Episode 9: Writely (Google Docs)

[0] Welcome back to episode, is it you, is it you, is it you?

[1] Who got?

[2] Is it you?

[3] Is it you?

[4] Welcome back to episode nine of Acquired, the show where we talk about technology acquisitions that actually went well.

[5] I'm Ben Gilbert.

[6] I'm David Rosenthal.

[7] And we are your hosts.

[8] This week, we're going to be covering an older acquisition, but following a theme from our last episode in productivity software.

[9] We're going to be covering what became the eventual.

[10] suite known as Google Drive, Google Docs, Google Sheets, and Google Presentations, Google Slides.

[11] I think it started as presentations.

[12] Yeah.

[13] And then it was the presentation spreadsheets and docs.

[14] The product of many names.

[15] Yes.

[16] We'll go through, there were a whole ton of companies that actually contributed to this.

[17] David will go through the acquisition history and facts, but largely focused around rightly, which eventually became Google Docs.

[18] Yes.

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[36] Thanks, Service Now let's dive into the show.

[37] David, you want to do acquisition history and facts?

[38] As always, Ben.

[39] So, dear listeners, let's transport back in time to the mid -2000s, Web 2 .0 era is in full swing.

[40] AJAX, the browser technology that enabled live dynamic updating of websites had just come out, and a group of technologists from Intuit had decided to start a little crew to dabble in what they could do with Ajax.

[41] And so they founded a company that they called Upstartle.

[42] I love that name.

[43] So bubble.

[44] So Web2 .0.

[45] And they ran through a couple projects and landed on a product that they called Rightly.

[46] And it was collaborative document editing in the cloud.

[47] I don't know what they called it that at the time.

[48] Yeah, which now seems so table stakes.

[49] Absolutely.

[50] Founded by Sam Shalas, Claudia Carpenter, and Steve Newman.

[51] and they worked on it for a couple years.

[52] It was in beta.

[53] They had a few thousand users.

[54] And then in March 2006, Google announces that they had acquired the company for an undisclosed amount, rumored in the $10 million range.

[55] What's interesting, they'd only hired one person over those two years.

[56] So it was the three founders and one other, former Intuit employee, Jennifer Mazon.

[57] and they all joined Google and became PMs in Google Docs.

[58] And what's interesting is that this was actually the second acquisition that Google had made in their online office productivity suite.

[59] The first was another company, a smaller company in New York, called TwoWeb, two web technologies that they'd actually acquired in 2005 that was working on Excel 2Web.

[60] That was something that they brought into Google Labs, right?

[61] And I think Google Labs created the first Google spreadsheets before Google Docs even launched.

[62] Yes.

[63] And this was all happening right around the same time.

[64] So Google spreadsheet launched in Labs in June 2006.

[65] Rightly was acquired in March 2006.

[66] And then shortly thereafter, in the beginning of 2007, Google Docs, based on Rightly, was released publicly.

[67] Yeah, I think it was docks and spreadsheets were actually merged right around that time.

[68] And you could go to dox .org .com and I remember the header actually said Google docs and spreadsheets, one big, long thing.

[69] And it looked like they just kind of like took the spreadsheets view and just interjected some of your docs in there and you could sort by date.

[70] But that was pretty much all the integration they had.

[71] Yep.

[72] And then shortly after that launched, two more companies that Google acquired in 2007, Tonic Systems and Zenter.

[73] which is an early Y Combinator company, both of which were working on presentation software for the browser.

[74] That's right.

[75] Tonic largely the back end and Zenter largely the front end.

[76] And it's pretty amazing how quickly Google turned these acquisitions around.

[77] September 2007 presentations was launched.

[78] And finally, there is now a full suite of Microsoft Office -esque productivity software in the cloud.

[79] That's right.

[80] But don't ask Eric Schmidt that.

[81] When they Google Docs and Spreadsheets, he definitely told a gigantic audience full of people that they were not indeed competing with Microsoft, and it was not a competitor to office.

[82] I wonder if our last episode's guest, Kurt Delbenny, was listening at the time.

[83] Yeah.

[84] And then some might say, you know, the rest is history.

[85] However, interesting side note of history, 2007, the same year, these final acquisitions happened, and the full suite was released by Google, June of 2007 Dropbox is founded.

[86] Yeah.

[87] And that's interesting.

[88] I mean, you look at the bet that Google's making here.

[89] I mean, this happens so fast.

[90] This all happens within a year and a half span.

[91] And all of a sudden, they have a full kind of sweet here.

[92] And they definitely went through and made very strategic acquisitions here, but built a lot of in house.

[93] I think what they acquired was super bare bones in each of these applications, all pretty inexpensive.

[94] I mean, these are all rumored approximate $10 million acquisitions.

[95] You know, last episode we were talking with Kurt Del Benny and we were looking at what Microsoft paid for Accomply and Wonderlist and Sunrise.

[96] That, you know, totals somewhere around half a billion dollars.

[97] And when Google was getting into dabble in this game, which is the, you know, really inventing the market for cloud productivity, super cheap because that wasn't, you know, people weren't flocking there yet.

[98] People didn't realize that.

[99] that, oh, I need collaboration tools in real time where I can look at the other person's cursor in my document.

[100] It was largely a toy at that point.

[101] Yep.

[102] And I think these are all really interesting examples of the buy versus build that we were talking about with Kurt a little bit last week.

[103] And what's interesting, and one of the reasons I brought up Dropbox being founded around then, you know, all these companies, these five or so companies that Google acquired that became the backbone of Google Docs.

[104] There were all these rumors.

[105] I don't know if you remember, Ben, around the time for years about the mythical G drive.

[106] Yeah, that's right.

[107] The G drive.

[108] It was coming.

[109] It was coming.

[110] It was the Dropbox killer.

[111] It was the Dropbox killer.

[112] And it didn't launch until 2012.

[113] And one could imagine, you know, we mentioned Zenter was an early Y Combinator company, as was Dropbox.

[114] You know, how might history have been different if Google had decided that they would accelerate their drive efforts by acquiring.

[115] dropping Dropbox or box at the same time.

[116] Yeah, it'd be interesting.

[117] Very interesting.

[118] All right, with that, should you move on to Acquisition Category?

[119] Yeah, let's do it.

[120] Because I think there's a lot of, this episode I'm most interested in the fast forwarding to today and looking at, you know, how does this impact Google's business as a whole?

[121] So I think, yeah, let's, happy to just blow right through acquisition history and facts now onto Acquisition Category.

[122] To me, technology.

[123] I think all these acquisitions, you know, primarily, rightly, were these kind of experimental Ajax apps.

[124] And everybody was seeing what they could do with Ajax at the time.

[125] Google Maps, I remember it was a very flashy demo example of that.

[126] And, you know, I think there were a few different people later on Etherpad, but a few different companies playing around with collaborative editing.

[127] And I think content editable was the new hottest thing in browser technology that they took advantage of.

[128] and you know this is this is just acquiring sort of that the people that were doing that right and so I think you know technology and a people acquisition knowing that there was a lot of technology to build in -house to really turn it into a product that was marketable yep it's interesting you know I was going to go with business line for this category but this is such when we started doing this talked about doing this episode we said it was going to be on rightly but as we were doing research we realized there are these really five or so companies and none of them too none of them too much further along than any other ones exactly and I think this really to me crystallized this being a classic Google decided they wanted to get into the business of productivity apps and they wanted to take a typically Google bent on it and put them in the browser instead of being installed software on your PC, and they decided to get into this business and made the judgment that buying was going to be a faster way to get there than building in -house.

[129] Yeah, it sure does feel like a case study in the buy versus build.

[130] I mean, I think that dropping, let's say, $50 million, short -cutted their time to market dramatically and put all that right brain power in -house right away.

[131] Yep.

[132] And what's interesting is it's also, you know, I think in blending a little bit, kind of the tech themes here, but, and I don't know what Google thought at the time in terms of their strategy, but as the battleground for productivity software has really evolved from, you know, at that time, it was Word and Excel and PowerPoint installed on your computer to now it's this whole suite of, you know, not just those applications, but also your email, also.

[133] your cloud services as a as an organization.

[134] I mean, what do your, not only the third party software you're running, which is your email, which is your word processing, which is your spreadsheets, but also your internal company apps that you're running on, whether that's AWS or Google Cloud Engine or Microsoft Azure, as that's really evolved in the last few years.

[135] It's almost been this mix within Google that they bought the traditional productivity software, but the email piece with Gmail and the cloud piece, which we can argue about how much success they've had there relative to Amazon, they built in -house.

[136] Interesting.

[137] Yeah.

[138] So there's the question now of, you know, before we get into what would have happened otherwise, David, do you think that Google should have gotten into productivity at all?

[139] like let's let's zoom out look at google as a business it's an advertising business primarily driven by ad words and you search and people click and google gets a cut and you know that has always been their cash cow and for the foreseeable future looks to be the largest source of their revenue working backwards from that you either have to believe that that is at some point not going to become their largest stream of revenue or that that's going to rely on some data or some asset provided by, it could be customers, by the productivity applications, does it make sense for them to be in the productivity game at all?

[140] Yeah, it's a good question.

[141] My sense is that Google for a long time has been looking for that what's next.

[142] Yeah, I mean, in fact, their revenues now are reported, since they're alphabet now, we should be saying alphabet.

[143] Alphabet's revenues now are reported as Google and other bets.

[144] They're so fascinated with this what's the next widget that they've restructured their entire company, their reporting scheme, and their leadership structure around it.

[145] It's interesting.

[146] And Microsoft had this challenge too for a long time.

[147] I mean, they were the Windows company, the operating system company for a long time.

[148] And I think perhaps longer, than a lot of people would have expected that has continued to be an incredible cash cow for them.

[149] But now we're in the throes, as we talked with Kurt last week, about, you know, what is Microsoft today?

[150] It's, you know, a mobile first, cloud first company.

[151] It's not an operating system and office company.

[152] And for Google, you know, they're the search company.

[153] They've been the search company now for nearly 20 years.

[154] And when did...

[155] Wow, I feel old.

[156] Yeah.

[157] Not quite 20 years.

[158] But 18 years, Google is going to college, you know.

[159] Google is graduating from high school this year and they're going to college.

[160] If we had a coin name for naming episodes, that's what we named this one.

[161] And I think this is a big part of the question of what does Google want to be when it grows up?

[162] And actually, I think a relevant other acquisition, flashing forward to today, Google recently acquired a company called Bebop, which was founded by Diane Green, who was the founder of VMware, and Diane was on Google's board.

[163] And Bebop was nominal.

[164] They hadn't released their product.

[165] It was still in stealth, but nominally making productivity software for the enterprise.

[166] Now, I don't think it was Word and Excel type productivity software, but it was software about helping enterprises build their applications.

[167] and Diane is now taking over the entire cloud business for Google, which includes all of Google apps and Google for work.

[168] Yeah, it's interesting.

[169] Well, two directions I want to go with this.

[170] The first one is, okay, maybe they've, clearly they've been obsessed with big bets the whole time.

[171] I mean, Google itself, the core project back rub, the whole academic research project, into organizing the world's information and releasing the, the, best search engine and the one that's the most sustainable on an ongoing basis, you know, that was an enormous bet.

[172] And I think that now they're thinking totally crazy with these moonshot ideas.

[173] When they started with Google Docs in 2006, they weren't doing self -driving cars and they weren't doing balloons that deliver internet.

[174] And they weren't doing a lot of these huge projects.

[175] So maybe this felt like a possible big bet to them for the future.

[176] of their company, looking at Microsoft and seeing that productivity of that era was such a cash cow and is just now sort of dwarfed by how big they're thinking with all their their current big bets.

[177] And this was sort of like an early on possible big bet that we're seeing that's sort of legacy.

[178] Like, I'm not sure Google would go into this space starting today.

[179] Yep, yep.

[180] I agree.

[181] But it's interesting to go back to that time.

[182] And I wonder if Google, I mean, sitting here today in 2016, Microsoft, as much as they've had a resurgence in the last couple of years, they're not as relevant in terms of the most important strategic players into landscape and technology.

[183] But going back to the mid -2000s with Google looking at Microsoft, and I wonder if they saw the Windows office, you know, two legs of the, you know, the stool.

[184] the non -balancing stool and thought, gosh, those two core businesses in an operating system and productivity, and they thought about themselves and said, you know, if we want to be like Microsoft, our analogy for operating systems is search.

[185] You know, we're the operating system of the web.

[186] What is the productivity on the web?

[187] And when you think about when they started Google Docs, that was what it was and still is to a large extent to this day.

[188] Yeah, it makes total sense.

[189] in that context.

[190] And I think that, you know, if we're looking at this like three to five years ago rather than looking at it today, I'd be sitting here preaching or I guess singing the praises of Google as this is one of the most classic examples ever of low -end disruption.

[191] I mean, you have the big thing that the enterprise people are buying with these companies that need every single last feature of office, even though any given personally uses 5 % of it.

[192] and most of them use the same 5%.

[193] But you need all those features because that's how you get the big enterprise contract.

[194] As you know, well, did you stuff all 100 % of those features into office for iPad?

[195] No, it's fun.

[196] We get to rethink the lightweight productivity we called it, which is super fun.

[197] But the, you know, in low end disruption, you get this new person that comes along, Google in this case.

[198] With Google Docs, everything's a total toy.

[199] It doesn't have any of the features that the enterprise need.

[200] They're giving it away for free.

[201] But like at the end of the day, there's so many people that look at that real -time collaboration available on the web, cloud storage, as like, wait, this is way more important to me than all those old things that colloquially everyone believed were necessary.

[202] And I think the difference of where we're sitting today from a few years ago is I don't think it fulfilled its low end disruption promise of unseating the incumbent.

[203] I mean, I was all braced and ready for office to become less relevant and Google Docs to be the future and them to slowly add on the rich feature set that people would call the new incumbent.

[204] Yeah.

[205] And so let me ask you.

[206] I'm curious.

[207] You guys started Pioneer Square Labs in 2015.

[208] uh -huh do you have on either your computers or via office 365 word excel and powerpoint we do because of biz spark um bisbark is the um microsoft program that that makes a lot of their software available available for free to startups startups if you didn't have that would you pay for those would you use just google docs at least a couple of us would just because any of our legal documents are going to be changed in Word and that needs to have perfect rendering.

[209] There are definitely still industries that require high fidelity perfect rendering of documents.

[210] But, you know, like anything that I open that, when I'm writing like a quick feature spec, or like a one page on an idea, or a welcome document that we're going to send out to new users of our application, anything like that, it's all Google Docs.

[211] So, I mean, really, I'd say, like, anything that I start from scratch these days is Google Docs.

[212] The other direction that I wanted to go with that is when we were talking with Kurt last week and something that's become completely obvious with Amazon's earnings, breaking out AWS, that, you know, Azure is very much the future for Microsoft.

[213] AWS is already as profitable as an independent business as their entire e -commerce business is in a much shorter time period for Amazon for Amazon sorry Microsoft wishes it were part of Microsoft Well yeah so Microsoft with Azure Amazon with AWS A lot of interesting news in the last couple weeks with Google and Google Cloud platform I think there was some news that Apple was moving there It's actually been a tremendous amount of news in the last couple weeks Apple developing their own internal cloud or their own cloud hardware.

[214] Apple developing their own hardware to put in their own data centers and run their own cloud infrastructure.

[215] Dropbox doing the same thing.

[216] But I guess where I'm going with this is in these cloud services, you kind of have these three layers.

[217] Infrastructure as a service, platform as a service, and then software as a service.

[218] Each of these three players, Microsoft, Amazon, and Google have all the layers of the stats.

[219] You have all the layers They started in different places, Amazon kind of with infrastructure and Microsoft with all the way up with software and Google with originally Google App Engine with Platform as a Service.

[220] Do you think that as all of these businesses are betting on that being the cash cow of the future, do all of them need all of the layers or would Google be fine without productivity software and the software as a service layer?

[221] It's interesting.

[222] This gets a little bit into, maybe I'll just jump into it, you know, my sort of, tech theme, as we've been describing you, all of Google's strategic decisions around this business probably made perfect sense to them when they made them in the mid -2000s and even up until a few years ago.

[223] But the landscape has changed and the battleground has changed for what productivity is.

[224] And that's why I brought up, you know, why you brought this up now and why I was mentioning earlier, the sort of cloud and the infrastructure layer.

[225] And I think, Ben, the answer to your question is no, and I think one need look no farther than AWS to see that.

[226] I mean, AWS started as infrastructure.

[227] That's what they do.

[228] And of course, they've moved up the stack and added other things, but that's, they aren't offering email.

[229] I think there is some Amazon email, but like nobody uses it.

[230] Not a serious, yeah.

[231] And, and yet they're still, at least in, you know, inning number, maybe we're in inning number two of the cloud now.

[232] They're, they're pretty far and away, you know, the leader.

[233] And it would be, it's interesting to think about like, what could Google have done rather than copying the Microsoft strategy in the mid -2000s of, okay, we've got the quote -unquote operating system, now we're going to do productivity.

[234] What if they had instead fought Amazon more directly at that point on the infrastructure layer or gone with another another aspect entirely?

[235] Yeah, it's interesting.

[236] I think with Google App Engine, you were locking yourself into Google's proprietary data storage and you had to use Python.

[237] It was like there, when you were looking at the cloud services and inning number one or the top half, the choices, it like wasn't apples to apples at all because you're like, well, I'm going to either build for a Google App Engine or I'm not.

[238] I don't really get choices around that.

[239] Or Amazon, it looks like, gives me just one level of the abstraction above running my own server, which I think is what I want.

[240] And, like, it was interesting how those two companies made enormously different bets there, and Amazon went out.

[241] And you look at the diversity of companies and enterprises and workloads that have adopted Amazon over the past few years.

[242] And, you know, you mentioned Dropbox moving off of Amazon.

[243] But for the longest time, you know, Dropbox.

[244] Amazon kind of won the first round of this fight across productivity because everybody used AWS.

[245] You know, Dropbox paid the Amazon tax.

[246] There's a great strategy article, which, you know, as our listeners know, we are both big fans of Ben Thompson.

[247] But his article last week on the Amazon tax is just fantastic.

[248] Yeah.

[249] And before we move off this point, I want to revisit, when I say that the low -end disruption machine sort of failed, obviously people use Google Docs all over the place.

[250] We even talked about how it's my go -to.

[251] For the longest time.

[252] But it hasn't become a great business for Google.

[253] No, that's the thing.

[254] Like, there's been stagnation in Google, the adoption of Google apps in the enterprise in a way that if they were really displacing the incumbent, disrupting the incumbent, the world would have moved to whatever their new set of features and new sort of market they were creating.

[255] The world would have needed those things.

[256] And that's not necessarily true.

[257] from a monetization perspective.

[258] And instead, actually, I mean, to bring back to our last episode, what you've seen happen is this resurgence of Microsoft, of the original winner in this space, you know, with granted some expensive acquisitions that they've made, you know, as we discussed last week, half a billion or so in total.

[259] But Office 365 and now, you know, Outlook and Outlook Mobile through a company are winning huge.

[260] share.

[261] Yep.

[262] Yep.

[263] There's a...

[264] I'm going to find this real quick.

[265] There was an interesting point made.

[266] Here we go.

[267] About a year and a half ago, Google Apps had double the market share of Microsoft's cloud offering, according to a research report by Bitglass.

[268] The 16 % versus 8 % that whole bunch of people still using on -premise productivity and email software.

[269] More recently, about six months ago, Office 365 had jumped ahead of Google Apps, 25 % versus 23%.

[270] And it's a thing where Microsoft got their act together in Office 365 and building the cloud productivity tools.

[271] And like, to be honest, so I worked on what was then Office Web, or Word web app before they were called Office Online.

[272] It's actually my internship at Microsoft.

[273] And like, it was a joke compared to Google Docs.

[274] I mean, I was writing specs and looking at Google Docs for like, well, how did they do it as a reference and then figuring out, can we do it better?

[275] Side note.

[276] Nope.

[277] Yeah, not a place, not a good place to be as a product team.

[278] No, no, we were totally like trying to fast follow, but built on much older infrastructure, and it was kind of a nightmare.

[279] And what's happened is really like that native clients on all platforms at Microsoft had become excellent through building and buying.

[280] and the cloud applications have, you know, held their own.

[281] And you can do real -time collaboration now with Microsoft's applications.

[282] And even if the user experience, which in my opinion of their cloud applications is still below Google's, they're at least able to tell that story to the enterprise and Google has a one out.

[283] And what's really interesting here is that I don't think anyone would argue that, you know, the cloud versions of Word and Excel and PowerPoint are, you know, greater beating, you know, a resurgent or beating Google Docs, but what is it doesn't matter.

[284] Yeah, it's the wrong battleground.

[285] It's the wrong battleground.

[286] You know, Microsoft is still capturing the majority of the value in productivity.

[287] Google is capturing almost zero right now in terms of the dollars being spent by enterprises and individuals on productivity.

[288] And Amazon is just taking a tax on everybody else.

[289] Yep.

[290] God, this is such a good case study and incentives.

[291] I mean, I think, like, if I'm ever struggling to, understand a business, taking a step back and saying, what is every party incentivized to do brings instant clarity.

[292] Microsoft is a productivity company, operating system and productivity company.

[293] And, you know, operating system broadly defined.

[294] That will become something much more cloud -oriented.

[295] Google is an advertising company.

[296] And it's not like this low -end disruption was coming from the company that represents the future of productivity.

[297] It was coming from an advertising company looking for their next thing.

[298] So when push comes to shove, Microsoft needs to defend their castle.

[299] And they weren't defending it against a productivity upstart.

[300] They were defending it against an advertising company that was looking at it as sort of an afterthought.

[301] So in my opinion, the atrophy of Google Docs in fighting that war or in fighting whatever war they should be fighting where it's going is largely because they have problems to think about in the future of their advertising business, what it means as they transition from desktop to mobile and I mean we've even gotten into Android yet at all and I think you kind of stay away from there but like future episodes yeah they have advertising problems that they need to address their that are more serious it's a great point I mean think about it this way like your Larry Page Jeff Bezos and Steve Bomber and then Satya Nadella like what how much is productivity on your mind like what percentage of your mind share does that I Occupy.

[302] Jeff Bezos is probably zero.

[303] And Larry Page, you know, I don't know, 10 %, right?

[304] Like, and Bomber and then Nadella, like, you know, 90%.

[305] Yeah.

[306] Who's going to win?

[307] Right.

[308] Right.

[309] Or who, maybe not who's going to win, but who's going to, who's got their back against the wall and has the most at stake to make sure that they give it their best shot.

[310] It's true.

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[326] 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's systems and you get a trust report page to prove it to your customers.

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

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

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

[330] All right.

[331] What would have happened otherwise?

[332] Well, it's hard to say.

[333] This actually is a really interesting one.

[334] Had these companies Let's Take Rightly, for instance, had that been an independent company launched publicly and let's say they built Google Docs, what would that look like?

[335] Yeah, it's interesting in thinking about the incentives, like then would we have had a true low -end disruption event where, you know, you have a true new productivity company going after an old dinosaur or is, were they still fighting an unimportant battle?

[336] yeah like well and let's look at um you know let's look at box and drop box here because these are the closest comps we have would rightly have gone into storage maybe yeah yeah is that interesting or you know i mean storage um that that box and drop box obviously did um you know today uh who knows what will happen in the future but i think with both of those companies um apple should buy drop box well there's a there's history there as well it's a different person making that decision now yes we're referring to uh steve jobs famously offered to buy dropbox for a billion dollars i believe something around that uh and then i don't know that was ever first he called it a feature not a not a company and then when he came back with his tail between his legs then drew housed and told them that, you know, politely declined.

[337] But, again, who knows what the future holds.

[338] But sitting here, March 2016, do we think Box or Dropbox could ever be a company at the scale of Microsoft or Google or Amazon?

[339] Personally, I think that's hard to see.

[340] Yeah.

[341] Yeah.

[342] Oh, man. If it does go that direction, you know, it's Box going to Microsoft route and Dropbox pioneering some new well they need consumers to pay which is a really hard thing to do for utility file storage thing like that but if a mythical rightly or upstartle still existed would that be more of a contender than a storage focus company yeah I mean perhaps what happens is Dropbox buys upstartle and then you have a true you know, the Microsoft equivalent of OneDrive and Word Online.

[343] And that is sort of the productivity stack.

[344] Clearly Dropbox has, you know, had these thoughts as well.

[345] I mean, they bought Mailbox and they bought several other companies.

[346] God, that is a company that's not good at acquisitions.

[347] Future episode.

[348] Yeah.

[349] All of Dropbox's bodies buried.

[350] That's mean.

[351] Yeah.

[352] Yeah.

[353] Yeah.

[354] All right.

[355] I already did my tech theme.

[356] when you want to talk about Ben?

[357] Yeah, I had written down that I wanted to draw the parallel to classic low and disruption, so I think we've beat that one pretty good.

[358] All right, should we do conclusion?

[359] Yeah, yeah.

[360] And then we've got one more section that we're adding on.

[361] Yes, we'll get to that in a minute.

[362] Stay tuned.

[363] Yeah, so we gave YouTube, I gave YouTube a C, and that's, that's become a money pit for Google, at least to, you know, I think it's a relatively break -even business, but, God, is that thing expensive to run.

[364] Yep.

[365] This, not terribly expensive to run, not terribly expensive to buy.

[366] To buy.

[367] Probably expensive from a manpower perspective.

[368] Like, it probably just takes a lot of, a lot of engineers to keep this thing going and develop it.

[369] But, but given, I mean, Google does make money on.

[370] Yeah.

[371] So I think, I think the business unit of Google, apps for business is self -sustaining.

[372] You know, I'm going to also give it a C, but more because I think it is a distraction for Google and less because I think it's not expensive in terms of dollars.

[373] I think it's expensive in terms of opportunity cost of attention.

[374] Yeah.

[375] So you're making an argument, not this specific argument, but a, a sort of category argument that by acquiring these companies and taking a productivity focused strategy for several years, adopting that at Google, it was actually a major distraction from either their core strategy within search or finding another sort of, you know, stool that would be a better fit with their core capabilities as a company versus trying to go down a path that they really weren't equipped to succeed in.

[376] Yeah, I mean, I think at the end of the day, Google was looking for a second huge business, much like for Microsoft, they had Windows and then they had office.

[377] And there's some argument that it contributes to their existing business, but they were going after selling productivity tools.

[378] And that just didn't become a huge business for them.

[379] I mean, it's a decent business.

[380] I think it's a self -sustaining business.

[381] It's a profitable business.

[382] But it's not a Google scale business.

[383] It's not a huge business.

[384] Right.

[385] And I think for many years, that was where they were focusing energy when really, you know, there's a big potential problem with their current business as things go more mobile and now they're looking at all these other moonshot opportunities and I think for a long time they thought productivity could be a second huge business for them.

[386] Yeah.

[387] Hmm.

[388] So I was going to give this acquisition a B for many of the reasons you initially started talking about, well, you know, it wasn't a huge success but they didn't spend a lot of money and it does, it is, it's not losing a lot of money for them or consuming a lot of capital like YouTube.

[389] But I think I'm convinced by your argument because for technology companies where you operate in this battlefield every day where there's this huge fog of war and it's very, you know, uncertainty is a way of life.

[390] The sort of one resource that you have that's most important for startups and big companies So like, even Apple and Google and Microsoft and Amazon is your focus.

[391] And this was a pretty major dilution of focus for Google for a long time.

[392] Obviously, they've been very, very successful in things like search and Android and many others.

[393] But that resource is very precious.

[394] And for both of us working with startups, you know, this is what we coach founders all the time.

[395] You know, focus, focus, focus.

[396] this is the most important thing.

[397] It's all that you have as a startup.

[398] I think I'm convinced, Ben.

[399] I'm going to go B minus.

[400] Still more generous than me. All right.

[401] So we have a new section.

[402] And this is a section where we talk about things that, a media or a movie or a TV show or something we're reading or a book or a new publication or something, we find fascinating.

[403] And in true lingo, we're calling this the carve -out.

[404] So I will start with my carve -out from this week.

[405] And actually, we'll call it since the last episode, Bill Simmons launched the ringer.

[406] And for those of you who are not subscribed to the ringer, it's totally sports -focused, but it's really the kind of, crown jewel of the Bill Simmons Media Empire.

[407] I think after Grantland, after his, for those who you don't know, Bill Simmons partnered with the SPN to launch Grantland, which was incredible long -form content about sports.

[408] And it was like the most incredibly well -written prose about sports you could ever read that would take you on this journey and make comparisons to pop culture and an event that happened 50 years ago and truly relatable.

[409] And Bill Simmons is a gift as a writer.

[410] And we saw him to launch a podcast and finally the ringer, which is the thing that has, it's starting as an email newsletter and a website, but it's a very small staff and it's a kind of a new media publication that Bill Simmons has launched after the tumultuous shutdown of Grantland by ESPN as, you know, has probably made sense as a very expensive property.

[411] But I'm going to read a quote from the first email that went out, Bill introducing the ringer, and he does this great little section where he talks about all the names that it could have been.

[412] And this is just one of the reasons why he's a great writer to read.

[413] But he's talking about several of the names, and the paragraph ends with, Upper Echelon, sounds like a hedge fund.

[414] Barnstorm, sounds like a horse that would be favored to win the Kentucky Derby.

[415] Side two, two insider.

[416] Grant World, too ludicrous.

[417] F -off, ESPN?

[418] Too easy.

[419] too easy and I think just rarely rarely you ever get a startup talking about like their ridiculous naming meeting the first email includes the classic photograph of the whiteboard with all the potential names crossed off it's just like it's some of the most relatable writing even if you're not a sports person it's just incredibly entertaining at a ropes you in I'll love it I'll love it my well I should say too the part of the inspiration for the carve -out was my wife, Jenny, introduced me to two of Slate's podcast, the political Gab Fest and the cultural Gab Fest, both of which are excellent, and they both do a segment like this.

[420] So shout out to Slate and thank you to them.

[421] So my carve out for the week is something that I think will, it picks up on a lot of themes from our show going back to our very first episode.

[422] and I just finally finished, crossed off my reading list, Creativity, Inc., which is the Pixar book by Ed Catmull.

[423] It is fantastic.

[424] One of the best books I've read, certainly this year, but in the past few years, best nonfiction books.

[425] And ordinarily, I'm pretty tough on sort of business books, and they can often be trite and repetitive.

[426] this was none of those things and I think listeners if you enjoy our show you will love this book and then the one thing I would say from it there's just so many good stories from you know Steve Jobs stories to all the Pixar history but and just general management lessons and startup lessons but my favorite part of it is talking about the creative process and managing that creative process, which obviously Pixar is so good at.

[427] And one of the points that Ed makes in the book is that it is always a struggle.

[428] Even at Pixar, they've done this so many times.

[429] And there's this temptation for them even within the company to make it easier, to make it rinse and repeat.

[430] Why do they have to struggle every time?

[431] But if you don't have that struggle, you know, you don't get something great.

[432] And I think that is so applicable to startups.

[433] Like I see it with the companies that I work with, you know, every day they're good times and bad times.

[434] But even the companies where to the outside world, it looks like it's all my least favorite phrase of up and to the right because it's always to the right.

[435] But it looks like it's all up as it goes to the right.

[436] You know, inside, like it's up and down every single day.

[437] And there are periods of just huge existential challenges.

[438] And one of the book talks about like every Pixar film and every Disney film since the acquisition has just had, you know, if you don't have this crisis, you know, it's very hard to make something great.

[439] Amen to that.

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

[441] Statsig.

[442] So many of you reached out to them after hearing their CEO, Vijay, on ACQ2, that we are partnering with them as a sponsor of Acquired.

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

[444] Before founding Statsig, Vijay 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.

[445] 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.

[446] Yep.

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

[450] So what does that actually mean?

[451] 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.

[452] It's super cool.

[453] 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.

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

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

[456] I mean, I'm looking at the list, Plex and Versel, friends of the show at Rec Room, Vanta.

[457] They literally have hundreds of customers now.

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

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

[460] Yep.

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

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[464] So you can quickly get started no matter how your feature flagging is set up today.

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

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

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

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

[469] Listeners, we'll leave you here.

[470] Thanks for tuning in this week.

[471] Visit us on iTunes, write a review if you like the show, tell your friends, and see you next time.