Acquired - Acquired Episode 15- ExactTarget (acquired by Salesforce) with Scott Dorsey

0:00This can be a great episode. This is gonna be awesome. Yeah. I think administrative might only be asking for reviews. Should we keep doing that? Does it sound needy? Welcome to episode 15 of acquired. The podcast where we talk about technology acquisitions.

0:33I'm Ben Gilbert. David Rosenthal. And we are your hosts. We'll be talking about the 2013 Salesforce acquisition of Exact Target. We have with us today Scott Dorsey. Scott was the founder and CEO of Exact Target. And I actually interned at Exact Target for a summer when I was in college. And probably worth mentioning, Scott is also my cousin.

0:54So super, super excited to have family on the show and welcome Scott. Hey thanks Ben, really appreciate it and David. I'd like to be on the show and I'm proud to watch how your careers develop Ben and I'm glad that you had a little little little stunted exact target along the way that's pretty neat. Super, super fun. I met a lot of great people there so. Wouldn't be here today without it. No, no, it's true. I think normally we talk about the acquisition history and facts and David sort of reviews that but I thought A really cool way of diving into the show today would be to kind of have David do a little bit of review of facts, but kind of go into a Q&A with Scott. Yeah, that's a plan since we're lucky enough to have the primary source here sitting with us. So for folks who don't know, exact target was founded by Scott and your co-founders Chris Baggett and Peter McCormick in Indianapolis in December of 2000.

1:53Scott, December of 2000. How did you guys decide to start a tech company? The bubble had just burst. You weren't in Silicon Valley. What was going through your mind? Exactly, David. It's a great question. We're a classic, you know, kind of didn't know any better against long odds story in that we started exact target in December of 2000 under the toughest conditions. The internet bubble had burst. You know, VC funding had really dried up and we were three first time software entrepreneurs, starting a tech company in Indianapolis. And actually none of us had a technical background. So we were against long odds for sure, but we had a real clear vision around what we were trying to accomplish. And it was actually my co-founder, Chris Baggett. And while we're unpacking some family stories here, Chris is actually my brother-in-law. So we both married into this great family from Indianapolis. He's from Pittsburgh and I'm from Chicago.

2:51And I had just finished my MBA at Kellogg over at Northwestern and really studied entrepreneurship and internet business models and had just come back from our capstone course which was studying really the Silicon Valley ecosystem and figuring out how to apply that to Chicago and how to apply that to the Midwest. And Chris had this big idea around database marketing and how to apply database marketing principles to the internet.

3:17and Chris is one of these just incredible visionaries in evangelists and he's now done at multiple times even post-exact target by founding a company called Compendium in the blogging software space and now he's very deep into food tech and agriculture but Chris had a real sense that the internet was going to transform marketing and that email marketing in particular and permission-based email was going to be a very powerful way for small businesses to get to know their customers better and be able to build these kind of personalized relationships and be able to deliver relevant content that drove business. And he was right. So he was so passionate about the idea that he really convinced me to kind of quit my day job. I was working for an internet incubator in Chicago called Divine.

4:01And we sold the house and had two little ones and put put the family in the car and drove to Indian apples and said let's give this a shot That's a pretty crazy. Did you guys did you guys try and raise money from Silicon Valley BCs at that point? I know so you raised some money from friends and family and a few local individuals Bob Compton I believe was your lead investor But you know, I got to imagine in December of 2000 Not many VCs are making any investments, let alone first time tech entrepreneurs in Indianapolis. No, that's exactly right, David. We spun our wheels, you know, talking to a lot of different VCs in Indianapolis, Minneapolis. We really didn't head back to the Valley in a meaningful way, but we certainly talked to a lot of VCs in the Midwest with absolutely no luck.

4:49And then started talking to angel investors who were also kind of slow to move. So our first round of financing was just a classic friends and family round. We raised about $200,000 from...

5:00those that loved us and trusted us. And that early investor roster was my parents and my brother and my father-in-law. And then pretty much all of Chris's neighbors. Chris has just this infectious enthusiasm. And it's not much of an exaggeration to say he went door to door with the PPM and his neighborhood and collected $5,000 checks. And we were so careful, especially with Chris and I being family.

5:26We only wanted to raise small amounts of money from family members that if it didn't work out, there'd be no hard feelings and we wouldn't have any discomfort around the Thanksgiving dinner table. So we scooped up a lot of five and ten thousand dollar checks and cobbled together the first couple hundred thousand dollars in the business. And a really cool story is that for those investors that put five thousand into that seed round and went the distance and actually a handful of them did.

5:52They held the stock all the way through the Salesforce acquisition that $5,000 became well, yeah, well north of a million dollars. So lots of pools and home renovation projects started popping up in Chris's neighborhood. And we had a lot of happy family members. So that was really our first move. We were a bootstrap startup. The three of us worked without.

6:17taking a salary for the first six months of the business and then we are really fortunate to find Bob Compton and Bob was a very accomplished venture capitalist and tech entrepreneur at his own right. Bob had invested in a company called Software Artistry which was the first really Indiana software company to go public and then later was acquired by IBM and then he was a venture capitalist at CID equity.

6:42and then actually ran one of their investments, sophomore Danick and sophomore Danick sold the metronica, it was a big exit. So Bob was a very accomplished investor and tech entrepreneur, and he became our lead angel investor and really became my mentor. He was chairman for the first seven or eight years of the business. And once Bob put money into the business, then raising capital got a lot easier. We had that stamp of credibility that we really needed. And with only 200,000 raised, I mean this was the era before cloud computing.

7:12How did you invest that to build the business? It's a great question, Ben, and it's so different. AWS didn't exist, so we were buying servers. We were racking servers. We were buying networking equipment. We really had to build the infrastructure. And ironically, our first...

7:28$10,000 went to Leerisks, which later turned out to be an email marketing competitor, but Leeris had a server-based solution for sending email at volume. That was one of our early licensing purchases. Really, most of the money went to building the product and building the early infrastructure. This was interesting. You always have to leverage your timing and your unique assets. One of our unique assets and an element of the era, was that we had a lot of awesome friends and colleagues that were looking for what was next. And a good number of them were with .coms that didn't work out. And we ended up hiring our first sales team as kind of independent contractors where we'd convince a friend that we had a big vision. This was a neat opportunity. And they would sell for us and we gave them equity in the company. And they would sell for us really as an independent contractor, no salary, commission only. And they had to do it all. They had to find the lead.

8:27put the pitch deck together, sell the deal, collect the deal, implement the customer. And if they made it all the way through, we paid them a commission. So we actually built this really kind of season sales team early, just on the back of the fact that we had a lot of really good friends that were kind of looking for something that was next in their career. And then once we got funded, they became real employees and we were able to provide benefits and all that good stuff. But we built a very scalable sales organization before we really could afford to.

8:55How much do you think that sort of original DNA of totally giving all, you know, pure commission-based sales to those early sales folks do you think kind of helped shape the way that that organization was built? Great question, Ben. Huge influence. You know, we, from day one, were a very sales driven, customer driven, you know, organization. And, you know, just the nature of the three founders all.

9:18sales marketing leaders, you know kind of general management background, you know everybody sold everybody spent time with customers and early on we would describe ourselves as marketers building software for marketers, you know we had a very very keen sense for what problem we were solving and what we wanted the product to look like and how we wanted to function so that was you know product management v1 you know was really all driven by the founders but we created a sales culture early on where the three of us were very aggressive and selling and working with customers and it's perhaps that my very favorite element of software is the service is that if you are a good listener and you work closely with customers they will reveal your product roadmap for you and it's really your job to certainly bring

10:03your vision and your point of view, but you're really distilling feedback from many, many individuals and organizations, your customers and your prospects in the marketplace. And you can distill that feedback in the right way and take action upon it. You can build an amazing solution that clients really want. So that was one of our, you know, I think one of our real strong students was being very close to the customer and being great listeners and really helping them shape our product. But we were incredibly sales driven and because of that kind of independent network, of sales representatives that we built. We were very sales heavy early on. I actually, I looked back, I did a history of exact target chat a few months ago, and I looked back at one of our early decks. This was even staggering to me. But at the moment where we had 44 employees, we actually had 26 and sales. Wow. That's heavy. That's heavy. So we were very, very, very sales driven. And then we also, we also unlocked a channel far earlier than most software companies. We realized that

11:00Digital agencies could be great partners of ours. They were building websites. They were writing copy and content, but they really didn't have tools for email marketing specifically. And we built a big channel program that allowed these agencies to leverage our tech platform, rebranded or white label it where they needed to and build these recurring revenue streams that were advantageous for them. And that allowed us to start reaching into big, you know, Fortune 500 companies like General Mills and Home Depot became clients of ours through their trusted agency at a time when we were still a small and scrappy company. So it helped us kind of punch way above our weight class early on. And that was that was a big drive our early success. On that front, you know, we should say for our listeners too, this is I think really our first or one of our first pure enterprise technology companies that we've covered. Oh, actually, I'd be curious on Scott's take on

11:52saying that. Well, well, but I want to come back to that because, you know, and I say that because you see these, there's sort of this like trope when you're looking at, you know, investments in the enterprise that like there's this matrix of, you know, what, what your target customer is when you're, when you're an enterprise software company and who you sell to and you need, you know, it's like a task like you need to, you need to have that nail and it's like, are you?

12:19Enterprise, or are you mid-market, or USB, do you sell direct, do you sell by the channel? And typically, you need to have very clear answers to those. But it sounds like from the get-go, you guys were like, yes, to all of those. Was that deliberate? How did you think about that? No, great question, David. We were very small business focused. Very small business focused. In fact, our first wave of customers were literally restaurants, dry cleaners, peaches, shops. We are very SMB and very retail oriented. The original problem we were trying to solve was that when the retailer, you know, turns the lights on and opens their door in the morning, they often had little visibility into who's walking in the door and who their customers are and how to build, you know, deeper relationships. And that was part of the background that Chris brought to the business. So early on, we were, you know, a thousand dollar a year subscription and very small business focused.

13:12And actually, a good number of the reasons why those early VCs said no, they just couldn't picture that this could become a large business. And then over time through, I think being crafty and agile and very sales and customer oriented, we started to realize actually our first wave of expansion was...

13:33you know, to grab lots of small businesses at one time, you need to start selling to franchise organizations. So we started evolving to franchise organizations where the franchise or cared a great deal about centralized branding and content, but they wanted to give autonomy and authorship down to the franchisee. So we started to build kind of this parent child relationship and this kind of enterprise architecture to serve franchise orgs, and that gave us a big boost. Then we started realizing that really Every organization in the world is going to need to use email and digital marketing to communicate with their customers, whether you were a nonprofit or Microsoft on the enterprise side. They really were a common set of needs. And we just built more and more sophisticated technology. And then ironically, we were a Salesforce customer from the inception of our business.

14:22We were students of Salesforce. We really watched how Salesforce built and scaled their business. So we admired that they were multi-tenant SaaS platform that served small businesses all the way up to large enterprises. And I just fell in love with the idea that you could essentially build software once and sell and deploy it over and over again, and that you could build features that could be every feature we ever built had a switchboard. We had an on-off button where we could deploy the software and package it in a really flexible way that was very simple for the small business or we could turn on all the advanced capabilities for the the more sophisticated enterprise and to have essentially one code base where we have clients you know paying a thousand dollars a year and clients we had we had a lot of seven figure clients and even some eight figure clients essentially using the same platform that's just a remarkable level of scale and flexibility

15:15And there's a lot of tension that comes that applies to the organization around segmentation, who are you building products for, how do you build your services or what are your support models, but these are all the things we see are afraid of, right? Oh, yeah, yeah, absolutely. But so we started small and then we disrupted, we really disrupted the incumbents by kind of entering our way up market. And I think they often underestimated us, but it was that flexibility that was strong. And I really, I wanted, I wanted to be a part of that democratization of software. I wanted to deliver compelling software to small businesses in an affordable way. And I always felt that our market opportunity would be a lot bigger if we could continue to serve SMB to enterprise. And then the really neat thing is small businesses become big businesses and marketers leave small companies and go to big companies. So we had a lot of pull through, actually one of our...

16:02Largest customers over time was Groupon and Groupon came into our small business inside sales team when they were barely just getting started and they were able to scale with us nearly every step of the way. So there are a lot of neat success stories where that SMB enterprise range was a big differentiator for us. All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, LaGora, the agentic operating system that is redefining how the world's best legal teams work.

16:32Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. LaGora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm.

16:58for months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts, and it pulls every key term into a grid a lawyer can actually work with. Lagores Bed here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

17:28And they recently launched LaGora agent offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And LaGora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early LaGora numbers essentially speak for themselves when they have a head-to-head pilot with their top competitor they win 70% of the time LaGora now has over a hundred thousand lawyers on the platform from 1200 legal teams in 50 countries and crazily they went from one million to a hundred million in ARR in about 18 months truly insane numbers and that is the real test

18:20Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in house at a company, you can learn more at logora.com slash acquired. And just tell them that Ben and David sent you. So I'm curious. So you know, you know, a few years of bootstrapping start really small, you know, directly. There's pizza shops as you say. And then, you know, Things go well a couple years well four years later 2004 you ended up raising ten and a half million from insight By 2006 you raise another seven million dollars and at that point you're doing sort of 40-ish million in revenue What you know on that on that kind of stair step up, you know how long did it take to get to you know from the

19:16individual little guys to the franchisees to up to up to I would assume by the time you're doing you know 40-ish million in revenue You're probably already at the enterprise or starting to hit the enterprise at that point What were there like specific great points along the way? I'm thinking perhaps like you know Microsoft is one of your biggest customers. You know, how did how did that conversation start? How did they come into the fold? Yeah, that's a great a great question, David. Maybe I'll first start with just kind of going back to that time frame. So in December of 2007, we actually filed to go public. We were 48 million. Yeah, we were 48 million in revenue. We were profitable. And we were just starting to kind of reach the enterprise space. And we were extraordinarily capital efficient. So the fundraising that your reference is all accurate, but actually can be a little deceiving because each of those rounds was a mix of primary and secondary capital. So we often

20:12had a secretary component to our fundraising to provide founders, employees, and early investors an opportunity to take a little bit of money off the table along the way. And I was so grateful we did that actually because we, especially because of how we bootstrap the business and how Our three co-founders worked for kind of a very long period of time without paying ourselves. Having an opportunity to take a little bit of money off the table along in the way was powerful because it just allowed us to sleep all night knowing that, you know, we had some level of financial security for our family and we'd be able to send our kids to college and all those good things. But then it just, it got us hungry, you know, to really want to take the business a distance and make sure we didn't prematurely sell the business.

20:51So what was interesting is when we filed in December of 07, we had only raised 6 million in primary capital and we had nearly as much on a balance sheet. So we had been extraordinary capital efficient up to that point. So we filed the go public in December of 07.

21:07the public equity market just fell apart in early 08. And we actually stayed on file all of 08 and ultimately decided to pull the IPO in early 09. And that's a whole nother story. I'd be happy to jump into it. But I would say it was that time frame where we started reaching up into the enterprise and the nature of our business was shifting. We started building more professional services capability and that the fundamental to the business started shifting. And in addition to the equity markets not being very favorable, it actually was a huge blessing for us because it gave us a chance to stay private, bring more capital in the business, and recalibrate toward the enterprise, and it was much easier to do that as a private company. Yeah, and that's what I wanted to go next year kind of leading up to. So you finally go public in December of 2007. And this was the days before the Jobs Act.

21:59which, you know, hard to imagine now that, well, easy because we all lived through it, but, you know, your prospectus was standing out there in the public domain from December of 2007, you know, well, still to this day, but until May of 2009, you were on file and all your competitors could come read your S1 and, you know, see all your financials, and then you ultimately didn't go public then.

22:27I assume because of the financial crisis in large part, there were no IPOs happening then. What was that like? You're so difficult. You're exactly right, Dan. You're still a private company, but you have none of the benefits of being a public company, but all the downsides. That's exactly right. I would commonly say we had all the...

22:51burden and cost and pressure being a public company with none of the benefits, you know, zero. Because you're exactly right. This was pre-jobs act. And, you know, we had to report every quarter just as if we were a public company. So the silver lining is we had a great training ground of how to set quarterly expectations, how to work with the street, how to work with analysts. We had to do quarterly earnings calls, you know, with the analysts that would be covering our stock. But it was very, very difficult. And A testament to the strength of our team and our company culture that we kept everybody focused. We kept everybody very positive. And, and, oh, wait, it was just a difficult year for running the business in general, you know, given the economic crisis. Our churn numbers went up because a lot of our small business customers were going out of business. Renewals got tougher. Upsells got tougher. New business. There was a lot of price pressure. So, you know, we had a...

23:45We had a good year in 2008, but it was a very different year from the prior years of our business. But it was a great learning and growth opportunity for us. In early 2009, it became evident we were not going to get out and certainly didn't want to go. We didn't need the capital. We didn't want to go public unless we were very confident it was going to be a successful IPO. And then to my earlier comment, the business really started shifting more to the enterprise. And I also learned a valuable lesson.

24:13profitable at that time and you know the public markets really want to see margin expansion and became really evident that if we were to go public we were going to have to show margin expansion both gross margin and in operating income and it was going to make it very difficult for us to make the strategic investments in the business that we wanted. We were very passionate about moving beyond email into a pure digital marketing platform. We were ready for international expansion. We were ready to start a couple of our acquisitions and all of that became a lot easier as a private company. So we pulled our IPO in early nine in conjunction with a large round of capital led by a battery and scale and the later TCV came on board as well. And our internal tagline was better than an IPO. And we really outlined for our employees.

25:03between that and then a later round you did in 2011. I think you raised more money than in the private markets than you ultimately did in your IPO. Yeah, we raised 145 million in 2009. And once again, there was a large secondary component, but it gave us a war chest to really get aggressive in expanding the business. And we created a vision we called the Accelerate 2013 where we became very specific around the company.

25:29what we wanted to look like in 2013. We started with the end in mind and then worked our way back. And very counterintuitive. This was the time where Sequoia sent out their favorite kind of famous deck around. Yes, yes, good times are over. Almost mandating 20% head count reduction across all their portfolio companies. And as all of our competitors were pulling back, we hit the accelerator. We got very aggressive investing in R&D development, building big sales capacity. Ultimately, we built a sales organization that was three or four times larger than our nearest competitors. So we kind of hyper-invested in the business in 09 and 10, counting on the fact that when the economy came rolling back, we were going to be the best position to take advantage of it. And that happened. And then we actually rolled into our IPO, which was March of 2012, with just huge momentum.

26:26We had accelerating growth rates. We had grown in that 0.08 timeframe 0.08, 0.09 around 30% and then we moved up to the 40s and then we were mid 50s as we kind of rolled into the public markets in early 12 so that hyper investment and that decision to stay private paid big dividends for us. Yeah, and then talking about accelerating growth, one of the things that always struck me as really unique about ET was how deliberately...

26:51you expanded the business internationally and using channel partners as the way to grow. I think we haven't really talked about international expansion at all in the show and it'd be really interesting to kind of hear how you thought about that. They'll be happy to, and you're exactly right, Ben, this was kind of a derivative of our channel and agency program and that we knew we could get reach into markets that we likely wouldn't be able to address directly through channel partners and we did the same thing internationally. So we found a partner in the UK.

27:21and they spun up essentially an exact target reseller. And we did the same in Australia. And as those great teams and later became friends, they built their business and really scaled it around the exact target platform. When they started to reach some critical mass of customers and employees, we then acquired the business. So it was kind of a a low cost low risk way for us to expand internationally before we would have been able to do otherwise. You know, it's kind of a small capital efficient company. And we really validated with these partners that there was a market for our software and our services, you know, outside the United States. And then we started working with multinationals like...

28:03Nike, and Expedia, and Microsoft, and it became imperative if we're going to grow those relationships that we had in the international presence. So, three years in a row, we actually acquired every August. First, we acquired our reseller in the UK, and used that as a beachhead to expand through Europe. And then the next August, we acquired our reseller in Australia.

28:20And then the next August we acquired a reseller in Sappala, Brazil and gave us a great reach into that marketplace. So we did six acquisitions over the course of exact target history and three were product expansion and three were geo expansion. Cool. Yeah. So you go through this, you go through this period of kind of from a, you know, a dead IPO that wasn't going to happen. You pull back, you raise a bunch of money at a time when nobody could raise money. You accelerate the business.

28:50come out and you go public in March of 2012. And then it's just a little over a year later that the acquisition happens. The topic of our show, and we'll get to category and tech themes and everything else in a minute. But I want to spend a little bit of time, we were talking with Scott before the show. One of the things we love to do on acquired is dig into these legal court cases and SEC documents and all sorts of stuff.

29:18Luckily, an exact target's case. I don't think there are any major court cases, but one of the things that happens when a public company is acquired is they're required and this will be coming out for LinkedIn soon. I can't wait to dive in. You're required to disclose to the SEC that they play by play of exactly how the acquisition happened. And so that we'll link to it in the show notes. It's this amazing document about how the exact target acquisition happened. And I'd love to just You know I asked you to talk a little bit about that process of you know how it started and and you know again all of its documented publicly like there were three other bitters That we can't talk about their identities. They're referred to as party A party B and party C in the document But multiple offers going back and forth. I mean there must have been such a stressful time for you. How did you navigate through it?

30:13It was incredible. It was incredible learning experience and exhilarating and nerve-wracking at the same time for sure. We had been a public company for five quarters and life was good. We had a great time. Our IPO was...

30:31super successful. You know, we came out of the New York Stock Exchange at, you know, North of a billion dollar valuation and our IPO was heavily oversubscribed and we felt like we had all the right investors supporting us from day one and all that learning that happened in 2008 and 2009, we're able to really apply to the, you know, S1 and filing process and IPO and how to pick the right banks and the right analysts and we just had it. We had an amazing time.

30:58going public and really loved it. And then five quarters of the public company, more of the same. You know, we kind of met and exceeded plan every quarter. We were really embraced by Wall Street and had a great investor base. We had completed two acquisitions, one called IGO Digital in the predictive analytics space and the second part, not in the B2B marketing automation.

31:20And life was great. We're very happy, you know, as an independent public company and we were growing, you know, north to 40% year over year. What started really happened, you know, across the, you know, kind of software ecosystem is that, you know, marketing cloud solutions started really garnering more attention. And I would say really the largest, probably five or six software companies in the world, you know, were really all shifting to the cloud and publicly stating an intent.

31:50to go a lot deeper into marketing. That started happening in a big way. For us at Exact Target, a big part of our strategy had been to build a very open platform, robust APIs, and lots of integrated partnerships. Our premise was that marketers need one place to store all the data they have on their customers and then to use that data to drive more personalized and relevant communications and relationships.

32:18So even literally before the app exchange even existed we integrated into Salesforce and we integrated into Microsoft Dynamics and we had great relationships with Adobe and Omniture and kind of many others you know across the industry so it was very logical that we were attending shows and conferences and co-selling and co-marketing kind of with all these companies but Salesforce you know we've had this really rich relationship with from being a customer to being an integrated partner to doing lots of things together in the market. And, you know, we got to know Mark and the team. And, you know, Salesforce had made a big push into marketing with their Radiant 6 and Buddy Media acquisitions and really, you know, had a social first strategy. And over time, it just became apparent that their customers wanted more. You know, that social was an important channel, but they really wanted a multi-channel platform. They wanted

33:11greater data capabilities and they wanted a platform that was not only oriented for B2B customers but also B2C. So we always had a close relationship with Salesforce and would always kind of share product roadmaps and vision and direction and it just became apparent they were going to make a bigger investment in marketing and knocked on our door and said, hey, we'd like to collaborate and take a closer look at.

33:33that kind of joining forces. And you're absolutely right, David. When you're a public company and you get that kind of inbound inquiry, the level of governance and process is at a very different level. Yeah, and I'm curious. And really, for our listeners, what we'll link to this document, you should read it. It's like a legalized version of high drama, like Shakespearean drama. But did somebody hand you a playbook and be like, okay, here's what you do in this situation or were you guys figuring it out as you went along?

34:01clearly was the first time experience for me, but fortunately we had an excellent set of advisors and board members that had quite a bit of experience in this area to make sure that we really followed the right process and did what was ultimately in the best interest of our shareholders. And for me as a founder and CEO, it certainly can be kind of an emotional and even a bittersweet process. And I had hoped that the premium we were offered.

34:28would be so substantial that it was really an excellent outcome for our shareholders and for our employees. And then I'd really hope that we ended up with an acquireer that was very strategic and would continue to invest in the business and Salesforce became that in a whole lot more. So the process was amazing. It was fast and exhilarating and certainly had a lot of pressure associated with it. But I was very, very comfortable that this was the best decision.

34:58for our shareholders and for our employees and all of our constituents. And now that we're able to see what's transpired over the last three years, I have 100% confidence that this was a huge win for Salesforce and for exact target. Everybody involved with the company along the way. Yeah, I'm really curious. You guys sold for about a 50% premium over what you've been trading at publicly.

35:25There's got to be a bunch of offers sort of coming in from investment bankers or perhaps even CEOs calling you and saying, hey, you know, I think this might work out. What number do you start actually paying attention at listening? Like when do you form the subcommittee? We should say to the acquisition happened in June of 2013, $2.5 billion, $33.75 a share. And your IPO price, I believe was $19.

35:54Just over a year before so and I think trading at 22 or so day day day before Yeah, that's about right. That's about right. We our IPO price was 19. We came out at 23 and a nickel And then largely traded in the 20s and were kind of in the low 20s when Salesforce first put their first offer of $26 a share in front of us. And I'll tell you Ben, it was lots about even coming up with a number that was interesting. We were really just focused on making sure that when you get that first level of inbound interest that we take it seriously and really handle the process in a way that's above approach and that we're kind of

36:38following every step you need to as a public company and let the process run and then ultimately let the subcommittee and the board make the best decision at the end of the process. And it helps to I think you guys during the negotiation process released you beat Q1 earnings and up to guidance and that's that's always a good thing to do. It's as you were saying, you know, too about like, and when you pulled the IPO the first time, you know, and then went out, raised all the money that went out afterwards with the accelerating growth like, you know, Great acquisitions happen when companies get bought not sold. You know, when you get on a bright future ahead of you and things are going great and didn't need anybody, you know, that's, that's the. No, that's exactly right. And you really, you maximize value. Yeah, when you are operating from a position of strength and you have multiple parties that are really interested and either making adventure investment or ultimately acquiring the company. And unfortunately, we had that, you know, we had that in a big way. And we just fit so beautifully into Salesforce. You know, they had a big vision around the marketing cloud.

37:38We were a perfect complement to the two acquisitions they had already made. And we really brought this data architecture that was very consumer oriented to the table. So we give Salesforce a big entree into the B2C side of the industry. We brought this multi-channel marketing platform where by that time we'd expanded beyond email into mobile and social and and web analytics we had we had a really broad you know kind of digital multi-channel platform We were you know the largest in the fastest growing marketing software company really in the world and we were able to fill the big gap for them and then Silver lining was that we had recently acquired par dot and par dot was this just gem of a company and Atlanta that we acquired for for right around a hundred million dollars and they were

38:29B2B marketing automation player tightly integrated into Salesforce. So Salesforce, you know, not only was able to get all the benefits that Exact Target brought to the table, but Pardot was a great snap in that put Salesforce in a position where they could compete with Eloqua and Marquetto and other players in that kind of that slice of the industry as well. Cool. All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta.

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40:39Well, I think this is a it's about time we move to our our next section of acquisition category and What we'll kind of do is Dave and I We'll kind of make our our picks between people technology product business line or other and then Scott would take the same other Yeah, it's always kind of cheap. Yeah, well, I think I mean I think for me it's Scott obviously your word is most important here, but clearly this is a business line acquisition for sales force you know going from And it's interesting this is going to go into my tech theme in a minute, but having been selling into the sales organization for so long and developed these huge accounts and big scale business that Salesforce had to pick up exact target. And as you were mentioning, part out and everything else along with it, to now be able to sell into the CMO and the marketing side was clearly a business line and a great one for them.

41:38Yeah, I mean I've nothing to disagree with there. I mean exact target clearly had It was it was not just a product but a suite of products. I think when I was Finishing out my tenure there. We were launching the digital marketing hub and that include SMS and email marketing Micro sites we had social with co-tweet and it became clear that like, you know there was their own exact target head channel to a lot of different customers that then Salesforce could expand into, but really a whole suite of products to add to Salesforce's repertoire, too. And if it were more clear that this is a business line, Salesforce actually still calls this the Salesforce Marketing Club business line that they bring out in the results and it's got you in it when you came there, right? Correct, correct. I would absolutely agree, guys, there's no question that we

42:27you know brought tremendous group of people and talent and culture to sales force and a lot of really unique and proprietary technology, but I would I would agree if you had to classify the acquisition into CatoGrad, I would call it business line because we just fit so beautifully into the marketing cloud strategy and brought a sizable amount of recurring revenue. You know we were 300 million in recurring revenue moving to 400 and for Salesforce that their size and their growth velocity. And now you see it with demand where they have to make large acquisitions. That are meaningful. That actually are relevant and can contribute to that top line growth. And we were able to do that in a big way. And it's made me really proud that Mark on a number of occasions with Jim Kramer on Mad Money and other places has said that exact target's been the most successful acquisition that Salesforce has ever completed.

43:15And I believe that to be true, which has gone remarkably well. And the leaders that were on my team that are now leading kind of big functional areas within Salesforce and the marketing cloud, they're happy and having a tremendous amount of success and really growing the business in a big way. And committing Indianapolis, which is really, really cool. Salesforce just recently announced that in addition to the 1,400 employees, they have in downtown India, they're going to add 800 new positions over the next few years.

43:42And then I don't know if you've heard this bend, but the tallest building in Indiana is the Chase Tower. Salesforce is gonna consolidate and move employees into that tower, and it's actually gonna be renamed.

43:53the sales force tower. So, uh, to have the thing about towers too. Oh, yes, yes, yeah. No, absolutely. Mark, Mark likes his towers. Uh, Mark, Mark and the team like they love their towers. But it's, it's going to be so fantastic for our tech community that the tallest building in the city and the state is actually a tech building. So it's going to be a big, uh, a big boost and accelerated or tech community, which I'm very happy about.

44:14Well, and I always remember, too, there's so many unique things about Exact Target for the region. There was this big drum beat from, I think, maybe your first or second office that it was about being an urban company, and that people needed to, you know, we were in Monument Circle, which was like this incredibly cool, historic center of downtown, big statue, Exact Target had a building with this cool roof deck that looked out over it, and I remember thinking, well, I never want to work in an office park again.

44:43And I think that like a lot of exact target employees got super spoiled in that way. Let's exactly right, Ben. Our real estate strategy was to really build around this urban core and build a campus and a work environment that was super appealing, you know, really to the millennial, the younger generation. And it's been really fun. Over the last decade, you know, downtown Indianapolis has had this huge resurgence of housing and amazing restaurants and a lot of arts and culture and sports and exact target has been a part of that fabric of Downtown Indianapolis. And I really felt that to build high growth category leading company in a market like Indianapolis, we had to be in the urban core to really take advantage of just the energy, the vitality, the ability to

45:32to recruit top-notch people from all over the country and then even to bring in partners and VCs and customers that could fly into Indianapolis and take a 15, 20 minute cab ride to downtown Indy and then be able to just enjoy all the benefits that that downtown setting has and that's been neat and I'll tell you one of the One of the neat legacy elements of the exact target is for years we've worked on getting a nonstop flight in place from Indianapolis to San Francisco and not having. It's been a real barrier. Our West Coast investors have to jump through lots of hoops to make it in Indy for a board meeting and it makes just fundraising for all companies here in Indy more difficult. And right around the time of the acquisition, we actually got it done with United Airlines and have had a nonstop flight back and forth to San Francisco, which might seem trivial but it's actually been a game changer.

46:20for our tech community, and Salesforce has appreciated it as well. No, I totally believe it. I think a lot of credence is paid to Seattle's proximity to San Francisco as a competitive advantage in fundraising and starting a company in general. And I think that kind of quick direct flight has just a tremendous amount to do with that. It's so true. It's so true. And the same is happening. It's Salt Lake City. Salt Lake is this amazing tech ecosystem, with Armature and Adobe. And now you've got...

46:48Almost a dozen I would say you know kind of unicorn level valuations and so much of that is you know Salt Lake and Park City are kind of a wonderful place to be But it's such a short hop away from Silicon Valley that you're you're able to raise capital and get those investors really engaged in the business Yeah, moving to the next section. What would have happened otherwise is sort of two alternate futures here And I kind of want to pose both questions to you. One is do you think exact target would have made sense with any other acquirer or and then two, exact target competed against responses and many other companies that started as email marketing solutions for a long time. Do you think there was anyone besides exact target that they could have made sense at Salesforce? I think yes to both questions. We certainly could have fit in well with the number of the other larger software companies in the world that have been focused on going a lot deeper into marketing tech and saw it as a big growth area.

47:46And there's no question that Salesforce looked at lots of different players over the course of time to potentially acquire. And one element that's interesting when you go through that evaluation process is a public company and really try to make the best decision for your shareholders is you really have to do a lot of financial modeling and a lot of thinking about what is life as an independent company look like. And we ultimately did come to the conclusion that being a part of Salesforce was a better outcome.

48:13higher probability outcome for our employees, for our shareholders. But there are a number of different ways that our future could have played out, but I was very, very happy the way it played out. The other interesting dimension is the public company. We would get an enormous amount of pressure around email. When is the end of email coming and these new channels are going to cannibalize email? Oh my gosh, it's just, it's kind of like if I had a nickel for every time I answered that question, but it was just, a heavy theme, then even sometimes I'd say a cloud over our company where we were thought of as such an email-centric company that even as we expanded around the world and expanded into all these other adjacent technologies that your reference band, we were still thought of as an email company. And I think often didn't get credit for being a broad multi-channel, army channel platform, but email was such a powerhouse for marketers that line of business

49:10just kept booming. And in other lines, we're growing, but they could never, never even get close, you know, to the, to the email side of the business because it's just the most powerful tool that a marketer has. And as Ecommerce has exploded with growth, emails become even more relevant. Yeah. I'm curious when you're forecasting what does life look like as an independent company? I mean, let's say you could continue to grow 40% euro for a year indefinitely.

49:35or at least to some, the top of some. That's right. That's right. That's right. That's right. It gets tougher with a lot of big numbers. Yeah. Yeah. So at what point do you, well, one factor in the top of the S curve and then two, how many years out, you know, what do you look at as like sort of the payback period of that premium and say like, well, they're giving us 50% premium and we don't think that we will reach that market cap for 20 years and we're only looking at a 10 year time horizon or something like that.

50:05I'll tell you, that's where, you know, that's really where the bankers and advisors and, you know, kind of independent committee come in, because they had a lot of expertise in how to build those financial models and what time horizon, you know, makes most sense in order to kind of predict your independent path versus joining forces with another. So I probably can't provide a lot more detail than that, but you're exactly right, Ben. That's exactly the process that you go through. That's right. Yeah. I'm curious before you move on from this, and this also leads into my tech theme.

50:34You don't have to say whether you consider it or not, but do you think looking back most of the big data-driven marketing companies that that generation, the exact target being one of if not the leader, got really big, we're growing really fast on a great trajectory, but then they all got swallowed up by other big enterprise companies, whether it's Oracle and Elequire or the exact target in Salesforce.

51:02Do you think there was any way that maybe there had been consolidation among the companies? Could there have been a giant? There are so few giant enterprise software companies could want to have been built in the marketing category? That's a great question. I think why it didn't happen is overlapping functionality.

51:23you know, that when you take a look at, and there were certainly a lot of conversations that ensued along the way, could you stack together, you know, some of these kind of large marketing tech companies become something bigger and something more meaningful, and where it starts, where it starts to run a file or kind of collapse, is that you just have a lot of duplication of functionality. So, you know, an amateur, you know, got kind of pulled into Adobe early, you know, there certainly could have been a fit between let's say email and digital marketing channels and analytics, you know, that would have been a logical connection point, but they kind of got pulled into Adobe early. But when you looked at, you know, Austin responses and some of the B2B marketing automation companies, you often had, you know, kind of a lot of a lot of redundant functionality, but we were we were headed down that path ourselves, you know, and that's really why the part out acquisition made sense and we kind of kept moving.

52:12deeper into data, and analytics, and the web, and really trying to build out that robust platform to make all these channels work together. And what's really interesting is the big product we built that stitched it all together is a product called Journey Builder, and Salesforce has really embraced that Journey Builder platform, and is applying it even across different clouds within Salesforce and using it lots of unique ways. All right, listeners. Now is a great time to thank our long-time friend of the show, ServiceNow.

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54:12So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com slash acquired and tell them that Ben and David sent you. David, do you have anything before we go into tech trends? No, I don't think so. The only comment is that it's got on what you were saying is it's interesting. You're seeing so many startups now that are emerging that are next generation marketing automation, but they're all taking the approach that you said of marrying it up with data and analytics. I'm thinking anything from mixed panel and segment is part of this ecosystem in a different way, but so many customer.io and Cortland, Intercom, it's funny they're taking exactly the bread state so that you're saying it's got. It's fun to see it evolve. One other topic that you asked me about David, but I think I jumped into another category. It's kind of a fun story. I'd love to tell you about it.

55:09the nature of our Microsoft relationship. Do you mind if I just touch on that real quick? Yes, that was a really fun story. So we really became the largest cloud company running on Microsoft technology. We were early users of SQL and .NET and really everything we built was on the Microsoft framework.

55:26you know, pushed Microsoft technology, I think, to the edge, you know, as we were building a super-transactually intensive, you know, multi-tenant platform. But through that, we really built this wonderful relationship. And then we started integrating into Microsoft Dynamics and had a really nice relationship there. And then ultimately, Microsoft became a customer. And it's a really fun story. Microsoft had an internal platform, an internal email platform called Pens.

55:51that really kind of powered marketing automation and email marketing specifically for Microsoft business units and the internal solution was not well-liked across Microsoft. So when we were fortunate to land Microsoft and really go through our adoption, we built like an 18 to 24-month implementation period where we would be onboarding different business units of Microsoft onto exact target and off-boarding them.

56:18on the internal system of pens, and we set a joint goal. It was an acronym for personalized email, something, notification system. You have to beat it if you're competing against pens. That's right, exactly. We actually set a goal with a Microsoft implementation team and they were incredible to work with that.

56:42Got to the end of the implementation and we're literally able to turn the lights off on pens You know retire this internal system that was was not well liked across the enterprise that we'd have a celebration We'd we'd have a party and and we did we we actually On the Microsoft campus had a huge tent that was erected in an event that was just you know catered to the fullest. I mean beautiful, you know wine beer food and The Microsoft team they had to get fire marshal approval but they actually pulled the servers that were running pens out of Microsoft data centers and brought the seriously brought them to the party.

57:19And we sledge hammered him. We all strapped down goggles and just beat the tar out of these servers. There was office space. It was just like a spectacular way to retire their internal system. It was a blast. Wow. That couldn't be like a better segue into what technology themes does this illustrate for you. And that's like a very physical, visceral manifestation of the one that I want to touch on. And that's businesses using software as a service to outsource anything that's not their core competency. This keeps coming up in episodes over and over again where business is now with the advent of cloud computing and the general cost of starting a company going down. Companies operate using tens of other companies, infrastructure and software, often even starting at a free tier or on some kind of premium pricing structure.

58:16different at that sort of scale where they're actually migrating from something they built in house, but I kind of wanted to open it up to you since, you know, what you do at high alpha is start these new, these new software as a service companies. How do you identify where are the sort of holes where we can take something that a whole bunch of companies are doing and do it on one platform then they can all just pay us to use our platform?

58:42It's an exciting part of high-alpha. High-alpha were a venture studio. We started a year ago, and we're a venture studio focused on starting new cloud companies. We actually have two sides to high-alpha. High-alpha Studio is our startup studio. We've signed up to start eight to ten new companies over the next three to four years. Then high-alpha capital is our second RM. That's a venture fund that is utilized to fund our own companies when they're ready to reach scale.

59:09and then also fund other great SaaS entrepreneurs around the country. So you're right, Ben. We spent a lot of time on just ideation, looking for unmet needs within the enterprise cloud space. And we do that through our own ideas. We do that through entrepreneurs that approach us. We spend a lot of time with corporate innovation groups and universities and just tech visionaries that have a sense for where the market's going. And this whole notion that Every employer is a buyer of software, something radically different. You kind of think back to the client server days, pre-cloud, and tech spending and buying was tightly controlled by the CIO and the IT department. And then with the advent of cloud, it starts to kind of open up to different business unit or business line owners can make decisions within a framework. And now we're in an era where

1:00:04Every employee is a buyer, you know, with freemium and an employee credit card. You know, you can spin up Slack channels and lots of other solutions. And it's creating lots of opportunity. But it's also creating quite a few unintended consequences. So you'll get a kick out of this where you actually have started a new business. We haven't announced it yet that essentially is a SaaS platform for managing SaaS.

1:00:25SaaS applications, it really is. It's targeted at the chaos and the overcrowding of SaaS spend. It's a huge problem. And our MVP is about ready to go live with our first group of pilot customers. But it brings together SaaS spend, SaaS utilization, and then user sentiment, user feedback. So it brings those three variables into one platform. So organizations can, at a minimum, actually understand what they're using. What have they paid for? What's being utilized across the enterprise?

1:00:55What have maybe they paid for but isn't being utilized? Where do they have overlapping products and platforms? Where's there maybe something cool happening? Where's there innovation happening within one group or department that should be thought across that organization? That's kind of a cool company that we're excited about to help organizations get their arms around how their business is using SaaS and use it in a most optimized way. The tech thing I've been referencing a bunch of this is another perfectly then is There's been this sort of historically in the enterprise space, which again, we haven't talked as much about on the show. There's been, there kind of been sort of four-ish giants, right? Like, there's Microsoft, there's SAP, there's Oracle, and then there's Salesforce, which is emerged as sort of the most recently as one of these giants. And there's this concept of like a count control. And like, there lots of startups in the space, but ultimately,

1:01:53those four companies are by far the biggest and they have the account control with the CIOs and increasingly CMOs and sales and CEOs where they can push all sorts of products through their channel and an exact target as we talked about being a business line acquisition was a perfect fit with Salesforce as one of their first forays into a new product.

1:02:18sending through their guerrilla channel, or guerrilla-sized channel. Do you think that's, you know, how do you react to that? And or one of the main themes I think of SaaS enterprise investors is that with SaaS, like, that's changing, right? Like, you don't, you know, people can buy stuff for you. I'm like, individual employees and account control is being eroded. I don't know, how do you think about that?

1:02:46Being on both sides now. I definitely see both sides of it and you're totally spot on David. It's one of the big reasons why the exact target acquisition has been successful is that Salesforce just has these amazing executive level relationships are the biggest companies around the world and they know Salesforce, they trust them, they want to buy more products, they want to buy more products that are tightly integrated. And when you look at the Salesforce marketing cloud numbers, they're booming and they're really booming because they have all those trusted CEO and CIO relationships. And then the market and the team, they're just incredible innovators and amazing at executing, scaling the business. So that's real, there's no question about that. However,

1:03:31There's still plenty of opportunity for new innovation and new entrants and the innovators dilemma of companies coming up with new ideas and new concepts and software that's lighter and more flexible and more mobile friendly and more consumer-like. There's no shortage of room, I think, you know, for innovation and for new companies to find their groove. And then you don't need your CIO to approve to buy it. You don't? That's exactly right. That's exactly right.

1:03:59which honestly, you know, you're talking about ideation and getting ideas for new companies and getting your first customer, obviously something near and dear to my heart at Pioneer Square Labs. And as someone that is often going out and transitioning from the customer development to getting your first customer and taking the people that you were talking to about what are your needs and saying, cool, we built this, will you pay for it? It's become extremely easy to do that when you have an advocate in the organization.

1:04:24who for, you know, like, you're going to charge less than $1,000 for your product. So they just can use their credit card and you don't have to go through the CIO. So it's open this whole new way for us of the ability to land your first customer in a much faster time frame. Absolutely. No, that's exactly right.

1:04:40and then all these great cloud platforms where you can really quickly build technology, build MVPs, get it to market and really see if you've got product market fit and you've got something that can be viable. And that's what's so fun. I think Ben about what we're both doing and coming up with new ideas and launching new companies is you can go from idea to MVP and proof of concept really, really quickly. Yeah, yeah. All right, we're going to move on to...

1:05:07What was formerly the last part of our show, I think we have a couple cool sections after, but grading the acquisition. And Scott, you can choose to participate in this or not. I feel like you might be a little bit biased, but this is obviously an incredibly successful acquisition. I mean, you hear Mark preach it to the world time and time again, and some of the biggest stages he's ever on, obviously a success.

1:05:29We've given A's to things that have like ridiculous multiples. I mean, you look at what Instagram did at Facebook or you look at Pixar sort of reverse integration or reverse acquisition of Disney pictures, Disney animation. And those are A's. So I guess what we're I'm gonna land on this is an A- for exact target. I think similar. You know, we've talked about all the reasons why this is a great outcome.

1:05:57You know, one thing that we actually didn't quote. It's funny. We're not super quantitative on this show, even though we're about, you know, acquisitions. So, you know, we went through this whole episode. We didn't talk once about your revenue, but some numbers I want to throw out. When the exact target in 2012, which was the final year, a full year of being a standalone company, I believe you have about 294 million in revenue.

1:06:26and in Salesforce's fiscal 2016, which ended January 31, 2016. So essentially the calendar year 2015, the marketing cloud division did 654 million in revenue. So over twice as much in less than three years. So that's a pretty great outcome. And speaks to the power of this.

1:06:54There are many product things that Salesforce has done with the acquisition and bolted on many things, but also just the power of these enterprise relationships that they have. So I think this was a great deal. I'm also going to, you know, when I think about Instagram, like, you know, it went from a billion dollar acquisition price to $3 billion in revenue in like three years, and that's all right. I'm also a minus, but I'm on the fence here.

1:07:24Scott any any comment You guys are tough graders. You're really you guys are really really really you'd be like that professor That's really difficult incredibly stingy incredibly stingy about giving away an A so my if it is not fair So I know I know Instagram is the is the bar That's a that's a high bar. Yeah, there's no question. I'm biased, but I I think I'd give you a really fair grade, and I definitely give a full A, no minus, I'd go with the full A, and I'll tell you the reason is that this was an extraordinary outcome, you know, for exact target, you think about...

1:08:00you know, three first time software entrepreneurs, you know, starting a software company in Indianapolis, you know, with very, you know, humble expectations. Nobody thought this was going to happen. In conceivable. In conceivable that we would ultimately sell the business for two and a half billion dollars. And what I'm so grateful for is that every employee who's a part of the exact target had equity in the company and this was really a meaningful outcome for our employees, not only just the kind of experience of a lifetime and being a part of this powerful culture we called orange, but there was a financial outcome that was meaningful. And the neat thing is that, you know, at 3375 a share, every person who ever invested in an exact target from friends and family to venture rounds to public investors made money. So, so I...

1:08:49you know, smile from ear to ear, just thinking about what an incredible outcome this was for everyone at exact target. And then the neat thing, David, I'm glad you referenced the numbers, is that, you know, integration is remarkably difficult. It is so difficult to acquire companies, integrate them effectively. And when you look at Salesforce, this was the large acquisition they had done. First time they had acquired a public company and to see the kind of results that had been produced. And I just know how delighted Mark and the team have been about the performance of the business.

1:09:19I give it an A in both sides, the sales force side, and the exact target side. You have to know you have to love your company, right? Like, if you don't, who else will know? Oh, absolutely, absolutely, that's right.

1:09:30Well, let's move on to some fun we have at the end of the episode. It's a section called The Carvout and this is where we talk about something that's in pop culture or media that we read or watched or stumbled upon or a product that we love and really anything that really tickled our fancy in the last couple weeks and I'll start with mine.

1:09:52I'm a big fan of the talk show. It is a podcast done by John Gruber of Daring Fireball that mostly covers Apple. And John does a live show every year at WWDC, the biggest Apple conference. And this year, his guests, you know, his guests are normally friends of his or other people sort of in the Apple journalism space and out walks, you know, Craig Federiki and Phil Schiller, the senior VP of marketing and the senior VP of software or just engineering all up. Anyway.

1:10:22just like an unbelievable, candid interview with two guys that have great personalities on stage. And you normally only see these people in the extremely rehearsed, very, very perfectly timed and executed Apple keynotes and getting them off the cuff. It's just so fun if you're a fan of Apple or just a fan of technology and how these businesses run in general to get that candid look at these guys.

1:10:50Mine is a great book that I'm almost done reading, but I've been enjoying immensely. This was recommended. I saw this as a recommendation. I went to Y Combinator's Startup School in 2013, I believe, by the 2012 or 2013, and Jack Dorsey spoke there, and he recommended it as a book. And it's been on my list, you know, ever since, and I've finally got around reading it. The book called The Score Takes Care of itself, and it's by Bill Walsh, who was the legendary, unfortunately, late coach of the 49ers during their amazing dynasty in the 90s. And which I remember growing up and watching Joe Montana, Jerry Rice, Steve Youngen. But the book is just about his philosophy and lessons on leadership. And he's such an amazing guy. He's not the, you know, you think of like a football coach in that era. And it's like super, you know.

1:11:48Hard and yelling and screaming like that's on his style at all. It's just like it's just this commitment excellence and like, you know, that's all that matters and all the other stuff is just show and But I mean there's lots of good gems in the book willing to put in the show notes off to check it out. That's very fun. I love the car about feature here guys. This is kind of fun. Thanks and David I should clarify Jack Dorsey is no no relation I mean although I've got lots of family connections here on the on the show Jack Jack and I are not related to one another although that'd be kind of fun So my car about was a month ago, I was flipping channels trying to find, I think probably an NBA playoff game flipped over to ESPN and caught the end of the national spelling bee, the script's national spelling bee, and it was phenomenal. The two finalists were an 11-year-old and a 13-year-old who were just extraordinary at their ability, obviously, to spell very difficult words and handle a tremendous amount of pressure.

1:12:42And they ultimately tied in the end. And the 13-year-old had had an older sibling that had won previously. And the 11-year-old was a fifth grader, who was the youngest kind of finalist and champion ever. And watching those two operate was incredible. And to me, I'll say two little stories. One, it's just...

1:13:01Quite exceptional I think how young people are developing so quickly and when we look across our businesses at interns or contributions new college graduates can make they are able to contribute to businesses in a way today that never existed in the past and watching these two kind of young students compete was really incredible. And then one of my favorite parts is that each of the finalists had to share their favorite word.

1:13:24which I would definitely have a difficult time spelling any of them, probably even pronouncing one of them. But one of them that stuck with me was indefatigable. And for whatever great word, which really means tireless persistence to be indefatigable. And as I'm working with all these early stage startups, to me, that's like the number one characteristic for a CEO or a founding team is that they have this tireless persistence and they just They have such a burning fire inside them to succeed and to solve a big problem and make a difference in the world that you just know they're going to be successful. It's great. Totally great. David, do you want to table follow-ups until next time? We're running a little long here. Yeah, well, maybe I'll just do one real quick which is because we've mentioned a few times on this show. Instagram reported latest user numbers this week or Facebook reported Instagram's latest user numbers this week. Pretty incredible.

1:14:14They passed 500 million registered users, 300 million daily active users. Think about that ratio. Three out of five registered users on Instagram use it every single day. Wow, that's impressive. That's amazing. You know, we, uh, Instagram was our, uh, one of our very first shows and, uh, like I said, it's our canonical A, but, um, especially with Snapchat and everything going on, there's all these existential questions and that business just continues to perform at an amazing level. No. Indeed. Thank you, Scott.

1:14:43All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly.

1:15:12The real advantage is how quickly you learn what changes actually created value for customers. And how fast you can use that signal to guide what you shipped next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

1:15:34So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. Yeah, hey, just to kind of close down the show, anyone listening out there, thanks so much. Tell your friends, review us on iTunes, share it on Twitter, Facebook, whatever you'd like to do, snap about us if that's your thing.

1:15:59Scott, how can our audience find you? At Scott Dorsey on Twitter and then high alpha.com. You can learn more about the new venture that we're building here in Indianapolis. Awesome. Well thank you so much. Yeah, thanks so much guys, really enjoyed it. Thanks Ben, thanks David.