Episode 23: NeXT (Live show at the GeekWire Summit)

[0] Okay, listeners, Now is a great time to thank one of our big partners here at Acquired, Service Now.

[1] Yes, ServiceNow is the AI platform for business transformation, helping automate processes, improve service delivery, and increase efficiency.

[2] 85 % of the Fortune 500 runs on them, and they have quickly joined the Microsofts at the NVIDIAs as one of the most important enterprise technology vendors in the world.

[3] And, just like them, Service Now has AI baked in everywhere in their platform.

[4] They're also a major partner of both Microsoft and Nvidia.

[5] I was at Nvidia's GTC earlier this year, and Jensen brought up ServiceNow and their partnership many times throughout the keynote.

[6] So why is ServiceNow so important to both Nvidia and Microsoft companies we've explored deeply in the last year on the show?

[7] Well, AI in the real world is only as good as the bedrock platform it's built into.

[8] So whether you're looking for AI to supercharge developers and IT, empower and streamline customer service, or enable HR to deliver better employee experiences, service now is the platform that can make it possible.

[9] Interestingly, employees can not only get answers to their questions, but they're offered actions that they can take immediately.

[10] For example, smarter self -service for changing 401K contributions directly through AI -powered chat, or developers building apps faster with AI -powered code generation, or service agents that can use AI to notify you of a product that needs replacement before people even chat with you.

[11] With ServiceNow's platform, your business can put AI to work today.

[12] It's pretty incredible that ServiceNow built AI directly into their platform.

[13] So all the integration work to prepare for it that otherwise would have taken you years is already done.

[14] 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.

[15] And when you get in touch, just tell them Ben and David sent you.

[16] Thanks, service now.

[17] I feel very antiquated my use of text edit now that...

[18] That's where...

[19] Texted.

[20] Hey, next product.

[21] It is.

[22] It's unbelievable.

[23] There's so much still there.

[24] Chess?

[25] From next?

[26] Totally.

[27] The screenshot icon finally changed.

[28] It was that, like, big camera until Yosemite.

[29] And it finally changed that little thing.

[30] That was, like, the last asset remaining.

[31] Crazy.

[32] I know.

[33] Is it you?

[34] Is it you?

[35] Is it you?

[36] Who got the truth now?

[37] Is it you?

[38] Is it you?

[39] Is it you?

[40] Sit me down.

[41] Say it straight.

[42] Another story on the way.

[43] Who got the truth.

[44] Hello, geekwire.

[45] Hey, geekwire.

[46] Woo.

[47] Awesome.

[48] Well, welcome to episode 23 of Acquired, the podcast about technology acquisitions.

[49] I'm Ben Gilbert.

[50] I'm David Rosenthal.

[51] and we are your hosts.

[52] On today's episode, we will be covering a cornerstone of technology today.

[53] Apple's 1997 acquisition of Next.

[54] So, yeah, I think this is one that we've been talking about doing for a very long time.

[55] The original tagline of our show was technology acquisitions that actually went well.

[56] And we've deviated from that a little bit, and we've gotten into talking about all sorts of acquisitions, recent ones, ones we think didn't go well.

[57] But this one is super, super true.

[58] our roots.

[59] So excited to be here and talk about it today.

[60] Yeah, this is going to be a blast.

[61] And big, big thank you to Geekwire and John and Todd and everybody for posting us here.

[62] This is our first live show.

[63] So we're streaming on Facebook.

[64] You guys will get to see how the sausage is made.

[65] Thanks for sticking with us.

[66] And we will post it on iTunes and our website, Acquire .fm, once we edit it.

[67] With that, we'll dive in.

[68] So next, like Ben was saying, saying.

[69] I've been looking forward to doing this one for a long time as both devoted Apple users, both of us.

[70] This is really the story of how, you know, what I love about is it's kind of like, this is the hero story of Steve Jobs.

[71] He had initial success, the initial arc, and then he was off in the wilderness and next for 10 years.

[72] Then he comes back to Apple.

[73] And here we are today where Apple is the most valuable company in the world.

[74] How did this happen?

[75] And truly, like, a drama, right?

[76] I mean, you can't script this stuff.

[77] They've literally made three movies about it because of how kind of crazy this journey is.

[78] So we want to focus just today on kind of the part picking up at when Steve started next and how that went integrating that into Apple.

[79] Yeah.

[80] So we start our journey in 1984, a very good year.

[81] That was the year I was born.

[82] and Steve Jobs is still at Apple for the first time, the company he co -founded with Steve Wozniak.

[83] And what's going on at this time is the personal computer has happened, driven by Apple and the Macintosh.

[84] Apple's a public company, very valuable.

[85] But computing has entered a new wave, and we're in the era of the workstation at this point.

[86] And I had to do a bunch of Googling and Wikipedia because I really had no clue what a workstation was.

[87] I think there were a bunch of these in college in the computer lab somewhere and they were made by sun and I didn't really know what they did.

[88] This is dating us a little bit.

[89] Yeah, dating us a little bit.

[90] So workstations, it turns out, are really just personal computers on steroids for the time.

[91] Now they're like pitifully underpowered.

[92] But what kind of defined a workstation was a quote, 3M computer.

[93] And a 3M computer had one megabyte of memory, megabyte of memory, had a megapixel display that could display one megapixels worth of content, and it had a mega flops of computing performance.

[94] That is floating point operations per second then.

[95] And sometimes people added a fourth M to the definition of a workstation, and that was a mega penny, which was how much these things caught.

[96] which was about $10 ,000 a pop.

[97] So these are not personal computers.

[98] They're mostly used at universities for research, for scientific research, for technical research, large corporations use them.

[99] But these aren't the server mainframes of the old day.

[100] These are single -use computers that are networks that people can log into them, but one user uses them at a time.

[101] Gotcha.

[102] So that's what's going on.

[103] And Apple is kind of in a quandary because this is the computing era of the workstation, but Apple has no offering.

[104] in the workstation.

[105] They're a PC company, and just down the street from them, Sun Microsystems has been started from Stanford, Stanford University Network, hence the Sun Microsystems.

[106] And Sun is the darling of technology.

[107] They are the fastest growing company in America in the 1980s.

[108] They go from founding to $1 billion of revenue in six years.

[109] So Steve's still at Apple.

[110] All this is going on.

[111] He's no longer the CEO.

[112] John Scully is the CEO.

[113] Put this in context around times that computers have been released.

[114] This is right after the Macintosh is released, right?

[115] A couple years after the Macintosh is released.

[116] So this is 1984.

[117] And Steve gets put in charge of a new division at Apple called the Super Micro Division, and that combines the Macintosh and the Lisa, and his remit is to basically start Apple's entry into this workstation market.

[118] And so he's working on a top secret project.

[119] codenamed the Big Mac.

[120] And the goal, what he's trying to do is to take a workstation powered computer, a 3M, and get rid of the 4th M, and sell it for $500.

[121] He wants to put workstation -esque power into personal computers, make them affordable to everybody, students, and individuals.

[122] So that's what he's working on.

[123] And it's not, unfortunately, going so well.

[124] So it turns out, with the technology at the time, it's really hard to build these workstation computers with off -the -shelf components and cheaper components.

[125] And so Steve isn't doing too good a job, and Scully and the board are starting to lose faith in him.

[126] So in May of 1985, Scully, the CEO, and Arthur Rock, who was a venture capitalist on the board, be wary of venture capitalists out there.

[127] Says the VC.

[128] Says the venture capitalist.

[129] So they decide that enough is enough, and they're going to remove Steve from being in charge of this new division, the super micro division, and they're basically going to just have him, you know, be a figurehead for the company.

[130] So they sideline him.

[131] He actually, his office gets moved across the street to essentially an empty building, and he's still at Apple at this point.

[132] He's still the chairman of Apple, but he has no day -to -day responsibilities.

[133] And so he's, you know, he refers to.

[134] this as kind of being often, he calls it being in Siberia.

[135] And so for the summer of 1985, he's just hanging out.

[136] He has nothing to do.

[137] But he's thinking about this problem.

[138] And this goes on for the summer.

[139] And an interesting thing happens.

[140] So over the summer, while Steve's hanging out, he ends up meeting this guy named Paul Berg.

[141] And Paul is a Nobel laureate in chemistry.

[142] He's a professor at Stanford in the chemistry department.

[143] and he's won the Nobel Prize for Chemistry, and he complains to Steve, and he says, hey, like, we've got these workstations, you know, Sun workstations at Stanford, but they're really, really expensive.

[144] And I'm trying to teach all these undergrads about DNA and recombinant DNA.

[145] And there's no way, like, they can't get enough time on the workstations to use them to model DNA computationally, and wet labs are, like, even more expensive than that.

[146] They can't work with it, actually.

[147] And so they're having a really hard time learning how to do this.

[148] And so this just, like, doubly strikes the fire in Steve.

[149] Like, he can't handle this.

[150] You know, he sees this problem.

[151] And so he says, you know, we need to get these powerful computers into the hands of students to be able to learn and build new things.

[152] And we need to get the price point down, but we can't compromise on the power.

[153] Yep.

[154] So by the end of the summer, he's been thinking about this.

[155] He decides to resign from Apple and start a new company.

[156] to pursue this vision of finally getting the workstation affordable into and merging it with the personal computer.

[157] Now, of course, Apple's business had been selling into education, not necessarily into these universities that needed these for super horsepower reasons, right, of doing a lot of really complex stuff.

[158] Selling the students, selling to computer labs for undergrads and high school students to use.

[159] That was a big part of their business.

[160] Feels a little competitive.

[161] So, here's what happens.

[162] September 13th, Jobs resigns, and there have been books written about this in movies, all of which tell slightly different stories.

[163] So here's his best we can figure out what happens.

[164] Jobs resigns on September 13th, and he tells the board he's going to start a new computer company, and he's going to take several people from the Super Micro Division with him.

[165] Those people are Joanna Hoffman, if you saw the Michael Fastbender movie.

[166] This is Scarlett Johansson, I think, plays her.

[167] she's one of the stars of the movie Bud Tribble George Crowe Rich Page Susan Barnes Susan Carey and Danil Lewin So he takes these employees with him And Apple Board says Okay Two weeks later they sue jobs For two things One stealing trade secrets from Apple And employees And two a breach of fiduciary duty As the chairman and board member of Apple Basically resigning and then going and starting a new computer company.

[168] So absolutely wasting no time.

[169] I mean, for anyone who's been in these environments, a lot of times they drag on and on and on and years later, get a cease and desist or things like that.

[170] This is immediate action.

[171] Immediate action.

[172] Like, company Steve founded two weeks later, boom, lawsuit that Scully hits him with.

[173] And this is one of the things that just totally destroys his relationship with Skelly because it's unclear that, like, it was not good before then, but then he sues him.

[174] And so Steve gives this interview in Newsweek, which is awesome.

[175] We'll link to this in the show notes.

[176] This is right after he leaves Apple.

[177] And he says in it, he's asked about this, and he says, it's hard to think that a $2 billion company with 4 ,300 plus people couldn't compete with six people in blue jeans.

[178] Thus is the classic startup story, right?

[179] Classic startup story.

[180] So they eventually, they pretty quickly settle the case.

[181] And the terms of the settlement, they settle in January, 1986, are that Next, the new company Steve is starting, cannot compete with Apple.

[182] And Apple gets to review any products that Next makes and releases before Next releases them, and if they determine them be competitive, then they can sue again.

[183] So Steve's okay with this, but he's just had enough.

[184] In February, he sells all of his Apple stock except one share so that he can still go to shareholder meetings.

[185] Such a Steve move.

[186] So they get underway and Steve's just had this, you know, wild experience at Apple and, you know, he's much ink has been spilled on this.

[187] But he decides he really wants to do things his own way this time, you know, not going to be beholden to an external CEO, not going to be beholden to a board.

[188] So, so what does he do?

[189] He spends $100 ,000 right off.

[190] Well, first off, he puts $7 million of his own money into the company to get it started.

[191] Yep.

[192] And he spends $100 ,000 right off the back.

[193] to get a really famous graphic designer and brand consultant.

[194] Paul Rand.

[195] Paul Rand.

[196] To come up with the name and the branding and the logo of this company.

[197] And Paul delivers a 100 -page brochure naming the company next, all capital, except the lowercase E, which stands for education, and coming up with the logo, which is...

[198] At an exact 28 -degree angle?

[199] At an exact 28 -degree angle.

[200] So the next logo is rotated at precisely 28 degrees.

[201] Now, for a lot of people who have commissioned logo work and kind of brand books before, a lot of times there's an iterative process where you get options and you review and you pick from one of the three, things like that.

[202] This was, you know, Paul Rand goes away into a cave, comes back with one fully formed idea and says, here you go.

[203] 100 pages on this one idea.

[204] And the 100K was delivered out front.

[205] Yeah, insane.

[206] But Steve loves it.

[207] So the second thing he does.

[208] He rents office space and you know like they're like a brand new startup like you're going to get a scrappy like you know co -working space like no not for Steve he finds the most expensive real estate in Palo Alto rents a pretty big office with a staircase in it designed by IAM pay the famous architect and and and that's their first office later on they moved to Redwood City into a whole complex designed by IAM pay and they're like Ames chairs everywhere and like $10 ,000.

[209] leather sofas and whatnot.

[210] So that's what he does on setting up the company.

[211] He also decides that he has some new management theories that he wants to test out.

[212] So the company is not a company.

[213] It's a community.

[214] And there are members of the community.

[215] There aren't employees.

[216] This sounds very like Valve like, you know, before Valve.

[217] And so there, everybody can see each other's salary in the company.

[218] There's complete transparency.

[219] But that's not that interesting because there are only two salaries in the company.

[220] If you joined before 1986, you made $75 ,000 a year.

[221] If you joined after 1986, you made $50 ,000 a year.

[222] That's it, everybody.

[223] It's really interesting to think about this in the context of Apple's secrecy now.

[224] This was jobs sort of laying out, okay, we're going to give this a chance.

[225] We're going to let everybody know everything about other employees within the company, about all the secrets of the company, and we're going to see if making them kind of community members allows us to not be so tight with our secrecy.

[226] And kind of at the point that that was violated, which of course it's going to happen when you start to hit scale, that's when he switched modes and said, nope, the rest of the time, you know, when we go back to Apple, this is going to be an entirely top secret, very controlled top -down organization.

[227] Yep.

[228] And what's, Super, he talks a little bit about this.

[229] Like, he'd just come from this political ouster at Apple, and he's trying to avoid politics.

[230] And that's like the whole genesis of why he does it this way.

[231] Obviously, it doesn't really work, but interesting that, you know, he does this experiment.

[232] And for a long time, Next did eventually change this and had different salaries and everything.

[233] But he's super idealistic at the get -go.

[234] And so the only question is kind of like, well, what is next actually going to do?

[235] And it's this big secret.

[236] Like, everybody wants to know what is next doing?

[237] Like, they know they're targeting education and they want to make powerful computers, but like, what is it exactly?

[238] And around this time, Ross Perrault of Ross Perrault fame, failed presidential candidate, here's about what Steve's up to, and he decides he wants to get involved.

[239] And Ross actually, some people know this, but not all, he's actually a technology entrepreneur himself.

[240] He founded two technology companies that were acquired, one by GM and one by Dell eventually.

[241] And so he invests $20 million in Next at a $125 million valuation.

[242] Remember, this is 1986, 87.

[243] So, you know, thinking about with inflation and the fact that they're pre -product, like this is a company with 150, they have a brand book.

[244] They have a, yes, exactly, exactly.

[245] Very expensive logo.

[246] They have an expensive logo and Steve Jobs, nothing else.

[247] So $20 million in $987.

[248] So they start getting to figure out what they're going to do.

[249] And so they're obviously, you know, the plan is they're just going to build the Big Mac that Jobs is working on at Apple.

[250] So they rent out a big factory in Fremont, California that can produce up to 150 ,000 machines per year.

[251] And they start getting to work.

[252] And as they start working on the computer, you know, they're building the hardware, they're building the software.

[253] They have to revise the pricing a little bit.

[254] So they announce in, in 1987, that they're going to launch, and it's going to launch it at $3 ,000 price point.

[255] So not $500, but also not $10 ,000 that, you know, workstations were normally at that time.

[256] So somewhat compelling.

[257] Okay.

[258] As usual, they announced the launch.

[259] They announced it's going to happen.

[260] I believe they announced it was going to happen in 1987.

[261] It gets delayed.

[262] And it gets delayed a long time.

[263] So the company basically goes dark, and then late 1988, they emerge again with a big gala event called The Next Introduction.

[264] Now, it's interesting to kind of look at the hallmarks of Apple and looking back in this sort of DNA of where they came from.

[265] During the next days, you know, they're announcing price points, they're missing them.

[266] They're announcing ship dates, they're missing them.

[267] That's not a thing that modern Apple does.

[268] They were very clearly scarred by this and kind of came out of it.

[269] said that's not what we're going to be yeah so i mean nowadays like apple announces an event like one week before the actual event like this is they announced years right right they actually launched anything so but the next gala i mean that sure sounds a lot like the modern apple keynote yes and this was one of the you know when you look at the time so um this is one of the scenes in the michael fasbender movie this is the middle scene uh this this keynote uh when it when jobs launches the next computer finally everybody's been waiting for for this.

[270] It's at the Symphony Hall in San Francisco, and it's pretty incredible.

[271] So they have a violinist, one of the key features of the next machine, which, by the way, is a one -foot cube of all black magnesium.

[272] Of course it is.

[273] Most computers at the time look super ugly, right?

[274] And they're huge.

[275] And this is also huge, but it is solid black magnesium.

[276] And, you know, and And they have it on stage, and they bring a violinist from the symphony up.

[277] And one of the key features, like I was saying, is it has digital signal processing, and it can play real audio for one of the first times on a computer.

[278] Instead of kind of the standard 8 -bit, a lot of the times you'd turn on a computer, you'd hear a beep, it would make Nintendo -like noises, very different than today.

[279] Yeah, this is real audio.

[280] And so the violinist plays a duet with the next computer on stage.

[281] And this was, you know, the whole gala, everybody who attended it got a frame, poster commemorating the long you know this monumental event the launch of next computer talk about a lack of product market fit for those of us and startups today they're thinking like what's that killer use case that justifies you know user actually shelling out from my product yeah yeah that's a it's a very expensive tech demo very expensive and also famously also chronicled in the movie nobody from apple is invited to this 3 ,000 people attend the event not a single person from Apple is allowed in the doors that's just vending vengeful.

[282] Vengeful.

[283] So they announced the actual device, and it's super cool.

[284] We'll link to this in the show notes.

[285] Somebody a couple years ago got their hands on one of these things on the initial next computer and did an unboxing of it.

[286] It's on YouTube.

[287] It's amazing.

[288] All right, put it in the show notes.

[289] It's in the show notes.

[290] So what is this thing?

[291] They announced the specs.

[292] 25 megahertz, Motorola 68030 CPU.

[293] you, whatever that means, 25 megahertz was a lot at the time, has configurable from 8 megabytes up to 64 megabytes of RAM.

[294] So like the benchmark for workstations was one megabyte of RAM.

[295] They have 8 to 64.

[296] So knock it out of the park on that.

[297] 17 inch megapixel gray scale display, 10 base 2 Ethernet.

[298] This is a networked computer.

[299] And that's key, right?

[300] This is something that the Macintosh was not set up to do.

[301] I mean, when they conceived of the Mac early on, it was standalone.

[302] I mean, the Ethernet wasn't a thing.

[303] We were not living in a world with the Internet or even precursors to the Internet yet, and this is a kind of brand -new idea that this computer and this operating system is going to be built to network from the ground up.

[304] The Internet doesn't exist.

[305] In fact, the Internet gets invented on this computer, which will come to in a second.

[306] The World Wide Web.

[307] The World Wide Web, yes.

[308] But the World Wide Web did not exist.

[309] And one of the features that they're most proud of about this machine is it has a 256 megabyte magneto optical drive, which instead of a hard drive, they think this is better technology.

[310] Except the problem is they put that in, so there's no hard drive, there's no floppy drive, it's just this like big cassette thing you put in there that's like magnetic or somehow.

[311] That's the only storage on the computer.

[312] So you can't transfer anything off the computer because the hard drive that the operating system runs on is the thing that you plug in and out of the computer.

[313] And Jobs is like, well, but you have your network to you're on the Ethernet, so like that's how you transfer files.

[314] But like nobody else is on the network.

[315] So it's kind of a chicken and egg problem.

[316] Right.

[317] It's like you know where you want to be skating, you know where the puck is going, but there's no ice between you and there.

[318] Yeah.

[319] This is like removing the headphone jack in 1988.

[320] They realized pretty quickly after launch that that's a bad idea.

[321] They ship a new version with an actual hard drive and a floppy disc drive.

[322] So they fixed that.

[323] but more importantly and here's where we start to get into like what is the real value of next the software and the operating system that they created next over these couple years is just incredible I mean there's the moment from when Steve Jobs Steve Jobs launches the iPhone in 2007 in the super famous presentation he says it's five years ahead of anything the competition is doing on the market this was at least five years ahead next step.

[324] Next step is the operating system that Jobs that Next made for the computer.

[325] It's at least five, if not a decade ahead of anything else anyone's doing.

[326] Yeah, so it's worth talking about kind of the technology innovations that came out of Next, or at least that Next put into production for the first time.

[327] A lot of it dates back to when Steve Jobs was at Apple and got the preview from Xerox Park of what the research technologies were that they'd been working on.

[328] And famously, it's the graphical user interface and the mouse.

[329] This is the, when Steve Jobs raids Xerox Park in Palo Alto and steals the graphical user interface and that becomes the Mac.

[330] That's what Ben's referring to.

[331] Yeah.

[332] And so, you know, the Mac gets that, right?

[333] For the first time, there's, you know, Bill Gates famously kind of freaked out at the demo watching the drawing on screen where the Mac is moving the mouse and it's moving around slowly.

[334] And Steve's saying, you know, I, yes, we got this from Xerox Park.

[335] what they didn't kind of pull from that was object -oriented programming.

[336] So in traditional programming, like you look at the way that DOS was running, there's routines and it's moving, it's kind of advancing linearly, there's branching to subroutines.

[337] And for the first time with object -oriented programming, you have the ability for software to model real -world objects.

[338] And so, you know, this dog has properties and has methods you can call on those properties, like bark or like back up or like walk forward and this was only really embodied in small talk at the time which was not a not a very popular language well and um at the written to not dive too deep into the technical details here but but essentially this is like all modern software right now written this way right and and the idea of creating software technology using you know old linear non -object oriented programming like you just like wouldn't do it that'd be like trying to like drive across country in like you know a golf cart like you wouldn't do it so so the the kind of breakthrough here is by using objective c which is incredible how long that that has actually lived licensed at at next and then eventually became kind of the core tool set that's used to now develop mac applications and and iOS applications you know swift is is being adopted but objective c is still the bread and butter of apple software development it enabled next to move much faster than traditional programming methods and for people to build much more complex programs that they would otherwise.

[339] And Steve has this great quote.

[340] So when he finally comes back to Apple after the acquisition a couple years later, the first time he's on stage at the first Apple keynote right after Apple acquires next.

[341] This is January 97.

[342] January 97.

[343] He says, I want to tell you guys a story.

[344] Steve's famous for telling a story.

[345] And he says, you know, when I went, this is a quote from him.

[346] When I went to Xerox Park in 1970, and saw the original genesis of the graphical user interface there, they actually showed me three things.

[347] And I was so blinded by the first that I didn't hang around to find out about the other two.

[348] And it took me years to rediscover them.

[349] The first, of course, was the graphical user interface.

[350] But the other two things, the second was object -oriented programming.

[351] They had it all running back in 1979.

[352] And the third was networking.

[353] They had several hundred altos.

[354] Alto was the concept computer, that Xerox Park had designed, they had several hundred altos, hooked up to network printing, network file service, email, all in 1979, if I'd only stayed there for another 20 minutes.

[355] He's making a joke, but what he realizes, and this kind of goes back to what he was trying to do with the Big Mac, it's the combination of those three things, it's the graphical user interface, it's object -oriented programming that allows software developers to develop really powerful, very useful graphical programs for the first time.

[356] And then it's networking.

[357] And that's what's going to enable this new wave of computing.

[358] It's probably worth fast -forwarding at this point.

[359] So Next kind of cuts their losses.

[360] There comes a point where Next says, you know what, this hardware thing, it's hard.

[361] We have extremely expensive computers that aren't selling very well.

[362] They only ever sold 50 ,000 units in total.

[363] And by the way, when the thing finally came out to retail, guess how much it cost?

[364] $10 ,000, which was the price that all workstations cost at the time.

[365] So nobody buys these things.

[366] Yeah.

[367] So next decides, okay, we're going to be a software company.

[368] And what they do is they kind of separate out next step, which was the operating system.

[369] And then they had kind of the mock kernel underneath, which they sort of brought in -house.

[370] They separated that out and they said, okay, we're just going to start selling this thing to other computer manufacturers.

[371] Right?

[372] We're not going to be what we know of Apple today is an entirely vertically integrated software and hardware company.

[373] They're moving away from that.

[374] It's just software.

[375] And that was kind of in vogue during that time because that's when the Mac was in the era of the clones.

[376] I mean, the MacOS ran on other people's hardware, which is totally mind -blowing for those of us today who know, well, what do you mean?

[377] iOS only runs on iPhones.

[378] Yep.

[379] But it's super important because of the power of this operating system.

[380] And, you know, we mentioned earlier, but just to give a sense of, like, what is the real implication of this power?

[381] The World Wide Web is invented on this operating system, on a next computer, actually.

[382] So Tim Berners -Lee at CERN invents the World Wide Web, and it's possible because of object -oriented programming and networking, obviously.

[383] And also fun other history of this computer.

[384] John Carmack at ID Software, John's now the CTO, I believe, of Oculus.

[385] John wrote the video game Doom, video games Doom, Quake, and Wolfenstein 3D all on Next, which is amazing.

[386] Wow, wow, I didn't know that.

[387] And those were the first, like, 3D games that, you know, ever, you know, equally revolutionized the game industry.

[388] Yep.

[389] So that's the power that this enables.

[390] Yeah, and it's interesting kind of taking a step back and realizing, okay, so very clear recognition of the technologies that were going to be transformational and, and, and really like the foundation of what the future of competing will be, really unable to bring it to market in a meaningful way at next.

[391] I mean, all the ideas were right, all the way that they brought a product to customers, you can chalk it up to timing, you can chalk it up to price, like just wrong, just poorly executed.

[392] And so they needed an out.

[393] Yep, they needed it out.

[394] And so they pivoted eventually to just selling software.

[395] They stopped selling hardware.

[396] They do that in 1993.

[397] It's funny.

[398] One of the pieces of software they come out with is this thing called Web Objects, which is one of the first Internet application servers.

[399] And Dell actually builds their e -commerce site on it, so when you bought a Dell...

[400] Dude, you're getting to Dell, like, that was powered by Next.

[401] Yeah, basically what Web Objects do is they make it so that, you know how you go to a website and it's not always the same as every other time you go to that website?

[402] It's got dynamic content on it.

[403] Web Objects was like the first ever system to do that.

[404] And this thing is like still in use.

[405] So the iTunes store, people wonder why iTunes, like, is so clunky and slow and crappy today, it still runs on web objects, which is insane.

[406] Yeah, for any of the iOS developers and the Mac developers listening, for better or for worse, a lot of these technologies have stayed with us for a very, very long time.

[407] So finally, you know, meanwhile, while this is going on, Apple is just like they have lost their way.

[408] they are getting creamed in the market.

[409] On the PC front, this is the era of Windows in the early 90s to mid -90s, Windows 3 .0, then Windows 95.

[410] Apple's getting decimated.

[411] They have no offering for enterprises in the workstation market, which is cooling down, but still a huge, huge market.

[412] And all of NT was doing phenomenally well.

[413] Steve Jobs in 97 stands up on stage in January and, you know, praises.

[414] the incredible advancements brought by Microsoft in NT and says Apple, what's Apple been doing?

[415] We've fallen behind.

[416] And of course, easy for him to blame while he's not at the company, but incredible to be...

[417] But he was totally right.

[418] And so Apple's casting about they're trying to create a next generation operating system.

[419] By this point in time, everybody's recognized the power of what we're talking about.

[420] And Apple just can't do it.

[421] They have two competing projects, three at various points, trying to build a modern operating system.

[422] They all fail.

[423] It's wild to think about it.

[424] I mean, you can chalk it up to organizational politics or you can chalk it up to the technology just being incredibly hard.

[425] But they were building an operating system codename, I think Copeland was the first version.

[426] And then they were going to have a second release called Gershwin.

[427] There was kind of projects going on in parallel for how are we going to build a next generation operating system.

[428] And they just couldn't do it.

[429] And honestly, it kind of reminds me the Longhorn days at Microsoft.

[430] Oh, God.

[431] It turns out operating systems are hard and organizations are even harder.

[432] And so you look at Apple, and eventually they kind of said, okay, enough is enough.

[433] We're going to look elsewhere to try and buy.

[434] And they had a couple options.

[435] They had a couple options for a modern operating system they could buy to replace Mac OSX, OS9.

[436] It was system seven at the time.

[437] Right, right, right.

[438] The future operating system was supposed to be Mac OS8, which ended up just being an incremental bump.

[439] And then OS9, which was another incremental bump.

[440] And then finally, what they were envisioning for years, not even until 2000, one was macOS 10 yeah and so so in nine end of just before christmas 1996 they buy next uh steve job for 429 million dollars um that uh go to next shareholders uh including ross pro um and and separately one and a half million shares of apple stock that go to steve jobs yeah so david you want to talk about that as a VC what's you know uh based on a return on invested capital How was the next exit?

[441] Well, over its lifetime Next raised, so they raised the money from jobs.

[442] They raised the money from Ross Perrault.

[443] Cannon, the large camera printer computer manufacturer, ends up investing another kind of $100 to $130 million in the company as well.

[444] So they got sold for more money than they raised, but like not that much more money.

[445] Like this was not a home run.

[446] Like nobody was getting rich off Next.

[447] And Steve gets one and a half million shares of Apple stock because he's going to come on board at Apple as a consultant.

[448] So he's going to, you know, come and, like, help Apple with this transition is the official plan.

[449] Right.

[450] And so the acquisition closes in February 1997.

[451] And Steve's a consultant and some of these events that we were talking about.

[452] He comes on stage and, you know, clearly like the dichotomy between how Steve talks about the future and his.

[453] vision and how Gil Emilio, who was the CEO of Apple at the time, who, you know, looked like, he actually was, like, quite technical and a bit of Fairchild's at my conductor and all that, but he looked like he'd never met a developer in his life.

[454] Yeah, when you watch their keynote, just kind of going back and watching a lot of these old keynotes over again, in preparing for this podcast, it is incredible to see the dichotomy between Gil standing up there and not really commanding the audience's attention and saying things that...

[455] Like, it's so important for Apple to, you know, court our core audience and developers.

[456] Right.

[457] It's not taking a position on anything.

[458] And, you know, we've all seen managers like that or leaders like that that that don't really take a side and you walk out and you're like, well, I didn't disagree with any of that, but I wasn't inspired.

[459] And then Steve comes on stage for, you know, just a few minutes to say like, hey, here's where I think we're going.

[460] And it's just captivating.

[461] It's night and day and like huge applause.

[462] So pretty quickly, acquisition closes in February.

[463] Over the July 4th weekend, Steve convinces the board of Apple that gives us.

[464] has no idea what he's doing and he needs to go and the next week Apple fired the board fires Gill so the company doesn't have a CEO they start a CEO search and really there's only one candidate and September of 1997 Steve Jobs is instated as the interim the I CEO the I CEO the interim CEO of Apple and he remained interim CEO until 2000 So for three years, he was interim CEO.

[465] Now, while he's interim CEO, the board doesn't exactly stay intact, right?

[466] He's, uh, he basically, he takes those three years.

[467] And it ultimately takes five years from the time Apple acquires next for OS10 to come out.

[468] So they spend five years building, taking the next operating system and baking it into the full product of the Mac.

[469] But during that time, I mean, Steve, like, there's the technical and product challenges of shipping that, but he cleans house and completely revamps Apple.

[470] Well, there's a good, I was, I looked up the article that came up on CNET, the day that the acquisition was announced and kind of how people were billing it at the time.

[471] And kind of awesome that like, when this acquisition happened, Cnet like existed, was a website, was a news organization.

[472] And they're still archives.

[473] And like the World Wide Web was invented.

[474] on Next computers five years earlier.

[475] Yeah, I know, I know.

[476] So the thing that they say in the article is, Next cross -platform development environments in the enterprise and internet and intranet space allow developers to write once and deploy across a range of internet and client server platforms.

[477] Amelia said that Apple expects to ship products with the next operating system in 1997.

[478] That's the same year that the acquisition closed.

[479] So the way that Amelia was looking at this is, you know, we're going to get this company.

[480] We're going to start kind of integrating their technologies.

[481] We're going to keep shipping our products.

[482] Yeah, we'll just slap this OS into our hardware.

[483] Like, no big deal.

[484] Yeah.

[485] And, and, you know, what we know today is, like, it didn't ship in 97 or 98 or 90s.

[486] Like, it shipped in 2001.

[487] And by that point, Apple had dramatically less products.

[488] I mean, this is the, this is the time where, you know, there's developers at 1997 worldwide developer conference in July, six months after he, after the acquisition closed, saying to Steve, hey so you know uh i worked on open dock for many years and we've invested a lot in it uh what you know what about open dock and and steve says yeah yeah a lot of you worked on things that um we had to put a bullet in the head of and uh i feel your pain and continues to go on and then paint the story of like apple has no focus focus is about saying no um we're doing all these different things it's not iterative improvements that we need to do it's it's like dramatic dramatic changes so what's really interesting is to look at screenshots from Next, or Next Step, or actually Open Step, the operating system that they ended up implementing.

[489] And you look at OS10 today, or even steps along the way.

[490] It is incredible how many pieces of Next step you can find in Mac OS10.

[491] I mean, you look at Next and it had a dock.

[492] Nothing else had a dock at the time.

[493] That was like a new UI paradigm.

[494] It's amazing how many pieces of Next you can find in your iPhone, in your Apple Watch.

[495] Like, you know, it's there.

[496] In 97, Steve is demoing the next step development tool chain.

[497] And he's like, here's interface builder and here's all these tools that people still use today to develop iPhone app.

[498] So the very core fundamentals of what makes the, what made the iPhone possible came from the next acquisition.

[499] Yep.

[500] So at this point, you know, wrapping up the history and facts, which was very long, but these stories are just, we love stories on this show.

[501] And like.

[502] And this is one of the best ones.

[503] This is one of the greatest of all time.

[504] And so we all know what happens.

[505] Steve comes back.

[506] 2001, they launch OS10.

[507] They launched the iPod.

[508] What did they launch the iPod?

[509] Was it also 2001, I think, when they launched the iPod?

[510] They launched the iPod.

[511] Then they launched the iPhone.

[512] Then they launched the iPad.

[513] Then they launched the Apple.

[514] You know, all this stuff.

[515] Yeah, Apple TV.

[516] And it's all next.

[517] The incredible thing is, yeah, when they first launched the iPhone, they say, and it runs OS10.

[518] That was a big selling point.

[519] This is not a phone, like we know, phones today with an embedded operating system.

[520] This is a computer in your pocket.

[521] And to prove it, it's running a variant of the operating system that exists on your computers.

[522] And that was, like, huge and ridiculous.

[523] And, like, people at BlackBerry didn't believe it.

[524] They'd look at the scroll performance and say, you can't do that on a phone.

[525] Like, we just don't believe you.

[526] And so I think that when you look at the, this was before it was dubbed iOS, okay, it was a variant of OS 10.

[527] And then when they launched the iPad, they say, and we're renaming it iOS.

[528] It runs on the iPhone and the iPad.

[529] Then they launched the watch.

[530] Then they launched the TV.

[531] All these things are kind of built off that same Darwin kernel and the core of what they acquired in Next.

[532] Yep.

[533] And there we go.

[534] The rest, as they say, is history.

[535] All right, listeners, our sponsor is one of our favorite companies, Vanta.

[536] And we have something very new from them to share.

[537] Of course, you know Vanta enables companies to generate more revenue by getting their compliance certifications.

[538] That's SOC2, ISO 2701, but the thing that we want to share now is Vanta has grown to become the best security compliance platform as you hit hypergrowth and scale into a larger enterprise.

[539] It's kind of wild.

[540] When we first started working with Vanta and met Christina, my gosh, they had like a couple hundred customers, maybe.

[541] Now they've got 5 ,000, some of the largest companies out there, it's awesome.

[542] Yeah, and they offer a tremendous amount of customization now for more complex security needs.

[543] So if you're a larger company and in the past, you showed Vanta to your compliance department, you might have heard something like, oh, well, we've already got a compliance process in place and we can't integrate this new thing.

[544] But now, even if you already have a SOC2, Vanta makes maintaining your compliance even more efficient and robust.

[545] They launched vendor risk management.

[546] This allows your company to quickly understand the security posture of the vendors that you're choosing in a standardized way that cuts down on security review times.

[547] This is great.

[548] And then on the customization front, they now also enable custom frameworks built around your controls and policies.

[549] Of course, that's in addition to the fact that with Vanta, you don't just become compliant once, you stay compliant with real -time data pulled from all of your systems, now all of your partner systems, and you get a trust report page to prove it to your customers.

[550] If you click the link in the show notes here or go to vanta .com slash acquired, you can get a free trial.

[551] And if you decide you love it, you will also get $1 ,000 off when you become a paying customer.

[552] Make sure you go to vanta .com slash acquired.

[553] Let's move on to our next segment of the show, which is acquisition category.

[554] Yeah.

[555] This will be a fun one.

[556] What do you think?

[557] Well, and what we do is we categorize the acquisition into, we've got a couple of categories and we decide which it represents.

[558] Yeah.

[559] So we normally decide if something's a product acquisition, a business line acquisition, a people acquisition, which oftentimes happens and kind of like acquires, a technology acquisition.

[560] Is it a core piece of technology that's not productized?

[561] Or is it, you know, other?

[562] Is it some new thing?

[563] And when you look at this, like Apple had been trying to create a technology that they really couldn't create.

[564] It was a next generation operating system with multitasking, with networking, with protected memory, all these different things.

[565] But it's not the technology they acquired.

[566] You'd be silly to make the case that this was anything but Steve Jobs.

[567] I mean, this is like, this is a great slide.

[568] The ultimate people acquisition.

[569] Oh, yeah, Gilamilio is listing all the reasons they acquired next.

[570] Yeah, the CEO at the time, literally at, is it at Macworld, I think?

[571] Yeah.

[572] Has this slide on stage.

[573] He's presenting these slides about, you know, rationale for the next acquisition and he has, like, all this stuff that they're getting.

[574] Then he flips to the next slide.

[575] And it just says Steve Jobs.

[576] It's like the only thing on the slide.

[577] It's the only thing on the slide.

[578] Reasons we acquired next.

[579] So, I mean, yes, we're still using.

[580] in next technologies today.

[581] Yes, they were incredibly forward thinking, but the company needed Steve back.

[582] Yep.

[583] I mean, it's hard to argue with that.

[584] Steve is, I'm just surprised.

[585] I mean, like, I've read all the books about him.

[586] I've watched so many of his keynotes.

[587] I've watched all the movies about him.

[588] Every time I read it, and this just like going in and doing a lot of this primary source research, this is going to be my tech theme later.

[589] But I am just so struck by, like, his level of thinking, you know, it is so rare that you see, that you find something like that.

[590] And when you watch this keynote with Gil on stage and Steve on stage at the same time, and like I said, Gil was, he was a Fairchild semi -conductor.

[591] He had been, you know, a long -time technology CEO.

[592] Yeah, he turned around a national semiconductor.

[593] He's credited with - National Semiconductor.

[594] You know, he looks like a child compared to this guy.

[595] But it's like, you know, Steve is just a met among boys, you know, or, you know, a person among small people.

[596] Yeah, special guy, we miss him.

[597] Totally.

[598] Okay.

[599] So you want to go into what would have happened otherwise?

[600] Yeah, this is fun.

[601] So what would have happened to otherwise?

[602] I think it would be fun to talk about the other option that Apple had.

[603] Yeah, so Jean -Louis Gasset was an Apple employee who kind of opened Europe to Apple.

[604] He came in in the early days, knew Steve Jobs well.

[605] left Apple to start his own company.

[606] Well, before he left Apple, when Steve got fired and left Apple, Jean took over the Super Micro Division.

[607] He literally replaced Steve Jobs.

[608] I didn't know that.

[609] Yeah, he literally replaced, so this is a, he's French, Jean -Louis.

[610] Great guy.

[611] He has a blog now, which is awesome, Monday note.

[612] And he replaced Steve Jobs.

[613] But then he left and started his own company.

[614] So two people that both kind of walk through that, that revolving door of that division of Apple, and started very, very similar companies.

[615] And B, which created BOS, was kind of the other candidate they were vetting other than next.

[616] And ultimately, the reason that Apple didn't end up making that acquisition of B, you know, number one, I continue to go back to the fact that they all sort of knew they needed Steve back.

[617] But they just couldn't come to the same agreement on price.

[618] Jean -Louis wanted $300 million for the company.

[619] Apple, I think, was willing to shell out $120, $125, somewhere in there.

[620] And they just couldn't get the deal done as with, you know, many other deals.

[621] I'm sure a lot of our listeners have been involved with.

[622] Yeah.

[623] But kind of amazing that like there were these two operating systems that Apple could have acquired.

[624] And should have built in house, right?

[625] Like both of those leaders had been at Apple.

[626] Right.

[627] They were chartered with building this and the organizational politics at Apple at the time didn't let it happen.

[628] Didn't let it happen.

[629] This is why Steve Jobs hated politics.

[630] Did you see that Next was planning an IPO?

[631] Yes.

[632] That was one of the kind of bargaining chips on the table.

[633] Yeah, so this company that, you know, finally had actually has a product out there, this operating system that, you know, is not the business that they were hoping to build, but is a decent business, you know, is planning to IPO later in the year.

[634] And we don't know if that actually would have happened, but it is interesting that that's an alternate future for.

[635] I think there's, there must have been a little bit of Steve Jobs reality distortion field there, too.

[636] Like, how they could have gone public.

[637] I mean, they had had a. they eventually became profitable as a software -only business, but they were not making a lot of money.

[638] No. But you're Steve Jobs.

[639] Right.

[640] Anyway, so they ended up getting acquired, obviously, by Apple not going public, but that would have been interesting had they.

[641] Yeah, I'm going to paint this picture as Next had a fighting chance, but probably would not have done very well in the long term.

[642] And I don't think Apple would be in business.

[643] Yeah, no. Like, they were getting creamed.

[644] I mean, And there was that famous quote, right?

[645] Who said, was it?

[646] Michael Dell.

[647] Said that, like, they should just shut down the company and give the money back to shareholders.

[648] Like, they were just getting creamed.

[649] So, all right.

[650] Tech themes?

[651] Tech themes.

[652] Yeah.

[653] So, I mean, the big one for me is, like, you hear this all the time in investor pitches.

[654] It's all about the people.

[655] I think this is one that's just so clearly illustrative of, we often talk about, like, 10x engineers.

[656] Sometimes there's just, like, 10x engineers.

[657] leaders and people that are truly inspiring.

[658] And then the other part of that is how much of a difference it makes to have the founder of a company leading that company.

[659] That they command a different level of respect from employees.

[660] And when they say, this is our strategy, people believe it.

[661] And people do crazy things and march to those orders.

[662] And the other thing that I was kind of thinking about in this is Steve makes a plea to developers to start building on this new operating system that they're building that will eventually sort of in some forked way become MacOS 10.

[663] And you don't like win, as Microsoft can see with Windows phone recently or a lot of people trying to start sort of like competing app stores and things like that, it's really hard to win over a developer ecosystem.

[664] And it's really hard to say, you know, developers, we're open for business.

[665] This is a platform for you.

[666] And Steve managed to really like make the plea in a very authentic way and say, hey, everyone who's a Mac developer, want don't you come and, and, and, and, you come and, and, and, you know, you're going to have to rewrite a lot of stuff because this is very different, but make a bet on us and develop your applications for MacOS 10.

[667] This power in this operating system that you couldn't have otherwise.

[668] Right, right.

[669] But to me, it's like the power, the power of a founder there.

[670] And then once you have like a tipping point in the network effects that come from building an ecosystem on a platform, that you can kind of just keep rolling with that.

[671] And the big bargaining chip that affords you.

[672] Yep.

[673] That perfectly dovetails with, I have two tech themes for on the show.

[674] We do, this is actually my favorite segment of the show.

[675] We talk about having gone through this whole history, like, what are some like eternal truths about just the way like business, technology, startups, you know, have, you know, operate that we can kind of pull out of this.

[676] Yeah.

[677] And I have two.

[678] The first one is just what you were saying, Ben, is that the, or related to what you're saying, in technology there's this concept of like iteration not just iteration but like you're kind of standing on the shoulders of giants and this a lot of the history and facts like we talked about a lot of pretty deeply technical stuff like object oriented programming and networking and workstations and like you think about tech companies today it's like Snapchat and like you know messaging and interacting with your friends and like spectacles and like doing this amazing stuff and flying drones and like but all that's only possible because of of these, like, building blocks at the operating system level at the deep, geeky stuff that needed to be built and installed first.

[679] So that's one.

[680] But two is something I've been thinking a lot about, also related to your first one.

[681] Like, what made Steve what he was, right?

[682] And in our, we haven't released our last episode yet, but we did, we interviewed Kathleen Phillips, who's the CFO Zillow talking about the truly acquisition.

[683] And in a follow -up on that, we talked about Snapchat Spectacles.

[684] And I referenced this tweet that we both read that I thought was super cool that Bill Gurley had retweeted and commented on when Snapchat announced spectacles.

[685] And John Collison, who's one of the brothers, who's the co -founder of Stripe, he tweeted, quote, I'm always impressed by how flamboyantly original Snapchat are, ghost codes, invisible UI, filters, sunglasses, and Gurley, and he says that's a really great thing to identify and recognize and I've been thinking about that because I totally agree but like what is that originality and it's not really exactly originality like there were QR codes before Snapchat did them there were in fact Snapchat acquired a company to do that there were glasses you wore on your face right and that took video before Snapchat spectacles you know there were messengers before them they weren't first but they were the first Thus far, and we'll see how spectacles perform.

[686] The first to make, like, a real product that just works and is delightful and solves a need for a user.

[687] And I think that's what this originality means.

[688] And that's what Steve was, right?

[689] Like, object -oriented programming, all this stuff existed at Xerox Park before Next.

[690] Object -oriented, networking.

[691] Like, all this stuff was out there.

[692] Workstations, blah, blah.

[693] But, like, it was technology.

[694] It wasn't a product.

[695] Right.

[696] It wasn't something that like you plugged it in and it just worked and it delighted you and it solved your need.

[697] And I think that's like, I don't know, I just been noodling, especially like as a VC.

[698] Like this is what we look for.

[699] So many times we meet, we meet founders, we meet companies and they're doing something cool that's hard technically.

[700] And the question is just like, okay, like the question I always ask is like, what data do you have, what signal do you have that people want this?

[701] and so many times you get this like blank stare back you know like well what do you mean this was never possible before it's like well that's not what I asked that's not what I asked like why are people going to use this um and I think that's what these you know whether it's Evan Spiegel at Snapchat whether it's Steve Jobs whether it's Mark Zuckerberg or you know any of these or Instagram right like Instagram was not the first app that made your photos look good.

[702] No. Pipsomatic made your photos look good yep but that's not Instagram you know like it's it's building this whole solution um and having the vision to do that.

[703] And I think it's, you know, it's a famously difficult task to take hard, complicated problems that are solved in sort of research lab like environments and get those into a mass market product.

[704] I mean, you look at, let's take two super famous examples.

[705] You know, Microsoft has like hundreds or a thousand of PhDs at Microsoft Research that do incredible work and do pioneering research.

[706] And they try their best to partner with, with product teams.

[707] But it's, you know, not super often that one of those things gets surfaced in a product in a big way.

[708] And, you know, the company's growing and it's getting way better at that, but it's like a famously difficult problem to sit in the organization in the right way to make your kind of very forward -looking things that may dangerously obsolete your current thing, you know, something that you bring back into product.

[709] And in fact, when Apple, my second example is when Steve went back to Apple, they had kind of an advanced technology division.

[710] And that was purely for the, it was a research lab, as people that were kind of playing around with like, what if we, could get this into a computer at some point and dismantled that.

[711] Yeah, Steve killed that.

[712] Because that's totally the opposite of what we're talking about.

[713] Right.

[714] You want to get those things into product and kind of reorganized and said, look, everybody who's doing that pioneering research, you need to be doing it with the lens of how are we going to build this into this product and how does it fit into the story of this product that we're trying to ship.

[715] Yep.

[716] And I think that's what's, that is what is so scarce in technology, in startups and in, you know, in business.

[717] Like, the ability to take a potentiality, whether it's technology or something else, and turn that into a product that just works and that people want, it's so scarce.

[718] And I think that's what, you know, for all the Steve's foibles and all his craziness and, like, he was just so good at that.

[719] And it's impressive.

[720] So, yeah.

[721] Okay.

[722] Should we wrap this one up?

[723] You want to grade it?

[724] That's great it.

[725] We were going back.

[726] back and forth on text over this last night.

[727] Yeah, so a couple episodes ago, we did the Android acquisition by Google.

[728] And you look and you can kind of figure out the main reason for Android to be there is to make it so that when people are searching on mobile, they're not always searching from iPhones, and Google doesn't have to pay Apple for all those searches.

[729] So that gets them like $4 billion a year in revenue they otherwise would have had to give up.

[730] big number, right?

[731] Like for kind of a small acquisition.

[732] So I want to like talk about the next acquisition and what it did for Apple in the context of that being an A -plus, of kind of like saving the company $4 billion a year.

[733] There was leaked things in the Oracle trial that Android as a division has made about $31 billion since being acquired.

[734] When you look at the things that have happened at Apple since the next acquisition, it's like a sci -fi system.

[735] story compared to those numbers like if that was our bar for a plus apple does like 250 billion dollars a year in revenue now and like probably would have gone out of business number one if if this acquisition didn't happen they're the most valuable company in the world as as david said um not only would they have like gone out of business and now this reverse course the the technology that they acquired and next is core and fundamental to every single product that they ship today It's the core of the Mac, the core of all the iOS devices, everything we've been talking about.

[736] And, I mean, developers who are listening to this were, like, you use Interface Builder and, like, Steve demoed Interface Builder as a feature of the next development platform in 1997.

[737] And these things continue to ship.

[738] Yep.

[739] And it is the, we were talking about this before the show.

[740] Apple has done approximately a trillion dollars in revenue.

[741] Since Steve came back.

[742] Since Steve came back.

[743] Give or take, give or take a billion, you know, a trillion.

[744] It's like GDP style.

[745] I know.

[746] I know.

[747] And I wish we had, you know, we have nothing higher to give than an A plus, but this is by far the best acquisition we've ever looked at.

[748] And I think probably ever will look at.

[749] Yeah.

[750] It is hard to argue with that.

[751] I mean, what's funny, like, it's so, this is such a, like, illustrates, like, it's better to be lucky than good, you know?

[752] Like, Gil Emilio completed the single greatest acquisition of all time.

[753] Gil Amelio.

[754] Who is Gil Amelio?

[755] You know?

[756] He's the George Lazyz -Bee of Apple CEOs.

[757] Exactly.

[758] Like, nothing against Gil -A -Milio.

[759] But, like, what's so funny is, like, he didn't see any of this.

[760] Like, this was not some brilliantly crafted move on his part, like, brilliantly crafted on Steve's part.

[761] But, but, yeah, I mean, like, this is just the sheer numbers.

[762] You cannot argue.

[763] I don't think you can argue that this isn't the greatest acquisition of all time.

[764] I mean, it literally created a trillion dollars in revenue.

[765] That's just goofy.

[766] That's like a fake number.

[767] That's a fake number.

[768] We were texting last night.

[769] I was like, I texted bed.

[770] I was like, it's like, you know, they were, you were like, you mean when we I message last night?

[771] Yeah, we were I message last night.

[772] And, you know, it's like, Steve changed the game on the field.

[773] And it's like, yeah, like they were playing football.

[774] And like, Apple was like behind by like 30 points in the fourth quarter.

[775] And Steve like ran a play that scored a thousand point touchdown.

[776] Like, you know, you just can't, you can't, so yeah, A -plus, like, for sure, no doubt.

[777] Yeah.

[778] Well, all right.

[779] You want to talk about carve -outs?

[780] Yeah, let's do carve -outs quickly.

[781] Cool.

[782] Go ahead.

[783] This really made me think it was a great podcast I listened to in the last week.

[784] The Ezra Klein Show is one of my favorite podcasts.

[785] He interviews people.

[786] He's the creator and editor -in -chief at Vox, I believe.

[787] And he has great guests on that range from all.

[788] different walks of life.

[789] And of course, I listen to the episodes that are particularly nerdy.

[790] And so he had Stuart Butterfield on, who is the creator of Flickr and now Slack.

[791] And Stuart's just a phenomenally interesting character with a philosophy background and raises a lot of really interesting points about Slack, about how they got there, about the founder journey, a lot about the similarities and differences of, you know, he started two companies that started as a kind of out there, never -ending game and ended up being a super widely used consumer product and talking about sort of how they got there.

[792] And one of the interesting points that he brought up was that when they were building what would eventually become Slack, they used IRC and then built all kinds of tools on top of IRC.

[793] Hmm.

[794] I didn't know they used IRC.

[795] Yeah, they actually, it's all this criticism of like, it's just IRC, like it actually is just IRC.

[796] So when they were starting out building that, Snapchat's just QR codes.

[797] I know, right?

[798] This is the point.

[799] They had a team of developers, and it was three technical co -founders and someone else they hired, and they would encounter these problems with chat when it was like, okay, we should build something to make this chat thing a little better.

[800] So they'd pull those developers off of product, and they'd spend a couple cycles and make their thing that would become Slack a little bit better, and then they'd go back.

[801] And then they'd kind of, it had a lot of bake time.

[802] They'd use it for like three or four months, And then they'd go in and say, ah, we actually need to make it a little bit better.

[803] And they'd go and make it a little bit better.

[804] And when you compare that sort of product development where a person is solving their own need very, very directly and an acute pain point with the way that product organizations often work, which is like the PM will propose the product and they'll have the spec and there'll be divergent ideas and people argue over it, there's a lot more ego in the room.

[805] And what Stewart's thrown out there is, you know, when we're just trying to solve our own problems and like nobody wins by.

[806] having our internal tool be better, except that sort of everyone wins, there's a lot less ego in the equation.

[807] And it's kind of an interesting way to develop software.

[808] And, you know, we're not all going to go and set out to start very expensive, never -ending games to create a different product.

[809] But it is, like, interesting to think about how can we, how can we kind of spoof that environment where we're all users of the product, we're all using it to solve our own pain point internally and take the ego out of the equation.

[810] Hmm.

[811] That's super cool.

[812] I got to listen to that pocket.

[813] The Ezra Klein Show.

[814] Ezra Klein Show with guest Stuart Butterfield.

[815] Awesome.

[816] Mine for the week is this super fun verge, an eye -opening Verge article, big investigative piece that they did last week or the week before on DJI, the drone company.

[817] DJI released or announced their new product, the Mavik Pro.

[818] This thing is amazing.

[819] It's the size of a water bottle, and it's a drone.

[820] for 27 minutes, you can fly it four and a half miles away from you with rock solid 1080p video.

[821] Whoa.

[822] You know, it fits in your pocket.

[823] Like, it's amazing.

[824] But they went and they were like, you know, did this profile like, what is DJI?

[825] It's this company.

[826] It's based in Shenzhen.

[827] And who are they?

[828] How do they hire?

[829] And it turns out the DJI runs this robot wars competition.

[830] So like you ever seen like battle bots?

[831] Oh, yeah.

[832] They do a university competition in China.

[833] That's like the most, coolest battle bots you've ever seen, and they get teams from 200 universities in China to create teams.

[834] And this is like, you know, NCAA football of China.

[835] And, and then they come and they work forever, and then they come and they compete.

[836] And the winners, DJI just hires them.

[837] And so they get like the smartest people.

[838] And this is all about like robotics and and machine vision and autonomously operated robots.

[839] So, like, you can, the rules of the game are that you can't see what's happening on the field.

[840] You have to rely on your robot sensors and most of it's autonomously driven.

[841] And they fight each other and their goals and stuff.

[842] And so as a result, DJI now has, like, I don't know, like over a thousand PhDs working on computer vision and machine understanding.

[843] And that's all baked into stuff like enabling this drone, you know, the size of a water bottle that you can do stuff like you can just tap on yourself on the image and then it'll track you like it knows who you are it can follow you as you run around and it won't crash into anything it has sense and avoid all just done with computer vision and it was like this glimpse of the future and and then when they interview frank wang the CEO of djia he's like yeah this is about robotics like drones like sorry like first product but we're going to build robots that are going to like do agriculture and like serve you in restaurants like all this stuff this is like the future of robotics it felt a little bit like you know Steve jobs Xerox park moment it was pretty cool nice so we'll link to it in the show notes we will our sponsor for this episode is a brand new one for us stat sig so many of you reached out to them after hearing their CEO of vj on ACQ2 that we are partnering with them as a sponsor of acquired yeah for those of you who haven't listened, Vijay's story is amazing.

[844] Before founding Statsig, VJ spent 10 years at Facebook where he led the development of their mobile app ad product, which, as you all know, went on to become a huge part of their business.

[845] He also had a front row seat to all of the incredible product engineering tools that let Facebook continuously experiment and roll out product features to billions of users around the world.

[846] Yep.

[847] So now Statsig is the modern version of that promise and available to all companies building great products.

[848] Statsig is a feature management and experimentation platform that helps product teams ship faster, automate A -B testing, and see the impact every feature is having on the core business metrics.

[849] The tool gives visualizations backed by a powerful stats engine unlocking real -time product observability.

[850] So what does that actually mean?

[851] It lets you tie a new feature that you just shipped to a core metric in your business and then instantly know if it made a difference or not in how your customers use your product.

[852] It's super cool.

[853] Statsig lets you make actual data -driven decisions about product changes, test them with different user groups around the world, and get statistically accurate reporting on the impact.

[854] Customers include Notion, Brex, OpenAI, FlipCart, Figma, Microsoft, and Cruise Automation.

[855] There are like so many more that we could name.

[856] I mean, I'm looking at the list, Plex and Versel, friends of the show at Rec Room, Van, They literally have hundreds of customers now.

[857] Also, Statsig is a great platform for rolling out and testing AI product features.

[858] So for anyone who's used Notion's awesome, generative AI features and watched how fast that product has evolved, all of that was managed with Statsig.

[859] Yep.

[860] If you're experimenting with new AI features for your product and you want to know if it's really making a difference for your KPI's Statsig is awesome for that.

[861] They can now ingest data from data warehouses.

[862] So it works with your company's data wherever it's stored so you can quickly get started no matter how your feature flagging is set up today.

[863] You don't even have to migrate from any current solution you might have.

[864] We're pumped to be working with them.

[865] You can click the link in the show notes or go on over to stat sig .com to get started.

[866] And when you do, just tell them that you heard about them from Ben and David here on Acquired.

[867] Well, thank you so much for joining us today.

[868] Thanks especially to the Geekwire folks for having us and for setting this all up.

[869] Really appreciate it.

[870] And if you're new to the show and would like to subscribe, find us on iTunes or your favorite podcast client, tweet at us at Acquired FM.

[871] And yeah, have a good one.

[872] Who got the truth?

[873] Is it you?

[874] Is it you?

[875] Is it you?

[876] Who got the truth now?