to make it as good of an experience for them as it can be. And the other really important about subscriptions is there's always debates about, oh, people just write for clicks and blah, blah, blah, blah. And then the publishers or the editors will come back and say, no, we don't even show our writers their click numbers. Like they don't know. All we want them to do is write content. And I think that's so foolish because

Everyone wants feedback. They want affirmation. They want to know, did I do a good job? And if you don't even get access to your click numbers, where do you go? You go to Twitter. Like, what are people saying about me? Right. You will find a way to figure out if you resonated or not.

Right. And who's on Twitter? The biggest loudmouth, right? One of the things I learned on Twitter, about Twitter very early on was I would be very engaged on Twitter. I'd be responding to people. And that's only occurred to me. I'm responding to the same 10 people or 30 people or whatever it is, right? So true. Yeah. You're engaging with 0.2% of your audience. Right. And so that's a fixed number.

And meanwhile, I have a feedback mechanism, which is my subscriber number, which is going up, which means I know there's a huge number of people that like and appreciate and are sharing. And it's all dark matter. I don't know who they are. I don't know where they are, but they like what I'm doing. And I need to anchor on that, not worry about what the loudmouths on Twitter are saying. And so subscriptions give this feedback mechanism and feedback mechanism for people that will never email you, that will never contact you, but they will pull out their credit card and they'll give you money. And I think,

I think that's so valuable and so positive from an incentive structure. Now there is a downside where subscriptions are niche, right? And I do think you tend up people will, if they dislike you, they can stop paying. And there is a worry and a challenge that you're not like pandering to your audience or whatever it might be. I think I'm kind of lucky because I was so early because I was the only person in the space doing this sort of stuff.

I got to a large enough audience size where I could not care. And if someone wants to cancel their description, I don't care. In fact, if someone comes back and if they are just,

over-the-top rude or disrespectful or insinuating things about me, I will not just cancel their subscription. I will refund them their entire purchase and say, please just never come back. Isn't that the nice thing about an approachable price point? You're like, actually, your dollars are insignificant to me because my number of subscribers is so much larger. It's very different than if Apple decides to stop advertising on Twitter. It's like, oh, crap. Oh, oh, oh, oh, I'm so sorry. I'm so sorry. Come back. Yep, that's exactly right. And again, would I have been able to do that when I had a very small number of subscribers? No, but I mean...

It was easier back then because, I mean, I started in 2013 and the entire opinion of the tech press in Wall Street is that Apple was doomed because, of course, we'll grab the Windows Mac, blah, blah, blah. So I had the lowest hanging fruit in the world to sort of pick, right? It'd be like, no, I don't think Apple's doomed, to be honest. You know, that's why I wrote that, why Christian was wrong, because all the disruption people were like, you know, Apple's for sure screwed unless they go down market. I'm like, no, I don't think they need to go to a market.

And so that was great because it's not like I was writing anything that controversial. And so I didn't even run into any issues where people would try to hold it over me. And by the time I got into issues where that mattered, I was large enough that it didn't matter. So I think I was definitely fortunate in that regard.

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Can you share, like, what does the shape of the curve look like in terms of if you graph it on the x-axis is time and on the y-axis is number of subscribers from the start of Stratechery today? We talked about going up to 1,000 and then adding 250 and that step change. And even if it's, like, relatively linear, has it sort of tapered off over time? Like, are you saturating the world of tech people who care about business strategy? Yeah.

Yeah, it's interesting because there's been different periods where it actually, I thought it was starting to taper and that actually accelerated. This is probably 2018, 2019 around there.

Over the last couple of years, it has tapered off. It's not quite what it was, which is fine in terms of the growth is tapered off. I mean, it's subscription revenue. If it stays flat, you're in great shape. Yeah. Well, and then also I raised prices a couple of years ago, which is the only time I've raised prices. And I still kind of mildly regret it. It's funny because everyone's like, always your price is too low. You should raise prices. That's definitely the absolute easiest way to increase revenue. I think the

easiest thing for me to do would be to just keep doing what I'm doing and just raise the price a dollar a year every year. And for sure, my revenue increase would very much outweigh my churn.

I mean, honestly, the biggest change that happened when I did raise prices was it didn't affect growth at all, except that I had a lot more people switch to annual subscriptions because I like preannounced it like, hey, if you want to get a year at the old price, which is great because I want people on annual subscriptions as we sort of discussed at the beginning. So I could do that. I think my view on it has always been.

I think on the internet in general, the markets are much larger than people think. I thought it was much larger than all the folks that are critical of my model thought. And it's been larger than I thought all along, right? I thought it would take five years to build or to launch as my business. It took a year. And I would rather explore the edges of that market, how big it is, as opposed to sort of maximizing my revenue too soon. And so that's sort of number one. Number two is I do want to have an impact. I do want people to read. By definition, the larger your subscriber base, the more...

your sort of marginal customer is not aware of you, is not immersed in the space. Their willingness to pay is going to be lower. And so when you start raising prices, you're going to hit a wall very fast. I think as far as subscriber growth, sort of by definition, that's sort of number two, the sort of shift over the last couple of years has been, well,

is this it? I've reached my natural base or whatever it might be, which is again, massively larger than I ever expected. I just wanted to pay the bills. Yeah. Like tens of thousands of people that pay you to read your work and millions of people that I'm sure come to your website and read the free product. Like there is a real market for this. I would definitely push back on the millions. I think it's interesting because

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

So my subscribers love it. Half my subscribers now listen instead of read, which is amazing. That's how I consume every single post. Yeah. And then the other good thing is people would churn because emails would build up and they'd look at their inbox. There'd be like 20 hundred emails and they're like, why am I paying for this? Whereas an eight minute podcast just feels like a knock this off real quick. So it's been very good for churn.

But the problem is people don't share podcasts, right? You listen to a podcast, you go to the next podcast, you do X, Y, Z. Whereas if you're reading something, it's super easy to tweet it or to forward the email. Click forward. Yeah. Yeah. So I do think that might be the biggest issue on why my growth slowed down, to be honest, which is fine. It is what it is. And you're obviously leaning more into podcasts, right? I did face a decision this year, which is growth is somewhat leveled off. Do I raise prices and just sort of be happy with the base that I have? And yeah,

I figured it'd be worth a shot to see if I can restart growth in this case by sort of working to increase and broaden the value of a check resubscription and not just my own content. So I launched Dithering with Gruber, obviously he's now my podcast partner a couple of years ago. That was like an add-on. So you pay extra and you get Dithering. And that was really on the, let me make more money for my best subscribers as a way to raise prices on my best subscribers without explicitly raising prices, right? Was launching Dithering a...

business decision or just a, this is going to be a fun thing with a good friend or both? Both. And then also I had this technology for pay podcast. That was a way to do it. And so, yeah, we watched it. It's been successful. I mean, it has, you know, I think like from day one, we had like 10,000 subscribers and then it's sort of level. It's kind of like, where are we stuck? We didn't turn at all, but like, how do you grow a pay podcast? We haven't done anything around free episodes and marketing. We will, but that was a de facto price raise on my best customers.

And what I wanted to sort of explore this space, it's like, well, is my market as big as it can be? And is there a way to sort of go broader? I figured out the newsletter thing. Like I think subscriptions make tons of sense for podcasts because people get so attached to a podcast. They get so attached to a particular host and it becomes such a part of their routine to a much greater extent than reading, which is sort of more of an affirmative choice. I have to go read this. Whereas like, oh, this is in my podcast player. I guess I'll listen to this next.

And so I think it's a great product for subscription, but it's totally unclear how do you actually build a podcast, particularly a paid podcast. It's really hard to get people to start to listen to it. And so in general, I think writers...

tend to succeed with podcasts because writing is a good marketing medium. Again, it spreads easily. You just pass a URL so people become familiar. Like, oh yeah, I'll try out your podcast because I like you as a writer. But if you're just a pure podcast, how do you sort of grow? And so what I've decided to do is Dithering's no longer going to be an add-on. It's going to be a part of a Shredder subscription. So now...

Again, your Shrekry subscription is worth more because you have this sort of extra piece and you got it for quote unquote free. So you don't sell it separately at all. Well, it is available separately. Again, it's Cohen with John and some of his subscribers maybe don't like me. So they want to go subscribe. They can, but it's no longer as an ad on Shrekry. If you are a Shrekry subscriber, you get dithering. It's part of your subscription. Watch the new podcast called Sharp Tech that again, there's both free episodes and paid episodes everywhere.

It's available to all Stryker subscribers. So your subscription is worth more. And so people are sort of opting in just to make the point clear, because I've listened to every single episode of Dithering, including the back catalog before you launched. I started recently listening to Sharp Tech and of course, Sharp China, which you're about to talk about. It seems to me that Sharp Tech and Dithering is sort of like, well, I get Ben and I get Ben's thoughts and I get a lot of the same thoughts. And I basically am picking whether I like

Andrew or John better. And I'm also picking the format and duration of the episode. Yeah. Right now, the bundle is kind of a joke because it's mostly just me, right? And different flavors have been. I only have so many opinions. I have a lot of opinions, but I only have so many. So it's not in its long-term place now for sure. And

It's very tricky because there is an extent to your point about if you release a bad episode of Acquired, you know, do you worry about churn? Am I diluting what Chatechry is to someone? It's no longer just an email. And now I'm reintroducing the possibility that people feel overwhelmed with content. And then they also feel like, oh, Ben's repeating himself all the time. I think there's a lot of underrated risks in doing what I'm doing.

But number one, I think watching Sharp China was a good signal to my audience of what I do want to sort of accomplish going forward, where that's a collaboration with Bill Bishop, who writes Cynicism, and it's the first Stratechery product that I'm not on. But I think it's an important topic, understanding China. I think it's of a similar tone and quality level of what you should expect from Stratechery. Do I expect all Stratechery subscribers to listen to it? No, of course not. Some people like me specifically, and I'm not on there, so they're not going to be interested.

But I think for a lot of folks, it's like, well, I keep hearing lots of news from China. Where do I go? I'm already a security subscriber. There's this other product here. And if they become a regular sharp China listener, I've now decreased my churn that much more for that sort of person. And I think, again, a big part of subscription is just churn management. It's like, I want to make sure this is a long time subscriber and you get that recurring revenue over time.

As you might imagine, there are plans for other podcasts, you know, sort of be added in the long run and we'll see what happens. I mean, growth has, I think, picked up over the last couple of months. So early indicators are that it's working where I'm increasing the value and we'll make up for the cost. Would I make as much if I just raise the prices and didn't bring on the additional costs of paying for podcasts?

Andrew and other podcasters and things on those lines. Probably not. Again, the revenue maximizing thing for me would be to stay with Memberful and just write Stratechery. And it's nice and simple. Yeah. But number one, I've always been worried about getting stale. I know I have critics I hear about on Twitter who think I already am. But they're 0.2% of your audience. Well, who knows? They're very loud on Twitter, right? Number two, one of the things I'm so proud about with Stratechery is, obviously, I'm most well-known for Stratechery, but I'm so proud of the business model and that it exists. And the fact that Substack is out there and there's...

hundreds or thousands or how many people making their living doing this. And I feel responsibility for that in a very positive way. And,

I really want to get this working for podcasts. I think there's a similar opportunity. And so helping to help pioneer that is fun. Building software is fun, even though it's costing me a lot of money, as you might imagine. Producing new podcast is fun. Figuring out this bundle thing is fun. How do you cross link stuff? Like, you know, if you listen to Strictly episode, because we know who you are, because it's a unique feed to you, you could just add another podcast to

without having to sign in or do anything, like really smoothing out this experience of cross promotion. It's fun. And I think I'm fortunate enough that your techery has been successful enough that I can make choices that at least in the short term are more optimal for figuring stuff out and having fun, even if it's not revenue optimal.

And obviously there's upside. Maybe it'll end up being a huge thing and I'll make much more money than I ever would have just doing strategy. But I do feel very fortunate that I can make that choice in the short to medium term. Nice thing about having no outside shareholders. You're your own little Zuckerberg over there ruling by fiat on whatever sounds most fun to you. You owe no activist shareholders.

No, for sure. I actually thought about building a sub stack a few years before they launched. I actually had a team together and it ended up falling apart. But my big hesitation was always, I just wasn't sure if it would be venture scale. And from my perspective,

If you have the stamina and capability to produce regularly, subscriptions are amazing ability to sort of bootstrap. And again, you're asking people to pay for the regular production of content. It's actually a very straightforward transaction and can be sort of very sustainable and

How many of those are venture scale businesses? I think maybe not as many. And you're right. It comes with a bunch of compromises, comes with a bunch of trade-offs. You have to optimize in certain ways. And I think venture is a phenomenal thing. I think I'm not anti-venture at all, just anti-venture for me personally. I don't think it would make much sense. I like the lifestyle. So lifestyle business for me. You were talking to two venture capitalists who have a business which is structured the same as yours. So I love that we've had this part of the conversation because I was really curious. I mean, selfishly,

for us. I'm curious your thoughts on there are corporations that have large numbers of people that make products that are scalable. And then at the opposite end of the spectrum, there's being talent. You're a solo business, but your business is being talent in other people's productions. But the internet has enabled this whole new class of stuff like Strategery, like Acquired, like Not Boring, like what have you. How big do you think this third class of whatever it is we are can be? Is that part of what this experiment is?

For sure. Like I'm not passionate about like Meta's business prospect. I definitely have takes on it. You know, I think that's the other company I've mostly been pretty right about over the years, along with Microsoft are probably my two longstanding best calls, but I'm not like waking up in the morning, killing myself. Like if their stock goes up or down, I don't really care. You're not going to go work at Meta. I'm not going to work at Meta. I think that's a pretty safe. I mean, if Meta wants to buy me for a hundred million dollars, I guess I'll earn out, but you'll rest invest. Yeah, I will rest invest. Yes.

I mean, Mark, if you're listening. But what does get me super excited and I am really passionate about is this completely new arena of possibilities and I think new jobs that are made possible by the internet. And actually, one of the reasons I actually am in general favorable towards meta is I think they're an essential component in the broader ecosystem of niche businesses. Because if the entire world is your audience...

How does the world find out about you? I'm lucky because I produce content that people want to talk about. And so they share it for free on Twitter, right? If someone makes like a really cool new piece of clothing or accessory, like people aren't going to talk about that on Twitter. Like you need a way to advertise. And I think that's what Facebook advertising has always been the best at. And I think it's really valuable. And so I am in general, a big defender of that because it actually is in line with what I am personally very passionate about, which are the economic opportunities that

made possible by the internet. What the internet does do in industry after industry, I think this applies to creative talent as much as anything else, is number one, there's always a barbell effect. You're either very large or very small. You're very large, you get scale, you get aggregation effects, and then you can make massive investments or acquisitions knowing you can immediately feed that to hundreds of millions or billions of people and get a payoff, or

Or you take advantage of the internet and open source software or whatever it might be or different platforms and your cost structures are basically zero and you only need a thousand true fans. Like the thousand true fans was 100% true. That was my guiding vision and ended up being the case. And so if you're stuck in the middle, which all the old publications were stuck in the middle, they weren't big enough to get aggregation effects.

Their cost structures were way too large to handle a fractured audience. They were all in trouble and got a lot of traction about saying they were doomed, and then they were doomed. Right. Like you were saying, that's why they hate social media. But if you're on the low end of the barbell like us, you love social media. No, that's right. It's an amazing asset. So that's number one. The internet has its effects. Number two, the internet has winner-take-all effects in specific markets. So it's going to be hard for...

for someone to be a generalist tech and media analyst and do what I do. It's possible. I mean, I think there's people that are very good, but just because I got there first. But that doesn't mean there's only one

role available. There's a guy, Neil Seibert, I think. Oh, it's like an equity research department in a bank. Yeah, he writes about Apple. And he very much mimics his business after me. He was pretty early too, so he actually did a lot of stuff himself. He's done a really great job. He's been an independent Apple analyst for eight years or something like that, which is fine. He writes about Apple every single day. Believe me, there are people that want to hear about Apple every single day. And so that's an example where it seems like we're doing the same thing, but we're

But we're in different markets. This is what the internet makes possible is the key to success on the internet is you want to be the biggest fish in the pond. But the success metric is not competing with other fish. It's finding your own pond. The opportunity is broad. It's not deep. Like in each pond, there's probably only be one or two fishes that survive. Right. But there's an infinite number of potential ponds.

You can define your pond in very specific parameters. I'm still surprised there's not someone that writes about Amazon every day. Like it's a massive sprawling business. There's so many things to write about. I think you'd probably make the same deal with Google. Casey Newton basically writes about social media every single day. It's been Christmas for him over there because of the Twitter stuff.

But that's fine. I feel guilty writing about Twitter too often. It's very exhausting. I cover lots of other stuff. There's other things to talk about. And so I'm writing about it more than I want to. Particularly yesterday, I really didn't want to know about Twitter. Obviously, Twitter taking on Apple is going to be, everyone's been anticipating it. Right. It's the Super Bowl of Ben Thompson fans. I kind of have to write about it, right? Right. But Casey, like that's the expectation is that he writes about social media. So he's written about Twitter every single day for like a month.

And that's exactly what people want. And I'm glad he exists from my perspective. Hey, if you want Twitter coverage every single day, go read Casey. That's a great thing from my perspective. And I think that sort of defines this market. And so number one, I'm really proud that this business model for newsletters exists. I think it should exist for podcasts. And I think part of that is just figuring out the mechanics of it. Like how do you market? How do you grow stuff? I haven't done a good job marketing my paid podcasts. I would say other than leveraging checkery.

But that's something number one we want to work on. Obviously, there needs to be some video stuff like there should be, you know, what's the ratio of free stuff to clips to snippets, things on those lines. We're actually experimenting that more with Sharp China and Sharp Tech, where even if you're on the free feed, you're getting more clips and snippets. Also, I think that the technological aspect is important, right?

It's funny, even free podcasts. It's like, oh, we're going to have a guest on. Go listen to his podcast. Go to your podcast player, search for XYZ. And it's like offloading this huge number of steps to the user, hoping they follow through and do it. Whereas we've built something where go to your show notes, click the link,

Boom, it's your podcast player. Like, I think that's something that's going to be important to sort of, you know, the sharing stuff is really tricky because people don't share podcasts naturally. So I want to figure that stuff out. And it's gratifying again, not just because it's fun and new and different than my day job, but also that is my passion. My passion is these sort of businesses, the internet, not just podcasting.

destroying old business models, but making new ones possible. And not just the big guys, but for individuals as well. And so I'm very grateful and feel very fortunate that I get to do both. Yeah. I want to switch gears and ask you about aggregation theory. There's a multi-pronged question here. So the business that you're running is far, far, far superior to a thing that I'm sure you've been asked a zillion times about, why don't you write a book? Right.

You make $150 a year per subscription. At least that's what I pay for the full bundle, I think. No, you got a refund and a discount, $120. All right. Then I pay $120 a year. Yeah, dithering is now wrapped into a strategic subscription. So yes, I should be clear for anyone listening, you got a credit on your subscription. We did not issue refunds, but you did get a credit. But that is to say, I have no idea what I'm paying. And there's some segment of your...

listeners that are so wildly price insensitive about what you do that it doesn't matter. So it's probably hard to price discriminate on them. Yeah, no one should look to me for pricing strategies because I know it's not optimal. But anyway, my quick math was if you did $150 a year, and I know it's 120, and you assume some five-year lifetime on customers, and you compare that to what you would make selling somebody a book once, which is what, $20 times 7% goes to the author. It's literally 500 times

more revenue to you to do what you do versus writing a book. And on the other hand, there's something that you've become known for in aggregation theory and some other topics around the edges of it that sort of deserve a canonical work. It's sort of the modern Porter's Five Forces. It deserves a canonical notion rather than something that's been edited and revised and attached and rethought through. So have you...

thought about what form canonical Ben Thompson topics would take. Yeah, yeah. Aggregation theory is the obvious one. I think the time to have written that book would probably be 2017. I mean, I was writing about the ideas of aggregation theory from the very beginning. It's hard to imagine, but back in 2013, again, like back then people thought Apple was doomed.

People thought the internet was inherently decentralizing. Oh, it was not long after the Facebook IPO and it was a disaster. Yeah, Facebook was doomed. Well, then Microsoft was the other thing. I was able to come out of the gate with really four takes that were provide tons of content. Number one, Apple's not doomed. They're actually going to be doing very, very well. Number two, the internet is centralizing. It's not decentralizing. Everyone's understanding the dynamics are completely wrong. Again, today, everyone understands that, but it was

believe it or not, very controversial a decade ago. Number three, this is what Microsoft should do. Like there actually is a clear path forward. They're not doomed to irrelevance. And then number four, Facebook is...

way more dominant and valuable than anyone thinks. And so that was, again, like I said, lots of low-hanging fruit to sort of pick. Well, it's easy. You're being self-deprecating here, obviously, but I think a big part of the reason this is behind Ben's question to you of, you know, it deserves canonical work. The reason these are accepted truths and realities now is in large part due to your work.

It is a bit of humbling to be a writer because I think people would understand all those things had I not written it. I think at best they understand that maybe a few months or at best a year or two before it becomes common knowledge. And that's just the reality of the game. The edge you can provide is usually measured in sort of months or years or a very low number of years. I do think Irrigation Theory should be a book. It was probably again more pertinent at the height of all these sorts of things. Maybe it's still pertinent now, but...

Number one, there's just a logistical issue. I write every day. And to your point, I make way more money writing every day than I would writing a book. So that's number one. Number two, there's a fear factor, which is people think I'm very productive, but I in reality have daily deadlines that spur that productivity in the absence of those daily deadlines would terrify me in terms of a book.

And number three, there's a second fear factor, which is a book is frozen in time. And if I were to have written an aggregation theory book a couple years ago, I probably would have centered it on Netflix. And that ended up being wrong. It was wrong in another way that I wrote about where content is super important. That's how you break away from aggregators is having high diversion content. And I had the balance wrong between Netflix's aggregation effects versus the power of content. And so...

I'm very fortunate. I didn't write that book. Whereas now I was still wrong, but I have the medium and ability to come back and say, well, I was wrong. This is where I was wrong. What does this mean for discovery time Warner? What does this mean for Disney? What does this mean for the other platforms? So that is a fear factor. And then number four, I think there's an aspect. Yeah. Maybe it deserves a treatment, but yeah,

So techery is very much of the internet. I think a nature of the internet is it's transient. It's not permanent. Again, another thing people got wrong. I think actually one of the biggest mistakes Twitter made, and it's understandable. No one could have seen this at the time, but Twitter should have had disappearing tweets from day one. It should have always been a just in the moment sort of social network. I think it would be a much better product. Honestly, I think they should still do it now. People experience it and think of it as a in the moment product and then are stuck with this archive that is

induces fear, induces ruin, and it reduces the facade of what it's like to be on Twitter. That's a big reason why Twitter is not what it used to be because now people are scared. Well, to the aggregation theory point, I think I've heard you make this argument before, but articulating it the way you have over the years and revising it on Stratechery,

is actually a better product than if you were to have written a book five years ago. Oh, I so disagree, David. It makes it really difficult to explain what it is to people. I'm like, okay, if I'm on the board of a company and I'm trying to explain to them that they need to reframe their thinking and think about aggregation theory, if someone's like, what's that? I'm like, I actually don't know what to send you.

Like, read these things in this order to watch this guy contradict himself and say what he got wrong and then sort of take away what you think the modern interpretation is? I think you're both right. There should be set-in-stone treaties. Honestly, there's just a matter of priority. I mean, I think, again, it would be good to share and point to this thing and go read this. To be clear, I'm in the middle of massive self-resolvation right now for explaining why this isn't the case, so take everything I'm saying with a grain of salt. Ha ha ha!

And the other thing is I'm just having more fun and more interested in building software and figuring out podcasts. And I would like to think, oh, a book is just really about my ego and putting it out there. So I'm not that sort of person. I just want to give back to the creative community. That's why I said I'm definitely in rationalization mode. You're definitely rationalizing. But no, I should write a book. I just haven't. I don't know if I ever will, but I agree that I should have by now written a book, but alas.

One last quick question on aggregation theory. Obviously, you were building up towards it, even as you said at the time, I think. Was it one or two years you were doing Stratechery before you wrote the first post? This is actually an example of the power of branding. I wrote articles that were basically aggregation theory well before I wrote aggregation theory. But giving it a term and coining it is what made it stick. And actually, some of those articles that I wrote before, there's one I think it was called Economic Power in the Age of Abundance.

Doesn't have the same ring to it. I think it's a better articulation of our irrigation theory in many respects. I wrote it in 2014, I think. And yeah, number one, doesn't have a good ring to it. Number two is one of my least read articles up to that date. Just no one got it or understood what I was talking about.

And it's a weird thing as a writer. Like there's things that I'm thinking about now or that I know I will write about, but it's not the right time. And that's something you just learn over time where you can be too early as a writer to, this kind of goes back to like, I didn't know how to communicate. Right. Like I remember I was in, um, there's some media at Microsoft and we walked out and my manager's like, uh, Ben, you're the only person in the room that actually understood the issue and what we should do.

And absolutely everyone, no one understands what you're talking about and people are kind of annoyed at you. And he's like, the problem is we want to get to H, but everyone in that room is on A. And you cannot talk about H. You have to talk about B and then C and D. Is this JR? It is JR, yes. And...

It's funny because that applies to writing online too. Number one, sometimes I'm wrong, so it's good to wait or to be sort of sure. But number two, there's an aspect where there's just the right time and place for things. There's always stuff I'm sort of thinking about. And one thing I've learned is it's definitely better to write about something, a current event, which is bad from a book perspective because I'll write an article that actually has some key insights, but it's talking about some event that happened like 2015, which no one remembers or cares about.

But in the nature of my business, that is actually much better for helping people grok it, get it, spread it, share it, those sorts of things. So there is a bit where the incentives of my business do work against timeless pieces in a certain respect. Okay. So when you hit publish, though, on aggregation theory –

Did you think it could be what it became? I did know, you know, I thought about the name. Obviously I was inspired by Clay Christensen disruption theory. That was sort of one of the things, but I had written a number of articles about

going up to that, that we're clearly building to that point. So there's one about Airbnb. There's one about Netflix. There's one about just websites and publications. And then Aeration Theory was sort of short and sweet because it was basically distilling what was in those previous articles into one thing. I felt very confident I had a thing and I wanted to have a definitive piece that was doing what it was and needed to have a name. So that's what that was.

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You do all this analysis on companies, and you have this very enviable position of getting to comment on and critique their strategies after they announce them or an event after they do them. And I want to play a game where I give you a company, and I'm curious, either if you were the CEO or you were giving advice to the CEO, what would you do strategically?

And I think an interesting place to start, because we've talked about him a bunch on this episode, is Meta. You are the new CEO of Meta. What do you do over the next five years? Well, I think Meta is actually doing a fair number of things that they should now. The Apple changes were very devastating, and they're structurally devastating. And so they deserve a significant haircut on their valuation because of that.

But I also think they were moat enhancing in the long run where I questioned whether any other company is ever going to build a top of the funnel advertising product that will be competitive with meta, assuming they can keep their audience.

It appears that they've done a good job limiting the sort of the TikTok threat. TikTok's growth has sort of flattened out over the last few years. So I think they're actually in good shape. What I do worry about is this is a company that's always been growing. It's really hard for those companies to shift to more of a scarcity mindset. I mean, they weighed off 11,000 people, which only brings them back like nine months.

They probably need a lot smaller, but it's also very destructive to company culture and morale. Do they still have the people that they need to pull that off? Those are probably some of the bigger questions. And obviously any aggregator is dependent on having that audience. But I do think that the network effects of their products are still underrated. I mean, everyone has in their head that they're shrinking and actually every product they have is still growing, which I think is underappreciated. So number one, I think they're kind of broadly on the right track. Number two, I would...

acquire Shopify and I would take the FTC and Justice Department to court when they sue to stop it. I think they need to close the loop on e-commerce and advertising. And again, I think that'd probably be bad generally, but I think it'd be very good for meta. So I would do that. As far as the metaverse stuff, I think it's a bad idea. It's very hard to talk about the metaverse because it's like, what are the prospects versus is it X, Y, Z? I do think that

It's not just a bad idea because it's taking so many resources and attention, I think, from Mark Zuckerberg. But also, I just don't think innovation is necessarily born of mass expenditures in large companies. We sort of skipped over a period of experimentation and ecosystem building that in the long run perhaps would be consolidated into a couple of companies. But instead, it's just one monolith sort of trying to brute force this sort of bit and

And the reality is, is Facebook is a services company. It's a social network and everything about their strategy works against that to succeed. They not only need to sell headsets, they need to sell headsets at sufficient scale and into friend networks such that people can social network on the headsets. And so their place of winning is even further away than I think people think.

And so I don't think strategically it's the best thing for them to be doing. And I've been pretty anti them doing from day one. They bought Oculus. I said it was bad. And again, it's very hard to distinguish between, well, what are the prospects of this?

versus zooming out. Should they even be doing this? But I think the market is overly down on Meta in part because the branding was too successful. This is still a powerhouse in social media and advertising. And the amount of money they're spending on the Metaverse is all things considered not that much. They're still, you know, have a $5 billion profit a quarter. So yeah, I would double down on what they are and I would consolidate not acquire Shopify and spend three years fighting out in court because I think the payoff would be worth it. All right.

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

Not really. It's a very complicated situation, to say the least, for lots of reasons, not just political but technological. I think probably doing what they're doing. Broadly, it makes sense. Yeah, I don't know. I've heard a ton about them and where they are. And...

You could talk about maybe some of the pricing stuff. They were pretty slow to raise prices, even in the face of shortages. They've been much more aggressive about that over the last little bit, which seems reasonable to me. It is opening the door for when and if a competitor comes along to undercut them in that regard. I think they're probably blessed by the weakness of their competition, but the long-term risk is obviously number one, just the geopolitical risk. The reality is, is TSMC,

a core to their model, essentially to the model of being so flexible, being so adaptive of incorporating new equipment, of accommodating hundreds and hundreds or thousands of customers is all their engineering is in one place. And that place is Taiwan and that has geopolitical risk. And from TSMC's perspective, I think that's just a reality you can't really hedge against that. And so

If anything, yes, they're building these fabs in the U.S., I think, largely for political reasons. And sure, do that if the Taiwanese government feels that's what needs to be done to keep the U.S. on board, keep the U.S. happy, build a couple in Japan because Japan is a future ally. But I think you do have to sort of double down on Taiwan and roll the dice that nothing happens. I don't think it's a hedgeable risk, the China risk. The other risk is the Moores Law sort of running out. I mean, EUV has...

Another five, six years, and then it's not super clear what's after that. How can you get smaller than one, Ben? You just have one nanometer. Yeah, there is visibility to under one, but... Isn't it like two molecules wide or two atoms? It's very small. I'm not sure if it's quite that small, but it's ridiculously small. So obviously, I would imagine they're investing heavily in... They've been doing this, like advanced packaging, like multiple chips on the chiplet sort of approach. AMD is doing that. Intel is now doing that.

And getting really good at that stuff is going to be super important. I mean, actually, one thing I do like about the Japan investment is their trailing edge. I think they're 28 nanometer fabs, which is really where China is making a lot of progress because there's no real economic reason to build trailing edge fabs. The whole idea is you build it once. It's long since depreciated and you're still making money selling cheap chips out of that fab. But I don't know. Maybe there's something in the trailing edge. More things need chips and they don't all need the leading edge.

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

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

Is Amazon a day two company? And then the same question, if you were to become CEO, what would you do? I think there's an analogy to like real life. When you're young, you're like, I'm never going to become an old fogey like those old people. And

And then you get old like me and the people around you that are trying to still be young are just kind of pathetic. And actually being old is kind of great. My kids are fairly independent. They can take care of themselves. I can going out with friends, you know, obviously I have more means than I did when I was younger. And I'm a big advocate of just in general, living in the present and embracing who you are and where you are at your life stage.

And I think that's good personally. And I think you're spot on. That's also true from a company perspective. You can't be a startup forever and it's bad too. I wrote about from day two to one day or something about Amazon when Bezos sort of like reasserted control a few years ago. I was like, no, we're going to do one day delivery. And there's been too much time spent trying to squeeze our suppliers for profits and margins. And no, we need to get back to this. And in retrospect, that was the situation

seed of Amazon's kind of disastrous last few years, which was they dramatically overinvested in their logistics network. Their cost structure got completely out of control. They overhired. And it's probably a good example. And maybe it was a precursor of what we saw with Jeff Bezos personally of sort of reintegration

losing track of where you are in life and what actually makes sense and trying to be young forever. So I agree with you broadly with that bit about Amazon. Do you think that applies to AWS too or is that different? Realistically, the challenge for AWS is...

Number one, what's going to happen with the real dry up in startup formation and easy money in that space, a lot of which went to Amazon. They're sort of the default choice for startups. Number two, Microsoft's sort of bread and butter has been

look, you've been working us for a long time. We're going to package it at like suddenly you're not just paying for on-premise windows. It also includes Azure credits and we're going to be able to attribute that to our numbers. And now you can sort of move pieces over and we'll help you do it, which I think is exactly what they should do. It's been a very smart strategy, but I think that the issue in any market is,

It's like me, all the initial easy stuff is like, there's lots of low hanging fruit, but then the largest part of the market is still the part of the market that sort of always been there and isn't necessarily fast moving. And Microsoft is just really cleaned up in that market. We're the known entity. We can help you move over. And I think from Amazon building up the support capabilities and rationalizing their offerings. I mean, it's weird because Amazon benefits because they have so many features, right? AWS is the Microsoft word of cloud providers, right?

In that they have an absolute absurd number of features and the interface is pretty terrible. But every single customer is completely dependent on one of those features. And if that feature is not there, then they can't go away. And that actually ends up being their moat.

We were researching the episode and we were talking to longtime AWS veterans to sort of understand the mental framework to talk about them today. And that became very clear that AWS doesn't deprecate features. Amazon will kill stuff, kill a fire phone, kill local delivery for food. They'll call all kinds of stuff. But in AWS land, if a customer is depending on something, AWS's long-term enterprise value is determined by...

customers believing that Amazon will continue to support them forever. They don't deprecate services, even when those services end up flipping upside down on the unit economics and they have to maintain a costly service that they never figured out how to optimize. Right. And every time a customer does something custom for AWS, it's a lock-in, right? I mean, everyone...

fantasizes about this world where, you know, like every time it comes up, whether it be, you know, containers or you have all these, you know, IBMs is like talking about doing this when they acquire Red Hat. We're going to make it so you can be cloud agnostic, right? Right. And then it just turns out that, well, cloud agnostic, but this one little piece of me would be better than this is that service, right? And then you wake up and, you know, of course I wanted Passport to be cloud agnostic. Passport's not moving off AWS like anytime soon. I can promise you that.

And so, yeah, it's the Microsoft strategy. Amazon has a lot of old Microsoft people in it. A ton. Yeah.

It's really interesting to consider like the different cultures between Seattle and San Francisco. Seattle just is a platform town. Like Microsoft was the originator. Microsoft's always been the best platform administrator. All that backwards compatibility that you want to make fun of from a user perspective is essential to building this foundation that people trust and that locks them in. And they're happy to be locked in because they don't want to go change it anyway. Right. And,

Amazon does this with AWS. Obviously, Microsoft is doing that with Azure. And the Silicon Valley companies are just very, very bad at that, right? Like, no one trusts Google, right? No one trusts Facebook. Silicon Valley is much more consumer-focused. Even the SaaS companies, those are consumerized enterprise technology. The whole idea is...

don't worry, you never need to pay for an upgrade. We're upgrading on the back end all ourself. But that means like they will remove stuff because it's one thing to remove an API that a piece of software depends on versus removing a feature that your customers are annoyed, but it's not actually breaking like what they operate on. And it's just pretty interesting to see those differences, which I do think there's a geographic aspect to it. I mean, geography is what saved Microsoft because, again,

When Microsoft was in the dumps, if they were in Silicon Valley, all their best talent would have left and gone to work for other companies. But all their best talent had kids, they had families. They didn't want to work for Amazon. Those people are maniacs. And so they stayed at Microsoft and they were miserable and they bitched and they wrote snarky blog posts about the company. But then when Nadella came in and sort of refocused the company, they had this foundation of talent that the HPs of the world, the Yahoo's of the world had long since lost. Right.

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

Well, I mean, if you go to Shrekery, you can click any of the podcasts that are on the side, you can subscribe. I mean, it's funny, like the, how does the funnels work, right? Do you just go to Shrekery and read and follow and I'll lure you in? Well, you go direct. Maybe we'll put a link in the show notes. Yeah, yeah, yeah. We use the show note link.

$12 a month, $120 a year. You not only get Stratechery, but you also get the update. You get Stratechery interviews. We didn't talk about interviews. That's actually been an interesting evolution of Stratechery. Yeah, you're a primary source now. What's going on? Well, that was a challenge, right? Because I started out, I had no access. I didn't know anyone.

And in some respects, I miss those days. I still remember the first time I had a company very angry at me and calling me in and it was Twitter actually, because I had teased out of their results that their direct response program was failing. This was like years ago and they got super mad in my next update. I'm like,

Well, it's possible this, and I kind of like walked it back a little bit. And the next quarter came out and they're like, yeah, we're going to need to, I don't know if they took a write down, but it was a big thing. And they said like, it's not working out. And I was totally right. And I was so mad that I kind of walked it back a little bit, but I'm glad it happened because when I started out, no one cared. No one paid any attention. Now people care and sort of paid attention. And so I'm glad I was right on that one because it sort of gave me courage going forward. But one that's interesting about feedback from companies is,

Everyone like from COO down or VP down, they always push back and they're like, no, you got this wrong. You understand XYZ. I never get pushed back from CEOs, even when I'm wrong. And what I've come to realize is that

CEOs are surrounded by people telling them what they want to hear. That's their incentives, right? The reason why the VP is attacking me is because he's worried I'm going to make the VP look bad in front of the CEO, right? That's the concern. Whereas the CEO is like, they're so thirsty for any sort of feedback from

that's outside of that rotten incentive structure that's just inherent in any corporation. And so sometimes they know they have more information than I do. They're aware that there's things that I don't know, but they're grateful to have sort of the different point of view. And so over time, I transferred from having no access to having total access, right? I can reach out to basically anyone. And just for people who haven't, let's just go through the lineup. You've had this year Mark Zuckerberg on, you've had Jensen from NVIDIA, you've had, I'm trying to think of some of your early big ones. You had Rich Barton on from Zillow, and I think he credited you with

You convinced us to start buying houses. You convinced us in the open door. I don't know if I should apologize to him or what. So I was trying to figure out, like, what do I do with this access? I didn't want to become a reporter. And I thought, you know, it's just important to me personally for my own pride that my takes are my takes. I'm not getting fed them from someone else.

And so what I ended up going with was interviews. And part of this was a product bit I had. Now you can listen to check your via podcast. So if I had an interview, there's a good reason to try the product out to get it. So there was, there was a product angle, but also I'm like, my whole take is I'm not exclusive. I don't have exclusive information. What I'm selling is my personal analysis. And so if I'm talking to a CEO, I'm,

I don't want the sense to be Ben's just parroting what a CEO says. So if a CEO wants to talk to me, it has to be on the record and it's going to be the full transcript and the full interview is going to be available to my subscribers. And I...

I want my subscribers to have all the same information I do. And so when I write, it's me, it's coming out of my brain. It's sort of unique to me. And I think it's worked out pretty well. It's a change. Like instead of me writing four days a week, I'm basically three days a week plus an interview. It's not just CEOs. I think actually often the better interviews are with like other analysts or people in different spaces. This also solved the, how do I cover startups? Because I,

Part of not being a reporter and being independent is public companies have to disclose a lot of data and they have earnings calls and they have presentations and things along those lines. With a startup, you don't have access to very much of that and you don't know how much is blowing smoke, how much is not. So now I am doing like interviewing founders,

where I say up front, look, this is completely subjective. I'm not going to verify what they say. I'm not going to do X, Y, Z. It's their chance to tell their story, what their business is going to be X, Y, Z. And so that's a way to sort of cover that space given the limitations in the way Shetekri operates.

And so that's one of the products. It's not a standalone thing, which I think is better. It's still part of Shitechery. I thought about should be a standalone product, but I think there's an aspect of, I don't want there to ever be any sense that that's a driver of my bottom line. I want to be able to say that I think the metaverse is probably a bad idea. That's really tricky, right? Like, I mean, the Mark Zuckerberg one, obviously it's a huge get. I think that his interviews with me are, I'm biased, but I think are light years better than he does anywhere else.

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

But then it was really annoying because Facebook had that bad earnings call and their stock went down. And I'm like, crap, I really need to write an article about why this reaction's unwarranted. They're actually fine. It's going to be like three weeks after I just had Mark Zuckerberg on. It's going to be a relatively positive article. But that's like where you build up your reputation over years, right? And sometimes you can't always be depositing. Sometimes you do a withdrawal. Me writing...

Meta myths was a withdrawal on my reputation. Yes, it didn't look great that I just got an interview with Mark Zuckerberg and I wrote a positive article, a contrarian positive article about meta three weeks later. But I hope I've built up enough sort of credibility with my audience over the last nine years.

that they believe that, no, that I would have written that article with or without that interview. You're also unabashed about your incentives. You're like, look, everyone, my incentives are to have as many people subscribed for as long as possible. My incentive is not, I

I think I'm going to be Mark Zuckerberg's best friend. So I'm really hoping that he invites me on his PJ and we get to hang out. Yeah, well, it's tough because like I said, I'm super positive on Meta's advertising product because that's aligned with my passion. So I do find the Zuckerberg ones the most challenging just because I generally have a contrarian opinion about Meta overall, and it's generally positive. So I'm super wary about that.

I also feel like I get more interesting stuff out of him than most other interviewers. So I want to do that. And sure, it's a feather in my cap to interview him, but I definitely don't want that to ever be perceived as... The reality is interviews don't drive subscriptions. And so I do it because, again, I want to push the tech product. I want people to use my podcast product. And then...

It's a different kind of work. As you guys know, preparing for interviews is a lot of work. It's also different than necessarily like writing an article. Oh, for sure. We could not be writers. Yeah. You can't stay the same forever. You can't be like the startup forever, right? I can't be the guy on the outside forever, which I was when I started, like with my chip on my shoulder and I'm just some dude in Taiwan giving his opinions about Apple forever.

that worked for me and I'm not that person anymore. And it'd be sort of dishonest to pretend that I am. The reality is I probably have the best access of anyone in tech. I can literally contact basically anyone and get access to them. And it's more honest to my product and what I do to lean into that, I think, than to pretend it's not the case. All right. So listeners, click the link in the show notes. Go experience the Stratechery cinematic universe, not just a guy in Taiwan giving his opinion on Apple. More coming, hopefully. Love it.

With that, after you finish this episode, come hang out in the Slack with 13,000 other smart, kind, clever, curious members of the Acquired community, acquired.fm slash slack.

get some sweet acquired merch. We now officially have live the ACQT. We've got Market Size Unconstrained with the original AWS logo. Oh, we got to do a collab with Ben on an acquired Stratechery t-shirt for the merch store. Oh, that's a good point. I have a Stratechery t-shirt. I almost wore it for recording this episode. I also have a framed aggregation theory. I didn't want a fanboy in front of Ben, but on my desk, I have a framed aggregation theory illustration. So...

I don't know, check out Ben's merch store too. We'll put a link to that in the show notes. But the other great acquired merch that dropped a couple of weeks ago is the Benchmark T that in the Benchmark style, of course, says there's always room at the top.

If you want to listen to the Acquired LP show and get more Acquired crammed in before the holiday season, got some good stuff, search Acquired LP show in the podcast player of your choice. And with that, listeners, we hope you have a wonderful holiday season. I believe we still have one more episode coming after this. Oh, yeah, we've got something special coming. We've got a little fun holiday Acquired present for everybody. Yes. And with that, listeners, we'll see you next time. We'll see you next time. ♪ Who got the truth? ♪

Is it you, is it you, is it you who got the truth now?