Episode 21: Inside the M&A Press with Bloomberg's Alex Sherman

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[17] Well, the nice thing is, I don't think this is going to be a super long episode anyway, so.

[18] Yeah.

[19] We said that before.

[20] Yeah, right.

[21] Who got the truth?

[22] Is it you?

[23] Is it you?

[24] Is it you?

[25] Is it you?

[26] Is it you, is it you?

[27] Sit me down, say it straight, another story.

[28] Welcome to episode 21 of Acquired, the podcast where we talk about technology acquisitions.

[29] I'm Ben Gilbert.

[30] I'm David Rosenthal.

[31] And we are your hosts.

[32] Today is a special episode where we, yet again, break the mold and do a little bit of experimenting of our own here at Acquired.

[33] We are covering the press perspective of mergers and acquisitions, and we have special guests with us, Alex Sherman, from Bloomberg.

[34] He's based out of their New York headquarters and is the host of the Great Deal of the Week podcast.

[35] He started at Bloomberg in 2008 as an intern out of graduate school and has worked in a variety of roles and covered a number of beats since then.

[36] Thanks so much, Alex, for joining us and welcome to the show.

[37] Thanks for having me. Yeah, yeah.

[38] We are excited to have you here and especially as a former employee of the media industry myself a number of years ago now.

[39] I'm really looking forward to this one.

[40] I think we're going to have a great time talking about the press and how you guys cover deals, your business model, and how it all relates to tech and acquisitions.

[41] So thanks again for joining us.

[42] Yeah, absolutely.

[43] It's nice to be on this side of the table instead of the host of the podcast, which I'm used to.

[44] Put my answering questions.

[45] You're getting the questions posed to you.

[46] Yeah, you'll see as the course of this goes around, I may end up being like just interviewing you guys for a force of habit.

[47] Yeah.

[48] Oh, that'd be, our listeners can then, then see the tables turned.

[49] Yeah, for our listeners out there, we wanted to do this episode.

[50] We were talking with Alex about, you know, what would be a right way to kind of like work together on something or have Alex be on an episode.

[51] And as we were talking, we realized there's this totally fascinating process of the news cycle of M &A and why we read about stories when we do and how that whole process works that was really not something I had thought about even after doing 20 episodes of this podcast.

[52] So we thought it would be a cool idea to have Alex on and, you know, clue everyone in on the process.

[53] Yeah.

[54] So before we kick off, we're going to abandon our traditional structure for this show and do it as a special episode.

[55] But I want to sneak in a little bit of history and facts about Bloomberg, because I bet a lot of our listeners may consume Bloomberg media, but don't really know much about the company other than Michael Bloomberg.

[56] former mayor of New York was the founder.

[57] But it's interesting.

[58] So Bloomberg actually, I think, might be like the largest technology company that nobody really thinks about or talks about too much because people think about it as a media company.

[59] But it actually is at its heart and its origins, a technology company.

[60] So it has, it was founded in 1981 by Michael Bloomberg.

[61] And Michael had been a partner at Solomon Brothers, which was an investment bank on Wall Street.

[62] And Solomon Brothers got acquired in either 80 or 81 by an entity that was rolling up banks and it eventually became Citigroup.

[63] And as part of that acquisition, Michael, as a partner, made $10 million in the acquisition.

[64] And he used that money.

[65] He turned around.

[66] He started a company called Innovative Market Systems, IMS.

[67] Not quite as catchy, but definitely a little bit less self -serving.

[68] Fortunately, for the brand, a couple years later, just changed the name to Bloomberg.

[69] in 1983, so a couple years later, Merrill Lynch, another large investment bank, actually invested $30 million in the company for a 30 % stake.

[70] And then ultimately when Merrill got bought by B of A during the financial crisis in 2008, Bloomberg bought that stake back from Merrill.

[71] But the core business of Bloomberg is actually this thing called terminals, which Alex, you probably use every day.

[72] And many consumers of Bloomberg media use.

[73] I do.

[74] I just don't have to spend the $25 ,000 a year per user fee that everybody else does.

[75] Exactly.

[76] And terminals are, this was kind of like the WhatsApp or the, maybe Snapchat, more like the WhatsApp for traders for Wall Street long before the smartphone or WhatsApp or AOL or anything like that.

[77] It's the communications platform for Wall Street and basically everybody uses it today.

[78] Yeah.

[79] And if, um, for our listeners out there that do use this, sorry for butchering the explanation of what it is.

[80] And for the listeners that don't, it's, it's this total black hole for people that, that aren't in the industry that they actually, it's a bloom, it's a Bloomberg branded hardware and you pay an annual fee and it hooks up to service and it has all this software installed.

[81] And it sits on your, your desk and it's your kind of core operating, you know, it's the operating system on which you work.

[82] Yep.

[83] And you make trades on the platform.

[84] Uh, you communicate with other traders on the platform.

[85] You can run all sorts of data and analytics on stocks, on companies, on markets.

[86] It's very, very cool.

[87] And as Alex was alluding to, it's also quite expensive.

[88] When you're selling to clients that have a lot of money, they're willing to pay a lot.

[89] Yep.

[90] Yeah.

[91] So Bloomberg, unlike, it's interesting, you know, and then we'll get into the show here, but in recent years, Bloomberg has evolved and started, you know, started doing radio, which is now podcasts, like Alex's deal of the week and television has TV channels, news.

[92] There are about 2 ,000 plus editors and reporters at Bloomberg that Alex is part of that organization.

[93] But the terminals, subscribers to the terminals, as Alex was alluding to, pay about $25 ,000 a year per terminal.

[94] And there are in the neighborhood of half a million people that do that, which makes Bloomberg quite a large company.

[95] Yeah, it's really interesting to think about, um, there's, there's all these, you know, we've talked about the changing dynamics in the media industry on a lot of these different episodes.

[96] And, you know, it's primarily because the way that most publications work is just selling ads, and that's their main revenue model.

[97] And their subscription, there's paywalls, and there's all these other things.

[98] But, you know, with Bloomberg, they produce all this media, but the core business is one with network effects, one that's based on technology, one that's essential for people to do their job.

[99] And it's not monetizing the ads on the publications.

[100] And there's a little bit of that, too, because you know, it's a decent business, but, you know, certainly not compared to selling terminals.

[101] So with that, Alex, with that long preamble, what's your perspective on all that, you know, being at Bloomberg at this company, but also being a journalist and a reporter and an M &A reporter?

[102] How does that play out for you?

[103] So I started at Bloomberg, as you mentioned, as an intern in January of 2008.

[104] And I have sort of without revealing the who, what, or when, I'd say I've had interviews with virtually every single competitor of Bloomberg since then at one point or another for to change jobs or because just someone was interested in meeting me. And I've never left.

[105] And there's a reason for that.

[106] And the main reason is what you just described.

[107] Bloomberg is, and this has been the case since I joined the company, Bloomberg is in better.

[108] financial shape than all of our competitors.

[109] So it has been hard for me to rationalize why I would go work at, say, a newspaper, which really struggles financially and lives on advertisement when our entire operation is, you could say, subsidized by the Bloomberg terminal business, which does $9 billion a year in revenue and is not ad -supported.

[110] Ad -supported businesses, unless you're Google or Facebook are, by and large, not good.

[111] You don't have to look very far.

[112] Even digital media companies that have decent valuations really struggle, and nothing is near the size of Bloomberg.

[113] So what I have tried to do at Bloomberg is to try to figure out what can I do to provide value here to the core business, not just some sort of ancillary side project, because you mentioned Bloomberg has Business Week, we have a TV station, we have a radio station, we podcasts.

[114] But in the end, if you're not serving the core function of this business, you're not essential to this business.

[115] So whatever I did here, I wanted to make sure that I was providing value to maybe both the common user and the terminal user.

[116] And covering M &A, I think, is very central to that function because M &A stories move markets, a lot more than almost any other story.

[117] If we can break a deal, if we can say this company is in talks to buy, you know, company X's and talks to buy company Y, the stocks and bonds are going to move for those companies.

[118] The prices are going to move.

[119] And it therefore makes it worthwhile for you to spend $25 ,000 a year to buy a Bloomberg terminal if you're trading on this information.

[120] And one very important note that your listeners should know is that Bloomberg Terminal customers get our news 15 minutes before the rest of the world gets it.

[121] It's basically a built -in paywall.

[122] Wow, I didn't realize that.

[123] That's right.

[124] If you're a terminal subscriber, you have access to this information first.

[125] Now, a lot of that, that advantage...

[126] And if you're a hedge fund and you're trading the markets, like, that's...

[127] And you know, and Alex breaks a story about, you know, a potential merger, like, that is...

[128] That pays for itself in literally...

[129] The $25 ,000 a year pays for itself in seconds, right?

[130] Yeah, well, 15 minutes is an eternity.

[131] It comes in the sales pitch.

[132] There's no question that.

[133] You know, some of our biggest scoops while we try to sell customers' terminals, we say, look, we broke this deal.

[134] You know, $6 billion in market value was created instantly, and you would have missed it if you don't have a Bloomberg terminal.

[135] What I will say, though, and this is very important toward the future of this business, is that that 15 -minute, the 15 -minute delay has eroded because of social media and, in essence, TV.

[136] So what has happened is you still don't get the story.

[137] first.

[138] But as soon as we hit headlines, it goes on Bloomberg TV, so we have it virtually instantly.

[139] So in other words, we've sort of cannibalized ourselves that way.

[140] And of course, anyone that has a Bloomberg terminal can then tweet the headline.

[141] So we realize that we live in a world now where the 15 -minute delay is a little bit anachronistic.

[142] It still exists, but it's something that's discussed here internally almost all the time.

[143] Like, do we want to change this?

[144] Do we still want to keep it?

[145] So far, we've decided as an organization that there's still value in this, so we do keep it.

[146] But, you know, Twitter and other forms of media have certainly put this 15 -minute delay in a different category now.

[147] And I think we're okay with it because honestly, so much of the trading is algorithmic that the money is made instantly.

[148] So really, you just need to be first.

[149] And as long as your point zero zero one seconds first, you've paid it off.

[150] after that point when the stock jumps and everything's programmed in there, it's much less important.

[151] That's exactly where I was going to go.

[152] I mean, it's super interesting how that's evolved.

[153] It reminds me a little bit of when I was at the Wall Street Journal.

[154] You know, our debate was famously the WSJ .com had a paywall in an era when, you know, very few news organizations did on the Internet.

[155] but that's like almost that's like the if you're talking about like access to a story when all that matters is the news that's totally different from this situation and I was going to ask like how do you as a reporter now and when you're covering an M &A acquisition when it is all about that data that's going to feed the algorithmic traders do you does Bloomberg now and do you as you're writing stories like set up data feeds that come out when you break the story?

[156] So we deal with this in different ways.

[157] So we know that there's going to be a reaction given our stories.

[158] And there are ways within the Bloomberg terminal that we can actually somewhat manipulate the reaction.

[159] And it becomes incumbent upon us to do this responsibly.

[160] So the most telling way that I can explain.

[161] this is that our biggest stories are red -headed.

[162] They're literally red on the terminal.

[163] So there's a scrolling set of headlines at the bottom of your terminal that are constantly going by.

[164] And the biggest stories are highlighted in red.

[165] So if we break a news story and we red -headed, there's almost always a massive jump in the stocks.

[166] And that, I would imagine, has to do with algorithms from traders that are set up.

[167] However, they do it to be coded, where if something is redheaded, then the stocks move.

[168] So we will purposefully not redhead stories where we don't actually want to generate an enormous market reaction if maybe the story is more nuanced.

[169] So, you know, if let's say a company might be considering buying another company but they haven't entered formal talks yet or something like that.

[170] You know, we want to make sure that we emphasize the nuance there so that maybe that particular M &A deal is not as advanced as we would, you know, maybe want one to be.

[171] Or maybe here's another example, that talks have happened and ended and are now dead, and it's not live.

[172] For example, you wouldn't redhead something about, you know, Apple to probably buy McLaren.

[173] Right.

[174] Well, that's right.

[175] In fact, we did not redhead that story when, because we did write sort of.

[176] a version of it after the FT put out their story.

[177] And yes, we did not redhead that story.

[178] Although, let me put it this way.

[179] And this is something that we do as a sort of a service to our clients.

[180] When the FT ran that story, their headline was redheaded.

[181] So we did redhead their headline because the people that made that decision thought that that was an important enough headline.

[182] And the FT is of a stature where we have decided at Bloomberg that they're write almost all the time.

[183] So, you know, we've given certain media organizations, the F .T, the New York Times, CNBC, the Wall Street Journal, the benefit of the doubt that they're, you know, we know that their track record is good enough, that even if they beat us to a story, we typically will alert our clients to that fact.

[184] Now, look, there.

[185] Yeah, well, it's interesting.

[186] It's almost like even at that point, this is what's so fascinating about how markets work.

[187] the news, like you guys may have decided not to redhead or not to run a story about that potential acquisition.

[188] But once that news is out there, that impacts the markets.

[189] So redheading the news that the rumor is out there is probably super relevant to your customers.

[190] David, you've hit on something that we talk about all the time here as reporters, which is if we get beat on a story, how much do we then have to react to somebody else's story?

[191] You know, so it's a, in other words, this wasn't news a minute ago and we didn't feel.

[192] But now that the news is out there, all of a sudden things are baked into the stock price.

[193] So is it worth it for us to negate somebody else's story just to have the stock price come down?

[194] You know, sometimes the answer to that is a yes and sometimes the answer to that is no and just let it be and sort of let the fact that Bloomberg didn't match the story speak on its own as, look, you know, we weren't able to confirm this.

[195] So we're not really in the business of slamming other people's erroneous reports, but sometimes it is sort of necessary to do that if the market has moved one way or another.

[196] Right.

[197] And it's interesting that your incentives are kind of the opposite.

[198] I mean, a lot of publications these days, the incentives are around page views and, you know, their CPMs.

[199] And what they want to do is make something seem splashier than it is, so they get more attention.

[200] And for you guys that, you know, you don't want to be the boy that cried wolf and you have a responsibility to the, you're paying customers to deliver them what you believe is the most accurate representation of the news.

[201] So you actually have an incentive not to downplay things, but certainly to play them accurately.

[202] And if others are overplaying them, then you might be incentivized to give your customers the kind of edge by making sure to downplay it just to negate the overhyping.

[203] Yeah, absolutely, which actually I think makes this place sort of a good place to work because you don't get caught in that game.

[204] You can sort of feel good about yourself when you go home at night, that your sole obligation is to just be as right as possible.

[205] Yeah, your incentives are aligned with the truth.

[206] Absolutely, and that helps a lot when we cover M &A because I am reliant on people that are directly involved in these transactions to give me the information to put out these stories.

[207] In other words, we can hear all sorts of information from indirect sources.

[208] Maybe they're, you know, bankers that aren't working on a deal, or maybe they're rival executives, or maybe they're ex -board members, or maybe they're friends of an executive, or maybe they're traders who have a financial incentive on their own.

[209] Well, none of those sources are good enough for us to publish something on because they're not direct.

[210] Yeah.

[211] So when Bloomberg runs a story, as someone who reads it, you can be certain of the fact that this.

[212] This is not indirect information.

[213] You know, there have been a number of cases where I have put out a story and it's happened to be, you know, the day before earnings or something like that.

[214] There was a big, there was a company called Synaptics, which is based in California.

[215] And it was a takeover target for a Chinese conglomerate for about nine months.

[216] And I put out a series of stories basically that said, you know, the Chinese conglomerate is interested.

[217] They're interested in this price.

[218] they've done due diligence, they've lowered it to this price, they're still in talks, and then eventually the thing died, and it was a whole life cycle story of interested, lowered price thing over.

[219] There were like four stories all along the way, and I was the only one that reported it, for whatever reason, no one matched this story.

[220] But I knew who my sources were, and they're directly, intimately involved in the process.

[221] So from both sides, not just one side.

[222] So no one has an incentive to lie here.

[223] And that's also should be pointed out that we have to get both sides sourcing in order to run a story to be comfortable with the fact that it's right.

[224] So everyone has given a chance to sort of weigh in here before we publish things.

[225] So I got a number of emails from traders saying, you know, you're being played.

[226] You're being manipulated here.

[227] No one else is matching these stories.

[228] Someone is playing you to manipulate the stock and make money off it.

[229] But, of course, I know who's doing this.

[230] And, I mean, there's no way.

[231] We'd all go to jail.

[232] And it's just not their job to do that.

[233] So, you know, it's one of those things that I sort of have to explain to people.

[234] Like, no, you don't understand the way Bloomberg sourcing is done.

[235] I'm not getting this information from traders.

[236] It doesn't work that way.

[237] Yeah.

[238] So across the industry, this is great transition.

[239] The kind of other thing we wanted to talk about is one of these several things we wanted to talk about is what are the nuts and bolts of how this works.

[240] is that standard across the industry or is that unique to Bloomberg that you need and is it you know for you to feel comfortable going with a story that you have direct sources from both sides of a deal is is that your standard and is that standard across the industry so this can be in general that is the standard there can be exceptions if we know something is really in a hot pursuit and we know the Wall Street Journal is chasing it and we know the Financial Times is chasing it.

[241] There are certain times where if we are so certain of one side of the source, let's say it's the CEO of a company that we've gotten to tell us something on background.

[242] All this stuff, by the way, is it's never on the record.

[243] It's all anonymously sourced.

[244] So the whole job is based on relationships with people.

[245] So if we have an existing relationship with the CEO or the chairman of the board of a company and they've told us something, at that point, what we'll probably do is, do is we still will reach out to the other side to say we're running this, but we may only give them a very short amount of time to sort of get back to us before we say, right, like at least give them the chance to say no comment.

[246] And then basically what we'll say is, all right, we've given them the chance.

[247] They didn't wave us off the story.

[248] We know our other source is so strong here that we'll go with it.

[249] And in those cases, you will see some stories that we run attributed to just a person familiar with the matter.

[250] But everything else will be.

[251] attributed to people familiar with the matter and by and large that means that people on both sides have weighed in that means both sides interesting wow this is that's so cool yeah I had no idea and these are the words that you know I mean we read like we read a lot of these articles given what we do on the show and um I think the that probably if you're not in the industry that like eyes just gloss right over that like what does that mean like but but coded in that language is Are these indications about, like, what the genesis of the story is?

[252] So, so I'll give you a little bit more.

[253] So there's a lot of inside baseball things that you would never know to look for unless you're talking to a reporter.

[254] You can sometimes glean where the information is coming from based on who the reporter is.

[255] So people that cover M &A, you have to look up what these people do and what their jobs are.

[256] So on a given story, there may be three bylines.

[257] The first byline is typically where the main information has come from.

[258] Almost all major news organizations does this.

[259] So the person with the first byline usually has gotten the critical or maybe the first piece of information to kick off a scoop.

[260] This is based purely on fresh news, scoops.

[261] Well, sometimes on a deal, reporter number one is, let's say, the activist investor reporter.

[262] So you know that the information came from the activist.

[263] because otherwise, that person wouldn't be on the story.

[264] In other cases, maybe the first byline is, let's say, you know, Verizon just bought Yahoo. Well, we have a different Verizon reporter than a Yahoo reporter.

[265] Same with the Wall Street Journal.

[266] Same with Reuters.

[267] Take a look at who the first byline is.

[268] If the first byline is the Yahoo reporter, then the main information came from Yahoo or someone involved with Yahoo. So then maybe the last byline is the verily.

[269] Verizon reporter.

[270] Then you could say, all right, well, then that person probably just called Verizon to check up on that the information from the Yahoo side was right.

[271] So you can sort of figure out where the information came from.

[272] It's not always a leak, though, which is very important, I think, for people.

[273] We're not talking about strategic leaks all the time.

[274] And we actually talk about this.

[275] If you go to episode seven of My Deal of the Week podcast, I talk about this with the other two M &A reporters at Bloomberg.

[276] A lot of the information simply comes from you know, what I would say to some degree is coincidence, which is I have been trying to get a meeting with a person for weeks or months.

[277] And finally, this person has said yes.

[278] And so I have lunch or coffee with them.

[279] And I'm able to ask the right questions to the right person and get information.

[280] And then I come back to the office.

[281] You know, well, maybe it's seven at night at that point.

[282] And we've made a decision at Bloomberg.

[283] This story is not so important that it needs to go out at seven at night.

[284] We'll put it out tomorrow.

[285] So then the story goes out tomorrow, but like, you know, I had to have some sort of, you know, parent -teacher conference with my kid in the morning.

[286] So the story eventually goes out at like three o 'clock in the afternoon.

[287] Well, there's no strategy to that.

[288] But I think a lot of people read in, and in fact, you see it all the time on Twitter after stories I've broken.

[289] Why did this story come out when it did?

[290] Like, there's way less into that than you think, almost all the time.

[291] Like, the story went out when it did because, like, I got around to writing it when I did.

[292] and I met with the right person at the right time.

[293] I would say 80 % of the stories fall into that bucket and 20 % of the stories fall into there's some sort of reason for why the story is going out right now.

[294] Interesting.

[295] From your perspective, generally, do the players in the stories understand all of this coded language as well?

[296] Like, let's take Yahoo, Verizon, for example, which I know you spent a little.

[297] a ton of time on that story.

[298] You know, byline comes out and say, you know, on one of the pieces of information, and let's say it's a critical story, and the Verizon reporter is first on the byline.

[299] Does Yahoo, do people at Yahoo then understand that means that, okay, like, this information is probably coming from Verizon, or is this kind of, you know, the backroom baseball?

[300] So it depends on who at Yahoo you're talking about.

[301] So your general CEO or CFO or board member has no idea by and large.

[302] So they rely on their own internal media relations or in the case of an M &A deal, they actually hire outside PR firms.

[303] And these people absolutely know.

[304] In fact, many of them are former journalists.

[305] So they are hired specifically to help companies figure out, A, where the information is coming from, and then B, to sort of craft the story and to work with reporters.

[306] So all the M &A reporters know the major external PR firms that are hired on deals very well.

[307] We speak to them all the time.

[308] So the companies are called, there's one that's called Brunswick.

[309] There's one that's called Sard Verbinan.

[310] There's one that's called Jowell Frank.

[311] There's one that's called Abernathy McGregor.

[312] There's a handful of other ones that, but those are the major ones that are hired specifically to deal with M &A transactions.

[313] So when one company decides it's going to sell itself or is engaged in a sales.

[314] process, they then hire one of these external firms.

[315] And sort of the PR at that point is then pushed in their directions.

[316] So in many cases, you actually stop dealing with the company directly.

[317] And then you sort of start dealing with the PR firm.

[318] So for instance, in Yahoo's case, Yahoo had a pre -existing relationship with Brunswick, but a lot of the communication, you know, trying to figure out if stuff was right or not, ends up going through Brunswick rather than Yahoo. The Yahoo internal PR system also is still a method of getting at what information is right and wrong.

[319] And they were certainly still involved in that process.

[320] But it really does depend on how sophisticated the company is, whether or not they keep the PR internally or sort of hand it off externally.

[321] That's really interesting.

[322] It sort of leads me to start thinking about your week and your day.

[323] How do you decide, you know, what you're going to chase down.

[324] and when you're going to do sort of long lead things where you should be aggressively trying to get this, this lunch or this coffee set up, and how do you decide, hey, this is the panic button?

[325] And then in terms of amount of media created, like how many stories do you write a week?

[326] You do one podcast a week.

[327] What's the total amount of media that you create?

[328] So on a given week, I'd say I'd probably write two to three stories on average.

[329] There's certainly no quota for that.

[330] In terms of what I'm focusing on, I have a chase list.

[331] that I keep for myself, that is built on sort of a running list of tips that I've gotten from everyone I speak with.

[332] So that runs the gamut of company executives, company corporate development type people, bankers, lawyers, board members, consultants that are hired by some of these companies, private equity firms, PR people.

[333] I'm sure there's a few other people that are in there in that mix at all.

[334] But those are the general people that I'm meeting with that are at the level that they'd actually know sort of what's going on.

[335] That's sort of my rotating cast of characters that I'm meeting with on a given day.

[336] Then when I have to sort of narrow in on something, so, you know, sometimes these sales processes I'm coming up with purely out of the blue.

[337] And so, you know, nothing had been reported on this.

[338] And then suddenly I'm able to break a story.

[339] And now there's a whole circus around it.

[340] So one of the stories I break.

[341] broke was Verizon was actually had started talks and was interested in buying AOL.

[342] So this was before the Yahoo thing.

[343] So that was a story that sort of, there was no narrative around that.

[344] And then my colleague, Scott Moritz and I broke that story.

[345] And now all of a sudden it's sort of out there.

[346] So now everyone's chasing it.

[347] For the Yahoo story, you know, Yahoo eventually decided like they would go public with that and sort of admitted that they were going to sell the company.

[348] So then like the whole world is on the Yahoo story.

[349] And then it's at the, so it then becomes very high profile for me, so to your question about what to chase.

[350] Because now I know that that is going to be a really competitive story.

[351] And I know that Yahoo is a big enough company that like everybody's going to care about that.

[352] So I'm going to pay more attention to breaking a Yahoo story than any of the sort of, you know, deals of lesser significance either by name recognition or by size that may come along that's still sort of technically under my umbrella beat of all technology media and telecom companies, which is my beat.

[353] Bloomberg.

[354] So, you know, I may let a three or four billion dollar deal pass without really chasing it if I'm close to breaking some news, even if it's just incremental news on Yahoo, because I know it's going to get a lot more readership and it's going to get a lot more attention, both internally and externally.

[355] Now, beyond name recognition, the other general metric I use is size.

[356] So I'm trying to, you know, at Bloomberg, we sort of pride ourselves on breaking the biggest deals.

[357] So if I can break a $15 billion deal, that's going to be a lot more important to me than breaking a $1 billion deal.

[358] And really, we don't even pay attention to deals that are under $1 billion unless they come with some big name recognition.

[359] So maybe a company used to be worth a lot more, and now they aren't anymore, or for some other reason, you know, a lot of people happen to know this company because they're consumer facing or whatever it may be.

[360] So you're saying if we've got some small M &A that we want to sweep under the rug, just wait till Verizon's going to pull an acquisition and then do it then?

[361] Yes, exactly.

[362] That's exactly what I'm saying.

[363] Getting buried.

[364] Yeah, wait until Verizon's going to do an acquisition on a Friday and then do it on a Friday.

[365] Take it out with the trash.

[366] Right.

[367] So this leads to a point that David and I had been talking about since kind of a couple of years ago before we were doing Acquired, and we were thinking about, you know, if we were going to do a podcast, maybe this would be an interesting area to go after because it sure seems like nobody talks about these deals after they're done.

[368] People talk about them when they're announced.

[369] People talk about them when they close, but there's never this like retrospective or like, did that actually go well or trying to understand, you know, what trends were, can we extrapolate from these deals that have gone well, and hence us starting this podcast, why is that, in your opinion?

[370] Like, why do we not see this sort of coverage later on beyond just the fact that, you know, that information is less actionable at that point?

[371] So one of the reasons is it's much harder.

[372] It's much harder to write a good, comprehensive story on that.

[373] And it would necessarily be sort of a featurey type story because you'd really have to dig in and sort of start at the beginning.

[374] Look, you guys do a good job of it on this podcast.

[375] But from a reporter standpoint, we need to decide, do I want to spend the work on sort of figuring out exactly how good this acquisition was from a culture standpoint, from a financial standpoint, you know, I have to go back.

[376] I have to figure out, you know, sort of exactly how this acquisition may have been profitable or unprofitable.

[377] profitable.

[378] A lot of times the numbers are masked because once a big company buys a little company, they don't necessarily need to break out all of the numbers that used to be publicly available when that first company was public.

[379] We joke on this show that's why we love lawsuits.

[380] Right.

[381] Exactly.

[382] Because we get to dig into them.

[383] Exactly.

[384] The numbers all of a sudden become public or other things that were hidden for sure.

[385] But I mean, the biggest reason is what you said that it's not actionable.

[386] The main reason is that my incentive here, particularly at Bloomberg, is to move markets.

[387] I mean, it's something that is very well known here.

[388] The goal is to provide value to a Bloomberg subscriber that's trading on information.

[389] So at Bloomberg, it's very cut and dry, which is like if you have the time, you know, 80 % of your day should be trying to break news on live deals.

[390] Then the other 20%, I mean, these are just made up numbers, I'm saying, whatever.

[391] The other 20 % is sort of your own time.

[392] So if I wanted to write a story like that, it's Google time.

[393] Right.

[394] It's Google time.

[395] Exactly.

[396] That's right.

[397] It's free, you know, free project, Google X or whatever they call it at Google.

[398] So then it's up to me on what to do.

[399] So look, we are, this isn't quite what you guys do in the podcast, but we did decide as a team that we're going to take on a project for next year where we do oral histories of certain deals.

[400] So that's something you can expect for Bloomberg.

[401] So we will go back in time and talk to the people that were involved, let's say, 10 years ago.

[402] I think we're going to try to do them around like acquisitions or anniversaries of acquisitions.

[403] So we're going to go back and talk to the people that were involved and ask them why they did this, what they were thinking at the time.

[404] It won't really be a look at sort of how successful or unsuccessful the acquisition was.

[405] So that's not quite what you're getting at.

[406] those really, you know, are sort of what I read in Harvard case studies, typically, Harvard Business School case studies at business school.

[407] So for people that have actually gone to business school, I think you do see that a lot of the time.

[408] But those are not, you know, publicly available in general for people.

[409] So you really don't see that very much.

[410] So one of the reasons, yes, it's not actionable.

[411] And the other reason is that it's just sort of hard to do it given the fact that you have mandates to do other things.

[412] Yeah, it's a little bit like, it's like, you know, getting news on Facebook versus, you know, reading articles on Medium or something like that or, you know, or, you know, longreads .com or something like, you know, it's the, you want the dopamine, like the dopamine hits of, and which for you guys is moving markets and for the news industry, like there's a lot more, in aggregate, there is a lot more dollars and value and buzzes.

[413] in that than there is on the, you know, the heart of going back and eating, you know, like a whole plate full of vegetables.

[414] I do think that another part of it is that the general public really just wants to know the headline information.

[415] So, you know, what company is buying, what company, and how much is it?

[416] And then, like, they sort of move on.

[417] So that's how the news.

[418] I mean, all the news cycle works like that in all forms and fashions of life.

[419] What's the headline news?

[420] Okay, I got it.

[421] just move on.

[422] That's sort of what our culture is like now.

[423] So even in what you're talking about, which is like, was an acquisition successful or not, you know, almost all I want to know, it can be sort of told on a gut level.

[424] So like, have I read how successful Facebook buying Instagram was?

[425] Like, no. Like, do I know that Facebook buying Instagram was really successful?

[426] Yeah, I do.

[427] I'd like to know maybe how successful it was, but like once I know how much money Facebook gained from Instagram, which would require some analysis.

[428] Like, that's about all I need to know.

[429] You know, I don't really need to, like, read the sort of the why behind that.

[430] People that are really involved in this stuff and do it for a living, I'm sure would.

[431] But, you know, then all of a sudden now you're dealing with sort of a new form of media, which is like, all right, well, if I'm only writing something to the people that are really involved in this, now I'm almost working for a trade publication rather than the Wall Street Journal or Bloomberg.

[432] So I'm going to write something that's really focused on from an audience perspective about who I'm writing for.

[433] Yeah, I mean, that's something we think about with this show all the time.

[434] David and I have looked at our numbers.

[435] We probably had three sort of check -in since we started the show trying to figure out, okay, what's the future of this thing?

[436] You know, this is like a side project for both of us and, you know, you start looking around at other technology podcasts, like, whoa, how big could it get?

[437] But you're right, it's super niche.

[438] It's this thing that it's people that are in the M &A world or in startups and hope to one day be in the M &A world.

[439] And, you know, that's got a ceiling.

[440] And I think you talking about the fact that it kind of fits under that moniker of trade publication is the best way to succinctly put it that I've heard yet.

[441] Yeah.

[442] It's something that I think about, too, for my podcast, which is, I mean, it's an M &A podcast.

[443] So, you know, I think to myself, like, all right, well, people that have some sort of demonstrated interest in M &A, which pretty much means you work in the business.

[444] We'll listen to this.

[445] And how do I get out of that box?

[446] How do I grow an audience for my podcast, too?

[447] So just this past week's episode is Rob Kindler, who's the head of M &A at Morgan Stanley, Global Head of M &A, and his brother is a stand -up comedian, Andy Kindler.

[448] So I had them both on the show.

[449] So I'm trying to figure out ways myself of like, all right, well, maybe Andy Kindler fans will listen to this thing.

[450] And it's not just the M &A crowd.

[451] And like, I've got to think to myself, how do I grow the audience here so that it's not just sort of the standard fare of people that work and sort of live and breathe this industry?

[452] history.

[453] Well, I can tell you that I think your idea to do what you and the team have decided to do with kind of more of the feature piece around anniversaries, just looking at what people have told us about this show has a lot of merit because when we do certain episodes, for example, the Snapchat and Facebook acquisition that wasn't episode, that has a tremendous backstory and there's drama and there's, you know, listening to David run through the acquisition history and facts there is enjoyable in its own right just as a form of an entertainment.

[454] So I think that there have been a few instances where we had a more dramatic history reading there.

[455] And that is something that we continually have people tell us.

[456] You know, I actually am not that interested in M &A, but I listen to that episode specifically because my friend told me it was interesting and I loved hearing that story.

[457] Yeah.

[458] That is absolutely something we found on and been spot on on this show.

[459] And our listeners can tell us, you know, if you disagree, but I doubt you will.

[460] Like, people listen to us for the stories, you know, and that's like, that's what's so interesting that we found is this difference between, you know, news versus stories versus analysis and getting that balance right, you know, obviously our listener base and potential listener base is much smaller than Bloomberg's, but, but I find it fascinating, like, how those, those three pillars of what's going on, you know, vary by, by medium.

[461] Yeah, my idea for the, or I don't know if I should give this away because, like, my competitors at the Wall Street Journal are listening, they'll take the idea but I'll at least tease you guys that it's it's it's sort of what you're hinting at where that there is sort of an anniversary coming up of a counterfactual a deal that did not happen so that is what that's sort of what the oral history that I'm thinking of doing is to talk to the people that were involved and sort of why it didn't happen and like what the world would have looked like if it did so cool yeah well that's what I mean I think I think this far our latest episode on Android is probably on track to eclipse this but I think our most popular episode is Snapchat.

[462] It's neck to neck with LinkedIn because we did that one.

[463] That was the first time that, you know, not that we were anywhere close to breaking news there, but it was still at the top of the news cycle when we released that episode.

[464] So I think it was a lot of people asking their friends, what do you think of this LinkedIn thing?

[465] And we had already put up an episode so people would say, you really should listen to that at this podcast episode to hear about it.

[466] But that was like a spike when it was relevant in the news.

[467] But Snapchat just keeps getting tons of downloads.

[468] And I think it's because of this like, oh, it's this anti -history, you know, like what what the world could have been if Snapchat were part of Facebook.

[469] Yeah, I also, I think a lot of people are simply just fascinated with Snapchat.

[470] I know I am in part because, I mean, I'm 34 years old.

[471] And like, I can't figure out how to use Snapchat.

[472] Like, so it's the first, like, company that has a product where I'm like, I am aged out of this at this point.

[473] Like, I don't know what this thing is.

[474] It's depressing.

[475] Really not intuitive to me. I don't fully understand why it's popular.

[476] That said, I do see.

[477] sort of a Snapchat model here that where I feel like other other companies are we're all sort of moving towards something.

[478] You know, I just actually, we just met with the whole executive team at Line, the Japanese company that does its messenger service.

[479] And they were sort of explaining to us how in Japan, Line and some other companies have sort of taken the path of.

[480] of having your whole ecosystem done through its platform.

[481] So online, you know, you can order a cab through line.

[482] You can, you basically, yeah, you order your meals through line.

[483] So all of these other independent apps in this country are sort of housed within one ecosystem with line.

[484] And you can see Snapchat developing into that.

[485] Certainly Facebook is trying.

[486] But, you know, Facebook Messenger is still sort of very much independent of Facebook and sort of that your core Facebook, your news feed, your pictures, it's not quite all lined up in the same sort of bubble ecosystem.

[487] Obviously, like, I think even the new iOS 10 for Apple, you're sort of seeing things move in this direction a little bit.

[488] But, you know, there's an app store baked into I messages.

[489] Exactly.

[490] Exactly.

[491] So, you know, I think Snapchat has it right where they've realized, oh, this sort of, you know, housing form of chat and general communication can also be used to do other things.

[492] One of the questions we were going to ask you is, you know, a section we always do on the show is tech trends and, you know, what this deal represents the tech trends?

[493] And I think that's a perfect one of, you know, that we were going to ask you, like, what tech trends do you see, you know, covering the landscape that are coming and absolutely, you know, how messaging, like, you can look to Asia and see how messaging has evolved into this operating system there.

[494] And then the question, I think, is like, is, is and if so, if, if, So when will that start to be the reality in the U .S. as well?

[495] Major wave that's happening in Asia, and the question is, is that coming here to the U .S. too?

[496] I'm curious to hear your thoughts on this one, because here's a tech trend that has not happened yet, but I'm – I want – So before I was an M &A reporter at Bloomberg, I covered media for three years, and then I transitioned into this role covering all technology media and telecom.

[497] Covering media at a media organization is like the ultimate neighborhood.

[498] For sure, absolutely.

[499] Totally right.

[500] Look, you're around a lot of people that sort of came from organizations that you're covering from, too.

[501] So it's sort of like, you know, oh, like I need like a time ink source.

[502] Like, well, like just walk three rows down.

[503] And like, that guy used to be the managing internet time, that type of thing.

[504] So here's my question to you.

[505] We have seen the way a lot of consumerish media tech companies are valued for years now has been based on users, whether it's MAUs or some other form of just user growth.

[506] That has been the main way that a lot of these media -ish companies have been valued.

[507] But at some point, and we're already seeing it with some, like let's say Twitter, the growth stalls.

[508] But there's still value to these products.

[509] But the way Wall Street has valued them, basically there just seems to be a cap.

[510] And then they may turn into sort of zombie -like companies.

[511] because the user growth isn't there and they're not making any money.

[512] So what's the way out?

[513] Well, right now, the answer seems to be like they just sort of give up or sell.

[514] But I wonder if one day we see some of these media tech media companies that have always been based on users if they can somehow formulate a new way of generating revenue through some degree of subscription, which we have not seen.

[515] So, you know, Twitter has never thrown out a subscription fee.

[516] Certainly Facebook hasn't, and they've never wanted to because the way Wall Street has valued them, that would actually be sort of anathema to what they're going for.

[517] But, you know, at one point, but we have seen among more traditional media companies that have gone online, they have transitioned to something that you would call a subscription model, which is the paywall.

[518] So you now have to subscribe to the New York Times or subscribe to the Wall Street Journal.

[519] So is it just a matter of time before this sort of traditional media that has gone online meets the new media that has not done this?

[520] And do we see some of these older new media companies go subscription?

[521] Well, Alex, I think you're forgetting about the vibrant community over at app .net, the subscription only Twitter.

[522] That is a blast from the past, man. Yeah, right.

[523] So I, you know, I look at this as a, I think the reason why there is a little bit of success with paywalls at publications and why I think that would be the nail in the coffin for any, any form of kind of like new media that involves, it's called social media, is that traditional media doesn't require network effects.

[524] And the, you know, let's say Twitter, for example, absolutely does.

[525] And as soon as people are, you know, my sources are no longer on Twitter, like the people that I want to be following because they decided not to subscribe, it's less valuable for me. And then I don't get that content.

[526] So I'm incentivized not to subscribe.

[527] And I think that there's this like unidirectional value creation that happens from traditional media companies to their readers.

[528] And there's this like massively bidirectional interconnected web on social media where if people start falling out of the ecosystem, you know, then everybody else is less incentivized to pay also.

[529] Isn't it possible, though, that some of these systems become so sticky and invaluable to our life that if you present people with the option of having to pay some sort of really small micro -payment, which you can then slowly move up over time, that people wouldn't just drop out.

[530] If you had to pay a penny to stay on Facebook, would you do that?

[531] I mean, all my whole life's on Facebook.

[532] All my pictures are on Facebook.

[533] Well, it's interesting.

[534] WhatsApp, you know, took this approach that, you know, was a dollar a year to use and free for the first year, crucially.

[535] Free for the first year and then a dollar a year.

[536] I think it's super interesting what you're saying.

[537] Well, the cynic in me says, Alex, come on.

[538] That would require actual creativity and, you know, that would be, Silicon Valley is creative on the surface, but, you know.

[539] Well, I mean, I think the more, like, the cynic in me says people don't pay for things.

[540] And people especially don't pay for, well, I guess, just to say people don't pay for, like, entertainment, people don't pay for websites, but.

[541] Well, here's why I think you could do it, though.

[542] But, but of course they do pay for entertainment.

[543] They pay for TV, for instance.

[544] Now, I mean, that's eroding a little bit, but that's still, like, a hundred million people that pay for TV in this country.

[545] Ooh, would they do a rev share?

[546] Like, could you see Twitter influencers getting paid out a percentage of their followers?

[547] Yeah, well, Ben, I mean, the crux of the point that Ben's bringing up is, unlike a Wall Street Journal or a Bloomberg or New York Times, you know, Twitter and Facebook don't pay their reporters to generate content.

[548] It's dependent on people being on the system.

[549] Or even like YouTube.

[550] Yeah.

[551] That's actually the interesting middle ground here is YouTube does pay people.

[552] It's YouTube, right.

[553] So they pay their high -end content creators and they have a social.

[554] subscription service.

[555] That's right.

[556] That's right.

[557] But where I think this could work, I actually think Bloomberg is, could be an really interesting model here that people haven't really tried in this area in tech.

[558] Is you guys, just like we were talking about in the beginning of the show, you monetize the information and the meaning of what you do and sell that as a very, very expensive subscription to people who care a lot about that.

[559] And yet for Ben and me, we go to Bloomberg .com and get your news and read your reporting for free.

[560] It would be super interesting.

[561] You know, Twitter especially, I think, could do that if they made the right investments.

[562] Like, what is the data that in aggregate is generated from Twitter from the fire hose, quote and quote, that is very valuable to people?

[563] You know, and it's interesting.

[564] There is clearly demand for this.

[565] there are third -party companies that do this.

[566] There's DataSift.

[567] There was, oh, the company Topsy that Apple bought.

[568] And there are a few others.

[569] But obviously, as a third party, like, you're not going to be able to do that anywhere near as well as Twitter itself could.

[570] There could be a huge latent revenue stream.

[571] Yeah, it's tough.

[572] It's tough.

[573] I mean, obviously, the big fear there is you don't want to disincentivize your power users from using Twitter.

[574] So it needs to be something where, it's very purely additive for them to actually pay for whatever it is that they're getting rather than, you know, sort of have them feel like they're targeted to pay more money.

[575] Right.

[576] Does Bloomberg use paywalls at all?

[577] We don't.

[578] We don't because we have the terminal.

[579] So we've decided that we're not.

[580] Now, again, that is a discussion that I know has happened here before, sort of the idea of should we use a paywall?

[581] So the decision so far has been no because we sort of have this built -in paywall in our system.

[582] But, you know, one day, I suppose that could change.

[583] Super.

[584] It's, you're bringing me back here to my days at the journal and in media.

[585] They're very happy memories in one regard, but on the other hand, business models of media are tough.

[586] Look, we're talking about Twitter or sort of social media in general.

[587] And one point that I do want to make here, which, again, And sort of, it speaks to an issue that we have sidestepped, but the issue still remains, which is, as a reporter now, I no longer really, if I have a reputation of being right, I actually don't really need Bloomberg's infrastructure anymore to move markets.

[588] So I'll give you a real world example, which is when Comcast acquired Time Warner cable.

[589] I got that information at like 9 .30 at night and I had it sourced.

[590] We were good.

[591] I knew I was 100 % right.

[592] But it was 930 at night.

[593] And the Bloomberg infrastructure sort of among like my editors, like no one was at work.

[594] They're all at home.

[595] So I had to sort of figure out and I was also sort of new to this role.

[596] So I had to figure out like how do I alert the right people?

[597] people here to get them all online so that they can approve my sources so that we can actually write this thing.

[598] And not only do the sources have to be approved, but then I have to write four paragraphs and editor needs to read those four paragraphs.

[599] And editor then needs to queue up headlines.

[600] We need to make the decision to redhead, as I talked about before, which of course that requires sort of a new level of authority.

[601] So in the amount of time that it took for me to figure out all of the different levers that needed to be pulled, the right people to contact, the phone calls to be made that first weren't answered and then were.

[602] In that amount of time, David Faber, who at CNBC, got the news and just sent out a tweet.

[603] And he broke the story on Twitter, which CNBC sort of allowed him to do.

[604] While I had the story at least 42 minutes before he did, because he just broke it instantly.

[605] So, you know, it made me think, like Twitter has sort of upended this.

[606] I don't need Bloomberg anymore.

[607] Like, I could have broke this thing on my own.

[608] But, you know, Bloom...

[609] That's going to be so frustrated.

[610] That's like as a venture capitalist when you miss investing, when you pass on Facebook, you know.

[611] Right.

[612] But of course, I do need Bloomberg because they're paying my salary, so I would have to be a real entrepreneur and be confident enough that, like, I could sort of start my own thing on my own, you know, and just at Recode, you know, who've done this.

[613] But still, even though, I mean, they got acquired by Vox.

[614] Well, exactly.

[615] And they make their money in part through their conferences business.

[616] The better example might be the information, which is Jessica Lessons, which charges.

[617] I mean, so they are a subscription media model like we were talking about.

[618] They charge, you know, several hundred dollars per year for their information.

[619] And I don't know exactly how successful they've been at getting people to pay for their, information.

[620] But, you know, it's, it's, it's not sort of a slam dunk here.

[621] Obviously, like, Bloomberg has enough else going for it that, like, I'm not, like, you know, if you're listening to this, bosses, I'm not leaving.

[622] What you can't have as an independent, though, and this is, like, the ultimate tech trend for me is, um, they don't have the redhead, right?

[623] Like, they don't have the, the customer relationship and proprietary data channel to your customer, you know, the financial traders, right?

[624] Or whoever the equivalent is in whatever industry, if you control that, you can...

[625] Well, but all you need is that to initially build the trust.

[626] And now that Alex has that, if Alex were to tweet, I would suspect that he would be able to move markets on his own.

[627] This is why Twitter needs to build the redhead.

[628] In fact, there was one time several years ago, I think it was a shutterfly being for sale, although that might not be right.

[629] But There was one instance several years ago where I thought that we had, this actually changed Bloomberg's tweeting policies, this one mistake I made, where I thought the story had gone out and tweeted something and actually front run my own story.

[630] And so it was a real -life test case where I did move markets.

[631] My tweet was picked up by traders and the stock moved like 5 % because I said, Shutterfly and hired, you know, catalyst to sell themselves or whoever it was.

[632] And then we realized the story hadn't gone out.

[633] We immediately pushed out the story at that point.

[634] But, you know, there was like nine seconds of confusion there where I had basically beat my own story.

[635] And then we re, we sort of huddled up as an organization and we were like, okay, from now on, Bloomberg reporters can't tweet out stories until the story has a link involved to it so that we're sure the story has gone out.

[636] to the world.

[637] Now, again, we've even amended that policy by now we have a link that only terminal subscribers can see so that we can tweet out with this link.

[638] And then you can, so the normal web link doesn't go out still until 15 minutes after the fact.

[639] But we keep sort of coming up with like, you know, little incremental amendments to this in order to sort of try to keep up with like the general world of social media with this built -in 15 -minute, you know, difference.

[640] And I imagine that if I speak to you next year or two years from now, like the rules will have changed again.

[641] Wow.

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[661] One quick topic we wanted to cover before we move into follow -ups and carve -outs is any advice you of so many of our listeners are work at startups, our entrepreneurs, our aspiring entrepreneurs.

[662] And maybe this is earlier in the lifecycle than where you play of companies.

[663] But the press for startups is like such a black box.

[664] Like if I'm a startup CEO or founder and I just have no idea how you work.

[665] I have no idea how to get in touch with you.

[666] Should I?

[667] Should I invest in building relations?

[668] Any thoughts from your end being on that side of the table of, you know, how entrepreneurs can best interact with you?

[669] Well, you absolutely should try to build a relationship.

[670] But the way you should try to build a relationship is to know what our job is.

[671] So, and that very much depends on who you build a relationship with.

[672] So certain outlets are going to cover startups much more closely than others.

[673] So, you know, Bloomberg plays in sort of the big game land, where, you know, We're going to write a lot of stories about Uber, but we're not going to write any stories about your piddling, you know, million -dollar valuation startup at this point.

[674] You're not covering Series A funding announcements.

[675] No, no. But, you know, tech crunches or like whoever it might be that's sort of covering that at that level.

[676] So, yes, build a relationship with a Bloomberg reporter, but don't expect us to sort of curry you favor and write about your startup that, like, nobody knows because we just don't do that here.

[677] like it's just we don't have the audience for it so know where we're coming from it's not personal it's just that like our editors are not going to allow us to write that story however you know the day that you guys you know all the sudden you've put out a series B series C series D and now like you're in you know almost unicorn territory or unicorn territory then yeah like it's good that you put in the time to make a relationship with a reporter because now that your company is big enough to write about.

[678] Now you're probably going to get a more favorable story because you've spent the time having some lunches and coffee and you've built a relationship with the reporter and the reporter knows that he can go to you for access.

[679] You have to remember where the reporter's coming from too.

[680] What we want is exclusive information.

[681] That's what we want.

[682] This happens all the time with smaller M &A deals with me that are sort of pitched at me. And like if a deal sort of with two companies that like no one's really ever heard of and it's right on that billion line, like we might cover it or we might not.

[683] If you give us the information exclusively, if this is a Bloomberg scoop, we'll cover it.

[684] If you wait and put out some sort of press release or you give it to somebody else first, like we're not going to cover it.

[685] It doesn't give us any value.

[686] So you need to figure out, and this is maybe the best piece of advice I can give to an entrepreneur that wants to build a relationship with the press, ask the reporter what matters to them, and then figure out a way that you can give the reporter what matters to them.

[687] So for Bloomberg, it's exclusive information.

[688] For somebody else, maybe it's, you know, I don't know, a sit -down interview with the CEO or whatever it may be.

[689] But figure out what it is that the reporter wants and whatever that is will be dictated by what the organization finds meaningful.

[690] And then, you know, down the road, if you're able to sort of cash in on that, then I think you'll get sort of the positive result you're looking for from the press.

[691] Yeah.

[692] And it's probably always exclusive information, but it's what type of exclusive information?

[693] For you, it's a deal.

[694] For another type of organization, it's a sit -down interview.

[695] That's so right, David.

[696] And that's, I think, the important part to make, which is, in many ways, you can sort of give out eight different scoops on the same story.

[697] You know, just sort of piecemeal your information and give one person, one piece of exclusive information, and give another press outlet, another piece of exclusive information.

[698] and then, you know, Recode the Wall Street Journal, the New York Times, the Financial Times, and Bloomberg can all sort of say that they had scoops.

[699] And because you've sort of divvied out the information, you've now gotten seven different stories instead of one with six others ignoring you.

[700] Love it.

[701] In VC, we call that a party round.

[702] Right.

[703] Yeah.

[704] This has been awesome.

[705] I've had so much fun with this.

[706] like I said, reliving my old glory days in the media and tech press.

[707] How long were you at the journal, David?

[708] I was there for just a year, so a very short stint, so I can't speak as any sort of expert, but it was a lot of fun.

[709] I think I was the youngest person there by about 30 years.

[710] Right, naturally, yes.

[711] So now you'd only be the youngest person by 25 years or whatever they mean.

[712] 20 years, yeah, right?

[713] a couple quick follow -ups and this will be fun having Alex on the show here so we do we have three quick sections to wrap up the show one is follow -ups on things that have happened with with deals we've covered in past episodes two is hot takes which are any M &A deals that have happened in the last couple weeks so we do a 30 seconds or less quick analysis of and then three is carve -outs which are fun unrelated items we talk about um but uh Alex is probably up on a lot of this stuff.

[714] So feel free to chime in if you like, or Ben and I will lead.

[715] But any thoughts, please chime in.

[716] First follow -up we have is Instagram.

[717] Alex, you were joking about, you know, yeah, Instagram is probably good.

[718] I have no idea how good it is.

[719] The A -plus of Instagram keeps on rolling.

[720] It is our, on this show, Instagram is our benchmark for the best deal, the highest -rated deal that we have ever had on this show.

[721] So they announced this week that they now have, we've talked in the past with follow -ups about user numbers, also going back to our conversation, Alex, that we just had on social media and aggregating users and the value of users.

[722] They announced this week that they have 500 ,000, more than 500 ,000 active advertisers.

[723] So separate advertisers, organizations, buying ads on Instagram over 500 ,000.

[724] That's up from 200 ,000 in February.

[725] Yeah, I mean, any, by, it's interesting because advertisers are where the revenue comes from, so it's interesting to look at that.

[726] But just by looking at the growth of that, I mean, it's been, what, eight months since February?

[727] And seeing, you know, Instagram's ad program is, what, like two, three years old now.

[728] So seeing, like, in eight months to grow that much, probably most thankfully due to the fact that the ad, the advertiser portals are integrated, if you're going in your - an advertiser that already is using Facebook, you check a box, upload some different assets, and boom, now you have an Instagram ad.

[729] They've really, like, talk about synergies.

[730] They've really leveraged their relationship and the tools that they have for Facebook advertisers to have a whole new, you know, incredible growth channel there with Instagram.

[731] Yep.

[732] Next one.

[733] Next one we have real quick is Amazon.

[734] Obviously, Amazon wasn't acquired, but has been an acquirer on several companies we've talked about and reference a lot.

[735] Just today, share price hit 800 bucks a share.

[736] Ben, you're trying to time the market on buying Amazon.

[737] I can tell you, just give up.

[738] Property values.

[739] Not that we give investment advice on this show.

[740] Property values in Seattle are now at an all -time high.

[741] The Amazonification of Seattle is something really incredible to watch and the economic growth in the region from this company starting right in the center of the city and kind of exploding outwards and is now in three or four separate neighborhoods overtaking downtown.

[742] We've talked a lot about their strategy before.

[743] I think I couldn't be more bullish.

[744] I still am stupidly trying to time the market and wait for investors to cool a little bit so I can get in, but I continue to say I should just buy in now.

[745] And for the investors on the show, not advice, but if you are looking for a derivative way to play the Amazon story, You should invest in Seattle real estate.

[746] That's true.

[747] Hot take, we only have one this week real quick.

[748] A small deal, but interesting one, relevant to our episode on Ways and discussion of the future of automotive and transportation and technology is Ford buying Chariot.

[749] Yeah, this one's interesting to me. So Chariot is basically the public bus system, but better and with fewer stops and subscription base.

[750] I believe it was only in San Francisco.

[751] I believe it was only in San Francisco.

[752] Yeah, and you pay, I think it's like $100 or something, and you get access to these great buses that pick you up at a...

[753] Shuttles, yeah.

[754] Yeah, yeah.

[755] So as far as Ford breaking into, you know, this trend of service -based or subscription -based car ownership or self -driving cars, you know, transportation is changing in a lot of ways.

[756] this doesn't like seem that interesting to me like it seems like there was a lot more things they could have bought that would have signaled to me oh they're they're doing something um you know really transformative and and here i'm not totally sure what the play is yeah i'm not either it was a small deal but but uh definitely you know we saw GM by Cruz earlier this year which you know cruise that game changing right like you drop this thing on the top of your car and it can become self -driving are you kidding me Bloomberg probably covered that deal.

[757] Probably not Chariot.

[758] Yeah, we're obsessed with this sort of self -driving car.

[759] And, you know, that's why they, the sort of the, you know, we decided to redhead that Apple McLaren story, even when McLaren later came out and denied it, which by the way, as sort of an aside topic, they didn't have to deny that.

[760] So I was a little, I don't know why they publicly denied it because based on our sourcing, they had at least had conversations with Apple.

[761] They, they phrased it we're not in talks right now.

[762] So I'm not, I'm not really sure why they denied it rather than just stayed silent.

[763] But whatever, had their own reasoning for doing that.

[764] And it was interesting.

[765] Did it positively affect them because the rumors seriously negatively affected Apple stock?

[766] So, you know, you never know in these cases, like because it's seriously negatively affected Apple stock, that may have been why they came out and denied it.

[767] Apple may have gone to them and said, please do this.

[768] Apple, I can tell you from a reporter standpoint, is like sort of one of the few companies that acts as like the mafia.

[769] I mean, the amount of fear that they put into other, I heavily covered when Apple was seriously considering coming out with their own TV product back in, I want to say 2013, 2014.

[770] And they were in, I was covering media then.

[771] So they were in discussions with Comcast and Time Warner Cable and other companies to potentially figure out if they wanted to sort of own the programming themselves or just.

[772] just sort of be like a partner with the cable companies and use their programming.

[773] And it was so difficult to get information from the media companies because they basically said, like, Apple told us not to say anything.

[774] And you just, that was, I had never heard that from any other company that the company had done business with.

[775] Like, Apple's not your boss.

[776] They were, exactly.

[777] They were free to talk about every other company they did business with, but Apple.

[778] But it was like, no, no, no. Like, you know, we can't.

[779] I think Steve Jobs was still alive then, too.

[780] So, like, maybe it was a Steve Jobs thing.

[781] I think Katie Cotton was their head of PR, and apparently, you know, that it was much, much tighter back in that era than nowadays.

[782] I'll throw in one more hot take for you guys, which is just I'm curious to see what happens with the Yahoo sale to Verizon now that Yahoo has said that 500 million of their users were breached in this big data breach from whatever sort of state -sponsored hacker, you know, hacked into their system back in 20.

[783] I don't know if this will have any sort of repercussion on the Verizon deal, but already you're starting to hear sort of outsider speculation that, you know, if this does turn out to be a big deal, maybe Verizon would push to try to alter the price of the deal.

[784] So I don't know.

[785] You know, a lot of that stuff will certainly come out in the next, you know, days, weeks, months.

[786] Interesting.

[787] Do you know if that's precedented to alter the price based on something like this?

[788] or any event in general?

[789] I mean, it definitely has the potential to be materially adverse, which I presume all the contracts in another former life I was an investment banker and yeah, all the merger agreements and stuff will, until closed, we'll have contingencies and max material adverse clauses.

[790] That's right.

[791] I think this would definitely fall into that.

[792] Yeah.

[793] I don't know enough to speculate, but that, you know, If the breach is as bad as it sounds like it could be, you know, I mean, you're talking, it wasn't that long ago that the Sony hack happened and, like, the amount of value destroyed at that company and costs they had to incur is definitely material.

[794] Right, so who knows?

[795] This apparently happened in 2014, and, like, I don't know what has been done with it since.

[796] So, like, maybe that would suggest that it's not that material, but I don't know.

[797] Obviously, Verizon is going to want to look into the details of this.

[798] So that might be something to keep an eye out on.

[799] We will be on the case when it does.

[800] All right, carve -outs.

[801] Ben, what's you got?

[802] So my carve -out, carve -outs for new listeners is a thing that we do that is a book or a piece of media that we've consumed that may or may not be related to the topic of this podcast.

[803] And a lot of times I'll give an article or something that gave me pause and was something that I like reflecting on or might be more philosophical or any of those things.

[804] this one this time going kind of totally out there there's a little recap video from burning man on vimeo by user fill of drones and it is one of the most um just beautiful visual uh captures of any real life event i've ever seen it is it's a ton of drone footage it's a lot of like maybe steady cam footage but it's just this really tremendously beautiful uh recap of of of Burning Man this year.

[805] And Burning Man, I think it gets bigger and bigger every year and more and more technology arrives there every year.

[806] So, you know, 10 years ago, it was something that you'd hear about.

[807] You wouldn't really get what it was and you couldn't really get much about it.

[808] And now, you know, people are still grappling with like, what the heck is this thing if you've never been, which, you know, for the record, I've never been.

[809] But now the amount of media coming out of this where we're seeing people's just like incredible creations is super cool.

[810] So we're going to drop the link in the show notes.

[811] It's Burning Man 2016 by Phil of Drones on Vimeo.

[812] Go check it out.

[813] It's a super cool way to spend five minutes.

[814] Super cool.

[815] Mine is a quick one this week.

[816] A new book that came out recently that I read called Algorithms to Live By, by Brian Christian and Tom Griffiths.

[817] This is a super fun book, Quick Read.

[818] It's about fundamental computer science algorithms like, searching and sorting and scheduling and optimal stopping that you learn about in, you know, your intro CS classes in college or in high school, but then about like what those algorithms are for like lay people who aren't CS folks, but how to apply them to your life?

[819] And it's super cool.

[820] It's like how do you sort your closet based on optimal sorting algorithms to how should you handle your email based on scheduling algorithms to all sorts of stuff?

[821] of how should you decide when you found the right person to marry based on optimal stopping problems.

[822] It's very techy, but written from a humanity's perspective.

[823] So I enjoyed it quite a bit.

[824] I think I've got one.

[825] I wish I had the time to read books now.

[826] I have two kids under three.

[827] So like those days are, I assume they'll come back.

[828] You need an optimization algorithm.

[829] Right, exactly.

[830] That's what I need.

[831] Raising children and lending your time.

[832] But I will, I'll give you one.

[833] because I thought it was very interesting, which is Ross Douthet wrote a column, an op -ed column for the New York Times, talking about, the headline was Clinton's Samantha B problem.

[834] And it talks about how late -night talk show hosts have sort of vehemently swung to the left in this particular election.

[835] So now, you know, you have, whereas even four years ago, in sort of the Letterman Leno late -night world.

[836] You know, these guys were Letterman, I guess, sort of tilted left.

[837] Leno was very middle of the road.

[838] But you just, other than maybe John Stewart occasionally, and even John Stewart, would sort of pad his criticism of the right by saying, hey, look, you know, I'm a comedian first.

[839] And, you know, this is a fake news show.

[840] You're no longer seeing that.

[841] you're seeing John Oliver and Samantha B and Seth Myers and Trevor Noah and a lot of these sort of late night characters really swing hard to the left and basically, you know, call out Donald Trump and Donald Trump supporters of, you know, as being bigoted and racist and there's no sort of middle ground here.

[842] And yet he says he juxtaposed this to the general public where, you know, there's still a huge.

[843] huge percentage of this country that votes Republican.

[844] And yet there's a big mismatch now between what you see sort of on late night TV and sort of your maybe random averagely, you know, average picked American that maybe is an independent or centrist or Republican.

[845] And there's no real outlet on the late night spectrum for this.

[846] And, you know, what he makes of this is sort of like we're basically he likens it to what we saw.

[847] the 60s and 70s where the culture really dramatically shifted leftward.

[848] And yet we had Nixon and then, you know, in 1980, we had Reagan.

[849] And so there was this sort of mismatch between the culture and the politics.

[850] And so he's sort of hinting at, are we going to see this again if Trump is elected where, you know, just the sort of your general entertainment culture is really out of whack with your general politics in this country.

[851] So interesting read, I thought.

[852] It got a lot of criticism on Twitter, but I didn't think it was particularly deserved.

[853] Huh.

[854] Huh.

[855] Well, I definitely have to read it.

[856] Yeah, me too.

[857] There's, no matter what you think about this election, it has been a bonanza for the media industry covering it.

[858] All right.

[859] Well, Alex, where can our listeners find you?

[860] From your podcast, your Twitter, where do you want to send them?

[861] Yeah.

[862] So the podcast is called Deal of the Week.

[863] It's available on iTunes, or you can find it on Bloomberg .com.

[864] And you can find me on Twitter at Sherman 4949.

[865] I typically will tweet out the podcast.

[866] It's once a week.

[867] The episodes are about 25, 30 minutes.

[868] So feel free to subscribe on iTunes.

[869] Our sponsor for this episode is a brand new one for us.

[870] Statsig, so many of you reached out to them after hearing their CEO, Vij, on ACQ2, that we are partnering with them as a sponsor of Acquired.

[871] Yeah, for those of you who haven't listened, Vijay's story is amazing.

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[879] 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.

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

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[895] You can click the link in the show notes or go on over to Statsig .com to get started.

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

[897] And for our listeners, if you're listening to this episode and you have not yet subscribe, but would like to hear more, subscribe from your favorite podcast client from iTunes or Overcast or any other client.

[898] And if you feel so inclined, we'd love a review on iTunes or tweeting about it.

[899] So thanks so much.

[900] We are at Acquired FM on Twitter and we'll see you next time.

[901] Yeah.

[902] And most importantly, thank you to Alex.

[903] This has been a huge treat for us.

[904] And a lot of fun.

[905] We'd love to do it again sometime.

[906] Cover more aspects.

[907] But thanks so much for taking your time to be on our show.

[908] My pleasure.

[909] Love doing it.

[910] Who got the truth?

[911] Is it you?

[912] Is it you?

[913] Is it you?

[914] Who got the truth now?

[915] Huh.