Acquired - PowerPoint

0:00Now my video is taking up half the screen and your video is taking up half the screen. Good. How do you even, uh, can you snap it? Oh, there we go. That's got a cool. Can I make your video small? That's kind of like why, what is the use case for this? I'm looking at an enormous version of myself and you're small in the corner now. It's, uh, it's Skype for Narcissus. Welcome to season two episode seven of acquired.

0:36the podcast about technology acquisitions and IPOs. I'm Ben Gilbert. David Rosenthal. And we are your hosts. Today we are digging into the historical archives to cover the acquisition of a company you've probably never heard of, but a product that you absolutely have used. Probably hundreds or maybe thousands or maybe you've even gotten your 10,000 hours. This piece of software. I feel sorry for you if you have. I think I may have.

1:05I think I may have. I definitely have investment banking. All right. Listeners, today we are covering Microsoft's 1987 acquisition of four thought incorporated, the makers of PowerPoint. This has the honor. I was going to say dubious honor, but this really is an honor. This was Microsoft's first acquisition and Apple's first investment in another company, first strategic investment. Not only that, They were within like three months of each other. I know. Most people don't even know that PowerPoint wasn't homegrown. I mean, word and Excel were homegrown applications, but PowerPoint was an acquisition. Yep, an acquisition. Not just an acquisition, a completely separate business line as we will get into, which is not to say that that is necessarily how we will categorize it on acquisition category, but Microsoft kept it as a business line, separately based in Silicon Valley actually on

2:02Sand Hill Road in Silicon Valley was where PowerPoint was developed. It all comes full circle. All right, we will dive in more. But before we do that, listeners, if you like the show, if you've been listening for a while, if you're new and you happen to like this episode, either way, we would love a review on Apple podcasts. It helps us grow the show and it helps us create more great content. So please take a moment. You can in fact, you could even pause right now and do it. We don't mind seriously. If you are new to the show, you can check out our slack at acquired.fm.

2:32All 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. Yup, 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 for 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.

3:21drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Lugora's bet 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.

3:41And 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. Legora 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.

4:33Plenty 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 David, we had.

4:56much teasing of the plot ahead in the intro. Do you want to take us in? How did four thought get started? How did Microsoft buy it? How is PowerPoint the essential part of Microsoft Office today? Or actually Office 365 a part of the Microsoft Cloud strategy? How did it all get started? Well, like so many other things, but like basically...

5:20everything in modern computing. The origins of PowerPoint can be traced back to Steve Jobs' historic visit, his raid, some might say, on Xerox Park headquarters in late 1979 after Xerox had made a small investment in Apple computer, and Steve got to peek behind the kimono.

5:47famously and go see the Palo Alto Research Center of Xerox where they were developing prototypes of their vision of the office computing environment of the future. And that was famously, Park was where the graphical user interface was developed, the mouse, the idea of networking, which of course would lead to the internet.

6:10podcasting and us recording on Skype and this moment right now. The most important thing created out of the internet podcasting. All comes back there. But no, so how does this relate to PowerPoint? So once Steve had seen the future of the graphical user interface, he brought it back to Apple and basically.

6:33Decreed that this was the direction the company was going in but of course Apple had been around for many years before then there were other product lines in Apple other computers they made that were command line interface Like like DOS before Windows and those product groups, you know didn't just shut down they kept going there was the Apple 2 and the Apple 3 that were both being continued to be. But David, why join the Navy when you could be a pirate? Exactly, exactly. You're referring, of course, to the famous Mac group that Steve starts with an apple where he flies the pirate flag in the building. People who were working on the apple two and the apple three were talented people, they sort of saw the writing on the wall too, that Apple was going in the direction of the graphical user interface and first the Lisa and then the Mac. But also, they themselves realized that

7:29not just was Apple going in this direction, the whole industry was eventually going to go in this direction. And in particular, two folks, the product marketing manager for the Apple 3, Taylor Pullman, and the software marketing manager for the Apple 2, Rob Campbell, they see this feature, and they decide to leave Apple and start a startup to pursue this graphical user interface future, because they know it's not on.

7:58the products they're currently working on. When we first start doing our research, and we start on Wikipedia, or we start reading the comprehensive history of this company, you always see the name of the founders, but very rarely do they actually go back before they were the founders of that company. And it seems like without fail, when we start to dig in, and particularly David, when you start doing your research, who were these people before? They were ex-Apple, they were ex-general magic, or they were at Stanford Research.

8:26There's a very small number of places they could have come from. And it's amazing, you know, where technology in the whole field is today, the world was just not that big. There were not that many institutions or companies like everybody spun out of the same few places. They really weren't, I mean, there were the number was in the thousands of people who worked in the technology industry, or at least the software industry.

8:48It just wasn't that many people, and there weren't that many companies back in the day. So Taylor and Rob, they leave, and they see the power of the future of the Xerox Park Vision, the graphical user interface, interacting with applications that business users are working with directly instead of separate computer divisions with punch cards and whatnot. But they think that the Mac and Apple Maybe they're a little bitter because Steve kind of knee-capped their products, but they think that the Mac is not the future. They think the future is bringing the Graphically User Interface to the massive numbers of IBM PC clones that are out there already and shipping in the enterprise.

9:26And it turns out that they were right about that. It just wasn't forethought the company that they founded that went would do that. So they leave Apple. It's the hard part about being a venture investor, David. You can be right about everything. But if you, you know, pick the wrong horse, pick the wrong timing, pick the wrong specific nuance, you end up with PowerPoint. It's a nice consolation prize. Usually you don't get the consolation prize.

9:53So Robin Taylor, the end of 1982, they leave, they start this company, they call it forethought. This is foreshadowing the graphical user interface to come. The vision is they are going to develop an operating system that is going to...

10:06Like I said, bring a graphical approach, almost a Windows-like approach, some might say, to IBM clone PCs. So they raise $700,000 right after they leave. There's a lot of people that are really excited about this. Shortly thereafter, they raise another $2.5 million from PCs. They attract some great folks, new enterprise associates, NEA, invest, Dick Kramlik, who was...

10:30one of the founders of NEA, very well-known VC at the time. He invests, he joins the board. Also, as an independent board member, they get Bob Metcalf, who was the inventor of Ethernet at Xerox Park.

10:45By that point in time, he's the chairman of three comm. So he's their independent board member. Literally like Bob Metcalf of Metcalf's law is the independent board member of this company. There were like 11 people in technology. Like this is incredible. It's totally incredible. So high flying, huge vision. There's just one problem that a year later.

11:05Microsoft announces Windows. While this is now the fall of 1983, they've been working on this for a year, and while Windows wouldn't actually ship for Windows 1.0 I believe until 1985. It still doesn't seem like a good bet.

11:21What do you do? Right. What do you do? And in particular, in the case of fourth thought, it's not just that the 800 pound gorilla just stepped into the ring with you and is definitely going to crush you even if you could compete. Apparently development is really not going well and it's kind of a mess. And the foundation was the name of the operating system that they were building. It wouldn't even compile. They couldn't demonstrate it. It was just in development hell.

11:48So at this point, they've burned through about $2 million of the $3 million, just over $3 million that they had raised. They've made no meaningful progress. They have no prospects.

11:57The VCs and the board, basically, they issue an ultimatum. They say, you have to, this is now the spring of 1984. We're going to schedule essentially a demo day. You are going to demonstrate this operating system that you are building. We are going to evaluate it. We're going to bring in outside experts and we're going to see if there's anything here that we can use. Those VCs, they really hold your feet to the fire. They do the demo day. There's nothing. But there is...

12:23Some tiny, tiny flicker of good news, and exactly how this happens, even though he wrote a whole book on the topic. I'm still not entirely clear. But somehow, there's a guy who doesn't even work at the company named Robert Gaskins, and he's a mid-level manager at Bell Northern Research, which is sort of the California division of Bell.

12:44It's one of the five companies in technology. Yeah, one of the five companies in technology, he gets connected with the folks at Fort Thought. And again, he's like a mid-level manager. He's not part of the company. But he's really excited also about the future of the graphical user interface. And he wants to join the company. So even though the market.

13:06for the company has just been completely swooped in by Microsoft and the coming Windows product. The product is in development hell. He wants to join. And he has a vision for what he thinks can be a sort of quote unquote restart of the company. The term pivot wasn't around yet, but that he wants to bring to the company. And this is a good time to say to Bob. Thank you so much for being super gracious and emailing with us to help us research this episode.

13:34for folks who haven't read it, and I would imagine if you are as surprised as I was when I first found out that PowerPoint was an acquisition. You probably haven't read it, but Bob wrote a fantastic book about how this all went down and kind of PowerPoint as a case study and really fourth out as a case study and has gave us some really great quotes that will pull out later in the narrative. So if you're interested in what we're talking about here, definitely check out Bob's book. Yeah, we'll link to all of it. It's a love the title. It's called Sweating Bullets and it's so good. The definitive history of building PowerPoint and Bob is just

14:08Well, he's a few more words about Bob because he's a pretty interesting guy. He had been a grad student at Berkeley and he was doing an interdisciplinary PhD in English, linguistics, and computer science, which is quite the combination. He ends up dropping out to join Bell Northern Research because he wants to go work in industry and in computer science. This is the mid-70s. He knows this is going to be the future. It's sort of like...

14:32Masa, and when he met with the, of Softbank, when he met with the head of McDonald's, he said, go work in technology. This is actually at Berkeley, kind of right around the same time. And then after PowerPoint, he'd go on, he retired, he becomes sort of like the world historical expert in...

14:50The concertina, which is a musical instrument that was developed in England in the 1800s, he's really like a Renaissance man. So big thank you to Bob for writing this book and all the blogs that all of this material for this episode comes from him and it's all primary source from him. So thank you. So Dick Kram, like who, as I mentioned, of NEA was on the board.

15:12And he says, I can totally empathize this with this being in a VC, a company that is going nowhere, but there's something and there's someone who wants to do something interesting. He says, yeah, sure. This guy Bob, he may not be the most accomplished manager or had the best resume, but he's got some sort of vision to do something and rather than just taking the $1 million that's left in the company back, let's see what you can do. The board makes the decision to hire Bob in.

15:41and they give him 5% of the company, and they basically turn him loose on creating his vision for what an application for the graphical user interface could be. But there's just one kind of twist to that, which is that Rob Campbell, who was one of the original founders and was the CEO, he doesn't leave. He remains the CEO of the company, a forethought, and Rob basically goes and builds a wholly separate company doing software publishing because remember this is back in the day when to actually distribute software it wasn't just like you developed it and then you like put it on the internet or in the app store and anyone could buy it you had to actually you know market it literally ship it you literally had to you had to get discs

16:28manufactured put in boxes with paper manuals and shipped to computer stores and so there was actually a publishing industry just like there's a publishing industry for you know authors and books uh to do all this so rob goes and he starts a publishing division of for thought now the idea was that the company would build up the muscle in software publishing by publishing other developer software so that by the time the application that that bob gaskins was working on was ready, they would be able to publish it themselves without having to have a third-party publisher. That was the idea. So Rob goes, he gets a couple developers that he's going to publish their software. The first two don't really work out. And then he signs up a database program for DOS called Nutshell, that they were going to repurpose and redistribute for the Mac, and they decided to come up with the name for it of FileMaker.

17:22FileMaker, and for any long time Apple nerds out there, this should be a name that's come across your desk a few times. If you go to FileMaker.com today, it still exists. The website informs you that it's FileMaker, an Apple subsidiary. FileMaker is now owned by Apple.

17:39One of the very few Apple subsidiaries and a long long time subsidiary and it's kind of incredible They keep it a subsidiary and run it under its own brand like this is like this weird corner of Apple that you never hear about when you think about their You know four products and three sizes that are neatly shrink wrapped and well understood four products three sizes Plus FileMaker. And so the history on FileMaker, I mean this is kind of incredible that within one roof, now the developers of FileMaker were always a third party company and fourth thought was just publishing the software, but FileMaker would go on to be acquired.

18:15by Claris, which was the spin-out from Apple that was run by Bill Campbell, the coach Bill Campbell, who is one of the most legendary figures in the valley. Again, it all comes, I wouldn't even, there weren't even thousands of people. There were probably like 10 people working in technology at this point in time. Bill would then acquire the developer of a file maker and file maker into Apple a few years. Actually, I think within a year of when Microsoft acquired PowerPoint and fourth thought. But that is a story for another day. For today, back to the application side of fourth thought. So it turns out that Bob was not just had any vision for the company. He actually had the right vision for the company. So what he saw was that everybody knew that graphical operating systems, graphical user interfaces, and operating systems were coming, but this was going to enable essentially a huge wave that would wash across the whole technology industry.

19:12you would be able to on top of that build applications that were enabled by now having a graphical computing environment that you couldn't do before. And the vision of what application to build that he comes up with is business presentations. Up until this point, when you made a business presentation, you would do it using you know, slides, literally photo slides like overhead projector, you know, put the slides and like the scene in Mad Men with the the Kodak carousel, you had an art department, a corporate art department that would make presentation slides and then you would put it in your Kodak projector and like that's how you would lead a meeting. It's nostalgia, David. It's nostalgia. The carousel. It might be the best scene in television, like flat out. It's so good.

20:02It's so good. But Bob, so he sees this and he says the carousel is going the way of madman. This is going to be the future. People are going to make these presentations themselves, enable the business user who's the, it feels weird even to describe this in that there was once another way of doing this. Like if you are the presenter, you are making the presentation, you can actually now make it yourself and present it yourself when you used to have an art department have to do it for you. There's this thing called absolute PowerPoint by Ian Parker.

20:34It's like a super old website floating around, or did you find the thing at all about Whitfield Diffie? No. Okay, so there's a guy named Whitfield Diffie, and I believe he was in the Bell Northern Research Center. Folks who have studied computer science may know Diffie from Diffie Hillman encryption. I'm gonna probably get the details wrong, but if I remember right, it was a precursor to the RSA encryption, which is the sort of basis of most secure transactions that happened today. But there's a great, great excerpt from this piece. At Bell Northern, Diffie was researching the security of telephone systems in 1981, preparing to give a presentation with 35 millimeter slides. He wrote a little program tinkering with some of the graphics software designed by a BNR colleague that allowed you to draw a black frame on a piece of paper. And then it goes on to point out with a few days of effort, Diffie had pointed the way to PowerPoint. And it was, it's

21:30Incredibly at Bel know the research sort of coming up with this concept of maybe software can help us do this thing that you know, we have to do manually right now and and use a little bit of software to get there Wow, that's I can't believe I missed that in all the research because that is looking I mean gaskins comes from bnr That's the germ of the idea right there so the first thing gaskins does The board basically, he's not the CEO, but he's basically given CEO like oversight of the core part of the development part of the company, the non-publishing part of the company. He fires everyone except for one person because all the engineers that they have, they're all systems engineers that are all coding in machine language, trying to build up this operating system. He keeps one and then he hires

22:18Really great developer that he knew that he had tried to recruit into BNR named Dennis Austin and then Dennis and Bob go on to the two of them basically in like previewing the modern like lean startup team like they basically build PowerPoint together with with Bob as the PM and Dennis is the engineer Dennis at the time was actually working at another NEA portfolio company that had just shut down. Dick wasn't on the board. One of his partners was on the board. This tells you about the prospects for fourth thought and what NEA thought of the company. The board member at the other company that had just shut down that Dennis was working at.

22:56tried to stop Dennis from going to fourth thought because he was like, that is a sinking ship. You don't want to join that. Our firm has no faith in this company. You're throwing your career away. But Gaskins was still able to recruit him. And he writes about this because he was able to do it because there just weren't that many companies out there that were working on applications for Graphical user interface operating system. So if you believe that was the future, you know, you're only bet and Bob also talks about this is why he joined fourth thought himself despite it being a sinking ship. There just really weren't that many opportunities to do this. It was like when the iOS, you know, app store launched and you needed there were only like three places where you could write, you know, iOS apps. Um, which so they're kind of were like, yeah, there was Craig Hockenberry at the icon factory. You know, there was like

23:49actually just a few people that there was whoever made Super Monkey Ball. Yes, Super Monkey Ball. Which was, that was a port from consoles, I think, actually. I didn't know. Yeah, I wonder what, it'd be fun to go back and see, like, what the first, like, native companies and apps for iOS were? You know, you know why Twitter Rift came out so early that Icon Factory Twitter client? No, what?

24:15So Craig Hockenberry, when Apple announced their sweet solution for developers to be able to build web apps and they're not being an app store, Craig was one of the people who basically cracked open the iPhone and figured out how to reverse engineer the API surface and know what the Apple engineers were doing to build the native apps and he wrote Twitter effect as a jailbroken app. So then he was sort of already because when they released the SDK, I mean, it was a much more he had already been essentially building before the SDK comes out. They just had to rebuild it on public documented APIs. That's awesome. Yeah. Yeah. Yeah. What would be the equivalent today? I mean, I guess that's the billion dollar question. I mean, it depends if you're long crypto or not.

25:03Good question. Yeah. Probably also a topic for another episode. We definitely have to find some crypto transactions to cover. That'd be a fun one. All right, listeners. Now is a great time to tell you about a long time friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI first world, that doesn't hold up anymore.

25:33Yup, your risk surface changes every week now. A vendor turns on an AI feature or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote shadow AI running with no security review at all. Right.

25:54And that's where Vanta comes in. They're the leading-agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta agent. Think of it as a GRC engineer, that's governance, risk, and compliance, except that it's software and it doesn't sleep. It finds the issues drafts the fixes and cuts the time that you'd spend on vendor assessments in half. In half!

26:17which is exactly why more than 16,000 companies today run on Vanta. Companies like ramp, cursor, and snowflake all stay audit ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment. And that's the real value.

26:35Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at Vanta.com slash acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off and just tell them that Ben and David sent you. All right, back to the PowerPoint story.

27:05It takes them about three years to develop PowerPoint within fourth thought, beginning with just Bob and Dennis, and then eventually growing the team over time. But because they're doing this in a startup.

27:18You would think they're also publishing FileMaker. FileMaker becomes a very successful software on the Mac, but unfortunately, they don't have a really great deal with FileMaker. They're actually losing money on it and they're losing money on the other software they're publishing to, not good deals. They keep having to raise money all along. So from NEA and their existing investors, new investors, they're...

27:39basically constantly pitching. Bob is spending his time either laying off people pitching for money or building PowerPoint, probably in that order. Wow. Do you know how much money they raised? I actually don't know the total amount that they raised, but when they...

27:55do finally sell the company to Microsoft. The total price of the sale is 14 million and the VCs get 12 million. So only two million goes to common. I don't think that was all 12 million of liquidation preference, like there was probably some participation in there too, but you have to imagine they raised at least 6 million if not more if they're going to get 12 million per preference or quickly catapulting.

28:20I don't wonder what they raised from Apple's strategic investment group. Well, right. So they're raising money. They're talking with Apple all along because Apple is starting to launch this strategic investment group. But Apple's worried that they're not going to be able to actually ship the product. So they don't want to invest unless they're actually going to ship this strategic product for Mac. So they keep waiting and waiting. And Apple actually only finally ends up investing just about I think two or three months before Microsoft acquires the company.

28:49Yeah, it's in January of 87. January of 87, they ship the product in February of 87. And then the acquisition happens over the summer. Really, really believing in them Apple until it's absolutely clear that they are literally printing floppy disks and shipping them in one month. That's when we will invest in you. Sounds like most VCs, right? Yeah. I mean, at that point, it's impressive that they managed to get there without getting the check.

29:19Yeah, and I guess they took the check on you know, we'll need to ramp production after this first run Well, it's also like are you really gonna turn down Apple? Yeah, at that point in time the only platform that you are shipping your software for because developing for Windows is a nightmare Especially at that day and age so Apple invests January 87 February of 1987 they do a big launch event that finally ready to ship What was initially presenter was the name for the project over the past few years, but then they had a trademark issue right before they're about to ship. So they changed the name to PowerPoint. Shocking that you pick a term as generic as presenter and expect that to skate through trademark review. But it's again, it's like, you know, back to...

30:05Back to the early days of iOS apps, remember like camera plus and like all the, you know, super basic named apps. So they changed the name to PowerPoint right before they shipped the product. So February 1987, they do a launch event. They haven't actually shipped it yet. Microsoft and Bill Gates get wind of the momentum that's building behind this product and they actually reach out and very explicitly say they want to acquire the company even before the product ships and to be clear what the product is at this point like we say on the product ships it's software that allows you to make black and white printouts on transparency so that you can put them on overhead projectors yes like the power point you're envisioning is very different than this power point like we talked about 35 millimeter slides they're not even there yet they're not even in color yet like

30:58This is a program that helps you lay out your transparencies for overhead projectors. Yes, but apparently up until this point in time, Microsoft and Bill Gates of course knew that software applications for graphical user interface operating systems were going to be a huge market. They were working on many of them internally like Word and Excel. Bill Gates also knew that presentations was going to be a big market.

31:23His vision for how Microsoft was going to attack it was they were going to add the option to print an outline to Word. In Word. In Word. That's so great. So Jeff Rakes is the executive at Microsoft. There's a great excerpt here that Jeff Rakes wrote. He goes, I thought software to do overheads, that's a great idea. I came back to see Bill.

31:46I said, Bill, I really think we ought to do this. And Bill said, no, no, no, no, that's just a feature of Microsoft Word. Just put it into Word. And I kept saying, Bill, no, it's not just a feature of Microsoft Word. It's a whole genre of how people do these presentations. And to his credit, he listened to me and ultimately decided to go forward and buy this company in Silicon Valley called Forthought for the product known as PowerPoint. And here we are today. It's like, it's how freaking businesses communicate internally.

32:14That's how the military communicates. It is the de facto way for people to get ideas across to other people. You can hate that, you can love that. It can be your tool of choice, or you can be your nemesis in an organization. It's not that long ago. It's the late 80s, and the belief was, eh, that's a feature of a word processor. It's a feature of word, yeah. I was gonna save this till the end. I think it's the most fun idea to this whole thing.

32:42Fourth thought has is this like tragic history of a company. They're always perpetually raising money. They're doing bridge round after bridge round after bridge round. It's impossible to raise money. The irony is that...

32:55Because of PowerPoint, like, PowerPoint becomes the vehicle by which more money is raised in the history of humankind over the next 30 years than has ever been raised in the, you know, in the mankind's history until that point. And the irony is the company that made it could not raise money. So great.

33:17But it also reminds me of the Dropbox episode and Steve Jobs telling Drew Houston that it's a feature not a product. $10 billion feature. I guess there was no Jeff Rakes around in Apple and whenever it was 2010, this still tells Steve that, no, this is a product not a feature. No, no, no. Did your research get into the talks that Microsoft was having with another potential company? Only a little bit. They supposedly there were Two other companies that they were evaluating, once Jeff Rakes had convinced Bill Gates that this actually needed to be a product within the suite of applications that Microsoft productivity applications, Microsoft would make for Windows, but they evaluated the PowerPoint was the best. So apparently Dave Weiner had a company called Moore, capital M-O-R-E, and Microsoft actually issued a letter of intent to purchase them.

34:10and ended up walking that back. They basically took it back the same day that they gave forethought. They're offered to acquire them and basically On April 28th, 1987, this is right after Ford thought had shipped the first run of PowerPoint. A group of Microsoft senior execs went and spent a day at Ford thought to hear about the initial PowerPoint sales on Macintosh and what their plans for Windows were. And that day, as soon as they all got back to Redmond, that next day they sent the letter withdrawing their earlier letter of intent to purchase, which is interesting, interesting, totally crazy. Well,

34:45That makes sense because what I did research was the back-and-forth on the acquisition from the forethought side. So this was end of February, Microsoft reached out, reaches out to forethought, says, we want to get into this market, we want to buy you, we want to do this fast. A couple weeks later in mid-March, Jeff Rakes and John Shirley, who is then the president of Microsoft.

35:06come down to Silicon Valley, fourth thought is based in Sunnyvale at this point. And they have dinner, they offer $5.3 million to buy the company in cash. The fourth thought board meets and decides they haven't shipped the product yet. This is still a couple days before they ship the product and decides, you know, that's not that much money. The VCs have probably put at least that much money into the company. They're like, we'll roll the dice, we'll ship the product. They ship the product in mid-March.

35:36And it's a huge success. It sells a million dollars in its first month. They instantly sold out all 10,000. They had printed which is. It's just so crazy to be literally sold out. Sorry. You can't get the bits anymore. They're sold out. Can't get the bits anyway. They're sold out. Only so many bits.

35:56So then after that, that's when Microsoft comes back down and meets with them in April. And then immediately after that, I guess they canceled the LOI that they had with more to acquire them. They decide PowerPoint is what they've been looking for. They need to acquire forethought. And then they come back with a much improved offer. Can you imagine like being Dave Weiner in that situation? What a bummer. Total bummer.

36:24What could have been what would have happened otherwise so interestingly though the offer that they come back with this is you know VCs sometimes Do things to hurt themselves? They come back with an offer to acquire fourth thought for $12 million but in Microsoft stock The board is happy with the offer, but they believe that Microsoft's stock is overvalued because it was up 6x in the past year. And they didn't want to take Microsoft's stock, they wanted cash. Now, were they public? Yeah, Microsoft had gone public the year before. Did you sell the stock? Like, what's a big deal? Of course, of course you could sell the stock. Or you could hold the stock and make billions of dollars, but, you know.

37:05There we are, VCs. Cash is king, David. Cash is king. Cash is king. Cash is king. So the board says, no, we don't want this billions of dollars of upside in Microsoft stock. They call themselves venture capitalists. There also were a bunch of other weird terms in there. They, particularly, they wanted the whole company to move up to Redmond and join Microsoft in Redmond in Seattle. The team didn't want to do that. They wanted to stay in Silicon Valley. So they go back to Microsoft.

37:34They have the boards negotiate, because they're still VCs on the Microsoft board at this point in time. And Microsoft comes back with 14 million in cash, and the acquisition gets done in early summer. And in particular, the company and forethought as part of the negotiation. They get to stay in Silicon Valley, not just keep developing PowerPoint themselves there, but they get made into a whole official business unit of Microsoft.

38:00graphics business unit of the applications division and they have a mandate to hire and build and run that whole division out of Silicon Valley. So after the acquisition closes, as we mentioned at the top of the show, they move the company from Sunnyvale up to Sandhill Road to Tony Sandhill Road where all the venture capitalists are right next to Stanford and they move into the quadrous complex on Sandhill Road take over the whole complex that then is the complex after Microsoft leaves where benchmark has their I think their first and long time office Shasta's there many other many other VCU August capital is there and August capital was the VC investor in Microsoft

38:47are all there in that complex. It had been something else before Microsoft Mint, but Microsoft made it into a tech complex. Wow. Wow. And there's a big lesson in here. I mean, this is one of the great quotes from Bob that he sent over. I don't think I'm spoiling anything here in this open line. I think you guys know the end of the story.

39:06PowerPoint has been so very successful after its acquisition and mostly as far as I can see because Microsoft in 1987 lacked any technology or experience to try to manage us manage its first distant location and so accidentally avoided smothering its new product while providing what was really vital to us money industry cloud strategic tips from Bill Gates and Mike Maple senior during confusing times for Windows developers.

39:33And was it ever? Yeah, we have to say once again, thank you. Thank you, Bob, for your email to us and writing the book about this. Listeners, you can tell we're geeking out over this because it's so cool to have such primary sources for required. So yeah, that's what happens. I mean, Microsoft really does leave PowerPoint alone. It's the original Facebook style acquisition. And even though PowerPoint would ultimately come to be in 1990 with the launch of Windows 3.0. The office bundle is introduced and PowerPoint comes to be bundled with Word and Excel, and sold together as a set. Which actually was launched first for the Mac in 1989. The three were bundled together. Yes, PowerPoint became a component of the office suite for Mac and then in 1990 for Windows.

40:26Well, that was because Windows 3.0 didn't launch until 1990. Bob also talked about this is really getting into the weeds of both history and technology here, but before Windows 3.0, it was impossible to develop for Windows.

40:42nobody outside of Microsoft essentially could write applications for it. It was so buggy. And so the PowerPoint group, again, being independent, refused to ship a version of PowerPoint for Windows until a stable version of Windows came out. So you could get word and Excel on Windows 2.0, but you couldn't get PowerPoint simply because Bob and the whole group was like, no, we're not shipping for this piece of crap operating system. And the amazing thing is it took a while to get it to get it all integrated, so you had word and Excel that felt very similar, but then you had PowerPoint 4 that was starting to actually converge, but it still looked quite different from the original...

41:22Word and Excel on Windows, and it wasn't actually until PowerPoint 95, which used the version number of PowerPoint 7.0, where they actually totally converged and used the same version number. And the reason it went from 4 to 7 was to catch up with the Excel and Word version number. So there was never a PowerPoint 5 or 6. 5 and 6. Yeah, it's the Windows 9 of PowerPoint.

41:48The iPhone 10. The iPhone 9. The iPhone 9. Yeah. Oh boy. Yeah. Well, that is the story more or less of PowerPoint. And I'll throw out a few numbers just to understand the ramp here a little bit. So PowerPoint has been phenomenally received since day one. So it was overhead projectors and then it was 35 millimeter slides and it was in color. And then they started to actually find a way to make it I think it was actually, it was like a video basically that was projected out. Let's see, the third version for Windows and Mac in 1992 introduced video output of virtual slideshows to digital projectors, which would over time, of course, completely replace physical transparencies and slides. But the sales numbers are quite staggering. So that first 10,000 at 100 bucks a pop sold out right away. That was in

42:4287 and then it comes and only for Mac and only for Mac it comes out in office in 89 and then for Windows in 1990 by the last six months of 1992 PowerPoint revenue alone not office bundled was running at a rate of over a hundred million dollars annually incredibly fast growing business In 1997, there's a couple more great stats here, so fast forward another 5 years there's over 20 million copies of PowerPoint in use, and that the total revenues from PowerPoint over its first decade from 87 and 96 was over a billion dollars.

43:17I'm gonna stop before we get to a cloud world because that's when the accounting gets a little funky inside a Microsoft. But in 2009, there was a group called MBD, which was Microsoft Business Division, I believe, which included Dynamics CRM, but that was a smaller group. Did 18.9 billion in revenue and 12 billion in operating income. So, you know, enormous behemoth. It's a frickin' Windows-sized business for Microsoft having office all up.

43:46This is the power of if you recognize a massive wave like this, which is like the deployment of a fundamentally new, you know. technology, mode of interaction, and what that can enable, you can build enormous businesses as an application on top of it. I mean, this is the same story as Uber, right? This is the same story as Instagram. It's just in an office environment and with PCs. It's incredible that there was instant product market fit, even as the product changed so dramatically. The world wanted exactly what PowerPoint was the first, second, and third times, and it just, it just It occupies not only was the niche enormous, the market for digital presentations, but PowerPoint right now owns 95% of that market. That is unreal. Which is funny. In tech, we think lots of people use keynote now, and keynote's great. We use keynote away, but we're such a small piece of the overall market.

44:52And, you know, it's funny while I love Keynote and while I've dabbled in Google Slides, I end up using PowerPoint more often than anything else because... I know that if I'm working on a deck and somebody else is going to come in and work on it too, they probably have a history of using an understanding PowerPoint. I don't want to throw them into a new tool set. I mean, it is just the power of lock in and network effects and standards and it's just hard to shake. Yep. If you send it to someone else as a PowerPoint file, not as a PDF, like you know that they're going to have PowerPoint installed on their machines. One quick thing I want to say.

45:31Just on the idea of this massive wave coming and then conceiving and building an application to ride that wave, I really, really recommend everyone to read Bob's book, The Sweating Bullets book. It's just so good and so fun from a history perspective, but he also goes into great detail and he kept detailed notes throughout the development of PowerPoint, about how the idea came together, how he did market research for it, how they basically feature prioritized why they thought that they could beat competition. And it's a really great example of how to think about really a business plan for a new application product in a new technology paradigm. So really great case study. We're reading. Seconded. All right, listeners.

46:19Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part. Yeah, the hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern, like the risks are real.

46:45Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower. Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible, and secure in one place. And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approval, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security. Service now already runs more than 100.

47:32billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates. And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

47:55So 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. Should we move on to category? So I have this as a product. It was its own business unit and it was a self-sustaining or I don't know about sustaining, but it was a product that they were selling and was selling well. And you know, they had the whole channel to sell it.

48:24Ultimately, Microsoft was going to figure out a way to integrate this into every other piece of their business and just make it a product that used the Microsoft sales channel, the Microsoft sort of distribution, relationships. It only took them a couple of years to really build the ultimate bundle in Microsoft Office out of it. My assessment is product. Yeah, 100%. Like, it's an artifact of history that it was officially a business line for a number of years.

48:53a cool one, given all the externalities it produced in on Sand Hill Road and Silicon Valley, but 100% of products. Also, we didn't talk about this in the history, but this is a good point for it. We joke on this show about the quote that like, there's two ways to make money in business, you know, bundling and unbundling. The bundling of word, Excel and PowerPoint into office was one of the best and most genius business decisions of all time because when they did it, each of those products was selling separately for $500. So you would have had to pay $1500 to buy all three. All three of them had competitors in each of their, you know, word processing presentations and spreadsheets that sold for about the same price. But when Microsoft bundled all three of them, they sold the three of them together for $1,000.

49:44And there was no user who needed one of those, but not the others. Like, if you were an office user, you needed all three of them. So now you had the choice of you could pay a thousand dollars for all three of them from the, you know, made by the company that also made your operating system, or you could buy inferior versions separately.

50:01for 1,500. And they just completely mopped up the whole market. And there's a great Bill Gates quote here that is complete with an ultimatum. So here's an internal memo by Bill Gates announcing the plan to integrate the applications themselves. And this is in February of 1991 at the end of PowerPoint 3.0 development as they're starting to shift toward working on a sort of integrated platform. Another important question is what portion of our application sales over time will be a set of applications versus a single product.

50:31Please assume that we stay ahead in integrating our family together in evaluating our future strategies. The product teams will deliver on this. I believe that we should position the office as our most important application. Boom.

50:47I'm not just justifying my career here because I served when I was at Microsoft, both in my internship and in my first job, I served on a shared team. So we basically built shared components across the web apps and then later the iPad and Mac apps, but the notion of sharing between the products to promote the business of selling a bundled product group dates back to 1991. Well, that is the sound of many other mid 90s software companies and startups going out of business. And as one of my managers at Microsoft said in the 90s, there were 747s flying cash to Redmond. It was just full of cash. Oh, man. It's so funny. Like, it seems like such a different world. It is. Like, that is a totally different world from the world we live in today.

51:40but it was not all that long ago. Like, I remember all that. You worked there, you know? Yeah. And there's still, you know, I haven't worked there in five-ish years now or four years. But, you know, there was still a very strong culture of memory around that and of wounds from the Department of Justice days. And the cultures that are created by these things and the memory of tapping that incredible product market fit well and just knowing what that feels like and feeling like you're invincible, they last for two decades, three decades. Unfortunately, they tend to outlast their useful life. Yeah, cultures are hard thing to shake. Yeah. Well, should we do what would have happened otherwise? Yeah. Yeah, so I've got three of them. We've basically covered them. But Jeff Rakes' team, before they identified more and before they identified PowerPoint, they were working on an internal

52:34version of this. And it wasn't, you know, I don't, it certainly wasn't exactly this, but they had a thesis around sort of graphics-based presentation computing that they were going to do no matter what. When Jeff was heading the marketing for the application division, they sort of put pen to paper on what a presentation product looked like. And that's that's sort of when they started looking around to to acquire. So it could have been built internally. Who knows if it would have been as successful. I'm not sure how much nuance there was to nailing the exact right product at this point, because I just don't think there were that many products in the market. So I think had they built an internally, they probably would have still been able to define the market. Yeah, there were no other products in the market.

53:21by the time PowerPoint shipped with Windows 3.0 in 1990, they were still, it was the first, this is incredible, like the first graphical presentation software for Windows. What were the other people in the market doing? Yeah, now there'd be three other venture back companies, somebody doing it on blockchain and like 150 knockoff Chinese clones by the time, like you wake up the next morning and you're like, oh my God. That's so true, that's so true.

53:51My other two, yeah, they could have built it into Word and they could have bought Dave Winer's more. It seems like there was no way that Microsoft wasn't going to attack the market at this point. Who knows, but I don't think history would have been any different, really, whether they had acquired PowerPoint or not or taken any of those paths. Like they would have ended up one way or another with the right product in market. They would have bundled it with Word in Excel or it would have been if part of Word or whatever. Microsoft was going to own business productivity application software on top of Windows. That was going to happen regardless. I think so. The biggest difference is it probably wouldn't be called PowerPoint. Maybe there's a world where it wouldn't be a separate application and then maybe slide culture and PowerPoint culture wouldn't have grown up in quite the same way. The question is, if they built it into Word, is there any way that

54:48somebody else would have come out with this format and had it become dominant and large. They just weren't enough companies capable of making a distributing software at that point. I think Microsoft could have screwed around for a couple more years and then nailed it by either acquisition. Well, this is why Bob and Dennis, despite having plenty of career prospects and opportunities, other places went to fourth thought, was if you wanted to do this kind of stuff, just weren't many places to do it. Do you move into tech themes? Yeah. Yeah. So I mean, we talked about it a little bit, but keep it a company separate to make them more successful. I think that's a huge one here. Avoid smothering. So provide the resources that are helpful. Don't trample and then figure out when bundling makes sense. You sort of see the same thing with Instagram, bundling the ad units to advertisers between Facebook and Instagram and the

55:46Network to like I mean Instagram bootstrapped the social connection network off of Twitter initially But then when it came part of Facebook and like Facebook started pumping it into the news feed and then both bidirectionally of like Instagram appearing in the news feed and on Instagram like oh your Facebook here, you know connects with your Facebook friends, you know, that's a huge example to me too of that bundling Yeah, it's interesting. I think we're starting to identify a trend of um Like, keep the development team separate. Poor resources on allow sort of separate cultures at least for a time, but figure out how to bundle to customers. And ultimately, you need to do more integration with the product teams in order to get there. So you're not sort of shipping your org chart in weird ways. But I think that's important. Are there other good examples of making an acquisition, keeping the team separate, keeping the product separate and

56:44bundling for customers. Amazon and Audible is a decent one. The Audible team is still entirely separate and yet you can buy your Audible books sort of through the Amazon product page. Yeah. I'm having a hard time thinking of really successful instances of this outside of Instagram PowerPoint. You could argue maybe Lucasfilm.

57:11by keeping Lucasfilm completely separate creatively, but providing both the resources to make more films and more content, and then the distribution that Lucasfilm didn't have on its own.

57:26It's almost like there's different levels of this, like the the keep them separate and pour the right resources on and share the right learnings is like table stakes, but it's like this total home run scenario. If you could figure out how to bundle the front end to customers, like have you, um, have you noticed if you're a prime subscriber now, you become a Twitch prime subscriber and you have one subscription to a to a streamer that comes with that sort of an interesting example, although they're cross pollinating the teams a lot more than, uh, well, it's a few years in now. So it's not so different than this.

57:55I think we should keep an eye out for that in future episodes though. You know, the only other theme that I have is one that Bob mentions in his blog post and in the book. The quote that he has is a year or two is an eternity in a rapidly exploding market and that's so true. Like the amount of time that passes in between like throughout this history is fairly short and the time that the window is open to create a PowerPoint-like product, or to create a Uber-like product, or an Instagram-like product, is very, very short. These windows don't come along very often. When they do, you need to be delivering the product into market. In that window, or if you're too early, the market's not going to be ready to adapt. It really was Windows 3.0 shipping, getting mass adoption.

58:50and having PowerPoint ready and shipping with that. Like before that, fourth thought probably would have been fine and PowerPoint would have been okay if it were just on Mac, but like whoever shipped first with the first mass-adapted version of Windows was gonna win. And similarly, with the iPhone and Android, when you were the first application that just worked, that was a major new category enabled by the competing paradigm, that was the time to win. Yeah, and as I'm reflecting on it a little bit, in starting companies and trying to make bets on these platform waves, you sort of have to believe two things. You have to believe that that platform is going to become super dominant and that it's going to be totally pervasive and

59:39change consumer behavior and have incredible, um, just sort of traction in the market. But you also have to believe that you can build a standalone venture scale business by just being on that platform and by being an app on that platform. And like for Windows 3.0, there was tons of money to be made by or even 3.1. Like if you're the first to market on that incredibly pervasive expanding platform, You also have to have the faith that Microsoft is going to allow you to monetize on their platform enough so you can be a venture-scale business. You know, the Instagram's a kind of a bad example of that because they weren't monetizing when they sold to Facebook, but it's the question we ask ourselves a lot when we're trying to make a bet on a new emerging platform. Is it going to be huge and are we going to be able to?

1:00:28singularly be here and build a big business. And I think those are the two questions you have to ask about VR. I remember when the Apple TV developer platform came out about three years ago, I was considering making it bet there. I don't think it's sort of changed consumer behavior or became dominant enough, but we were thinking, is this a new app store? Is this a new iOS? And it's hard to know when those two characteristics are present. And I think, you know, that's why they call them bets.

1:00:57You got to put your ship down a little. What's interesting about this though is this wave and then mobile and then potentially VR or even blockchain in the future.

1:01:09are the same in that it was back in 1982, 83, 84, when people knew, people in the tech world knew that the graphical user interface was the next wave, but it wasn't until 1990 when Windows 3.0 shipped that that was the right window to be hitting the market. So that's a six to eight year gap there. And I feel like VR is kind of like in the same point. Everybody who's used VR, who's been in Reck Room, you know, knows that this is the future, right? But like, we're now like, maybe we're in like 1986, you know, or 87. But there was that article that just came out this past weekend that Apple is working on a VR and AR headset scheduled to ship in 2020 currently. Like, maybe that's the point, maybe that's the Windows 3.0 of AR and VR. Like, we know it's coming, but the window is not yet ripe to build the, you know, to realize the massive opportunity.

1:02:07As we work on companies at PSL, one of the ways to think about doing no enough about the space yet to start a company, we've seen it come to fruition a few times where one characteristic to prioritize in the early stage is ability to adapt to change.

1:02:25rather than certainty about your plan and making it a good plan because there's a few times where we've seen a company that just needed to get into market to both learn about the market and sort of develop that sixth sense about a trend of where they need to be in a year or two that you really wouldn't be without operating in this space. And so it's, can I only raise a little money? Can I stay super lean and nimble and can I be first to jump on to new opportunities when they emerge and there's a sea change in the market?

1:02:54with with for thought, I think they felt around in the dark for a while to kind of get there. And then it wasn't that great of a venture outcome or it was a terrible venture outcome. But you know, it does speak to like, well, it would know it was it was like an okay venture outcome. I remember this was 1987. They more than returned to campus was a lot more than yeah, yeah, right. It was an okay. But I think it does speak to the merits of if you're already.

1:03:18loosely operating there, and you have the agility to sort of move around to where the market is going. You're in an amazing place to catch on to one of these rocket ship platforms as they're taking off. Where you want to be is where PowerPoint was was having enough experience in the market to have the product right. Yes. And still be able to hang on until the window open. And then when the window open, it's just shoot through it. It's a delicate art.

1:03:47I've got one more before we get to grading on tech themes. Listeners who haven't heard us talk about this acquired started because David and I were getting drinks and we would we would like get drinks and catch up maybe every other month or so and we wanted personally wanted a reason to just hang out and talk more. But the other part of it was we were sitting there and David I pitched you on two podcast ideas. One was like we should cover acquisitions that actually went well because the trope is that none of them ever go well and they implode. The other one was Why don't we do a podcast series where every episode is about the rare company that manages to have a billion dollar plus innovation twice. That's right. I remember that. And we decided not to do that because it just weren't that many. It would be a very short podcast. And I think our thesis was basically like companies have the magic moment.

1:04:41Just just once because they're so rare that they find that product market fit the monetization where like just everything works and then After that companies keep finding ways to grow and expand that thing But they generally fail to find a second complete one of those and particularly one that works under the same roof and doesn't interfere with the other main business Microsoft did it like they're one of the few in the world so Let's look at like 2009, 2010 because it's the last time that the business was kind of cleanly broken out where you could see office and you could see windows and they didn't have insane ways of grouping and reporting the financials for these divisions. But both of them were doing 18 to 20 billion dollars a year.

1:05:29Yes, they built each other up. And yes, there's reasons why the Department of Justice intervened because they were propping each other up. And Windows was using Office to create lock-in. And an office was creating a big moat for Windows. But in a lot of ways, you know, these were two completely separate multi, multi, multi-billion dollar businesses. Office, as I was trying to do some of the math, they've probably done over $300 billion of revenue.

1:05:57Since the beginning of office and just office not including Windows and That's just completely mind-blowing like that that is better than the vast majority of companies could ever hope to do alone and this was just shipping a really incredible bundle. I don't think it would be where it is today without having PowerPoint. I mean, it is so de facto the way that people communicate. We'd be missing an entire paradigm of the way that people communicate ideas, and that's a huge piece of what office is all about. Yeah, I'm glad you brought that up before, right before grading. Not to load it or anything. Not to load it or anything, but well, okay, should we go into grading? Yeah, let's do it.

1:06:44Okay, I'm gonna go first with what I was gonna do before hearing that argument. I was gonna give this a B plus, which is funny, we say we need to stop giving B plus. B plus is like the standard grade on acquired B plus A minus because like, yeah, it was great, like, super good execution, like, you know, PowerPoint was the right thing to do, buying it versus building it was the right thing to do. But like we talked about a minute ago, This would have happened anyway, I think. But what if it hadn't happened anyway? What if Bill Gates hadn't listened to Jeff Rakes and had shipped a feature in Word, and this whole A-parent I wouldn't have been created, but having the three products and being able to bundle them as three was key to

1:07:38winning like if it were only two if we're only word and Excel competitors they wouldn't have been able to reduce the price of the bundle enough that competitors to those products also wouldn't have been able to reduce their prices and so by like having the three of them and literally knocking the price of a full product off of the bundle of the three of them, like no competitor could keep up. Well, no competitor could keep up anyway, because no one else owned the platform. Lotus had its time, but I mean, they were making such ridiculous margins on these things that they were selling so many that the fixed costs were completely diminimous. I don't think it was like we lowered our prices so much by having a third.

1:08:22app that we could put the other guys out of business because our prices were so low. I think it was like we had every competitive advantage in the world because everyone was using it on our operating system. And we had all the sales channels and we invented enterprise software. That's true. But like we're perfect had a enormous market share in the DOS era and brought a lot of that market share into the Windows era.

1:08:43And it's true. It's very true. And the feature checkboxes wars where you know, it was Lotus and word perfect and and office all against each other. And it was who could add more buttons on their toolbars. Yeah. Yeah. All right. I'm gonna go. I'm gonna rest my pen at B+. You're so harsh.

1:09:03This is an A. This is so clearly an A. They turned $14 million into hundreds of billions. What, you were just arguing against? Let's say a hundred. I was arguing in your case a minute ago. Now you're arguing my case. Look, I'm going to play devil's advocate no matter what. But I see why it's a B plus. Because when I was thinking through it, the question is in our grading, should we consider not only the opportunity cost of the capital? Like, so if you consider they turned 14 million into 100 billion over a 25, 30 year lifespan, whatever it is, like holy crap, how's that not an A plus? The only reason why I would knock it down a little bit is it wasn't actually the insight of buying this particular company and bringing this particular team and product. It was, it was a incredible insight that this was just a puzzle piece of in the same way that

1:09:58when we did the Siri acquisition, when we did the sound jam acquisition, it looks actually a lot more like an Apple acquisition, where this was a thing they were going to do anyway. And then this was a building block on which they sort of shaped it into their vision. Now, I don't know if Bob would agree with us. And maybe there was a lot more to PowerPoint and how PowerPoint actually ended up shaping the unique and special thing that was the the large-scale successful PowerPoint, but I'm gonna go A and not A plus because it wasn't a thing that they wouldn't have been able to do without buying it. There we have it. All right, some divergence, finally. No, it's great. We need some more divergence. If for no other reason than to keep it interesting, there we have it. Should we move on to Carvots? Let's do it. You wanna go first? No, you by all means. All right.

1:10:52I read a really great hacker news thread a couple weeks ago. I feel like it's like 2008 or nine. I read a really great hacker news thread. This is a throwback episode. We'll link to both the comment that I'm going to describe and the other comment that recommends the book. But there's two comments in this thread. They're amazing. One recommends the book Mindfulness in Plain English. I'm a complete and total novice to this and I would claim no wisdom or serious practice, but I'm very interested in the topic and looking for more resources of mindfulness and meditation. And it is a book that explains the vipassana meditation in a way that is completely non-woo-woo. It is very much like how you can wrap your logical mind around this process. And let's say you don't

1:11:45You don't want to hear any of the sentences that leave you staring off into space and go, I have no idea what they just said. And I find that completely meaningless, though it sounds cool. This book doesn't have any of that. And it's got a lot of really great sort of if you're an engineer or type A or analytical person who listens to this show and you've thought about meditation, like, this is a really, really cool and interesting book. So basically, probably 100% of our audience. Yeah. Yeah. And then the other piece in that thread was somebody who was describing, and this is another analytical engineering type person, describing their experience with meditation and sort of what the process is in the terms of an audio engineer. And he basically said that meditation is like turning down the gain knob because

1:12:36When you're truly sort of silencing your mind and keeping your thoughts focused, really crazy things are going to happen and you can't have that happen to you when you're outside in the world, when the sort of gain knob is all the way up, or you could basically blow out your speakers. It's it's too intense. And so why you why you meditate is to sort of turn down the game knob or the volume knob. So you can experience all this crazy stuff in a really controlled quiet.

1:13:01experience. But then the goal is, as you become more of a master of this, to turn it up over time and be able to be mindful in real world settings without sort of the danger of quote unquote blowing out your speakers. And I thought that was like the coolest way to think about it. And the first time that this sort of arena of thought and practice made sense to my analytical brain. What cool analogy? Yeah, I thought so too.

1:13:28So we'll link both of those in the show notes so you can check it out for yourself because there's a few more paragraphs in there about the metaphor that I'm not doing justice to. Well, let's say deep and noble carve out mine. Well, on the surface mine is going to be completely opposite of that. But fits in with the theme of the show with, you know, waves and applications coming to the waves. Ben, have you been writing electric scooters?

1:13:57over the past few weeks. I haven't. They're not up in Seattle. I've been riding a lot of the bikes. You got to buy one. So many of the electric scooter sharing companies are now in San Francisco. This is the phenomenon that started about eight months ago in LA in Santa Monica with Bird and is...

1:14:18sharing just like you know bike sharing companies like OFO and line bike and the companies in China that do bike sharing but for electric scooters that are literally like razor scooters with batteries in them and electric motors in the wheels and these things are amazing you can you know ride around the city get where you're going you just leave it on the sidewalk somebody else in the app finds them with GPS location goes picks it up rides it to wherever they're going leaves it where they're where it is Okay, so cities are up in arms about this because there's like, litter of, you know, electric skaters all over the sidewalks. But that aside, this is like the most amazing transportation innovation. I think that I've seen, you know, since Uber. It's so cool. Like, the form factor is perfect. They just nailed it. It's the Windows 3.0 of light electric vehicles. And it's great because like,

1:15:12Unlike an electric skateboard where like you're on a skateboard you have to know how to ride a skateboard and even if you know how to ride a skateboard like you still can feel a little out of control on it. With a scooter you've got the handlebars so you have a lot more control and at the same time it only takes up the space of a skateboard and is collapsible and is lightweight and portable. It's great. I've been riding all over the city on these things and so I actually bought my own. I bought my own. Yes, so on Amazon.

1:15:42Amazon Prime delivered in two days, you can get a nine-bot electric scooter, ES1 electric scooter. This thing goes 13 miles an hour, has about a 15, well, depending on how much you weigh, because that can have a big impact on it, 10 to 15 mile range on a charge. It's great. Is this the one you'd recommend, Shalee? I would highly recommend it. 299 on Amazon, delivered free, you know, Prime, and it's great. Like, I basically don't use my car or my bike anymore.

1:16:12And listeners can't even see all the weight you've gained. Well, maybe I'll have to do some meditation and mindfulness to think about exercising. That's cool. Yeah. In Seattle, I don't know if it'll work as well as San Francisco because the one time you don't want to be writing these things is in the rain. Well, they could be huge in the summer. It's still pretty cool.

1:16:41Even on the hills of San Francisco like there's enough torque in these things that like you can With the really steep hills you have to kick a little bit in addition to the motor But you can go off hills like what's the magic here like like we've had sort of ebikes and scooters and stuff forever like is there something now where mass production is is cheap and better for certain parts. Is it lithium ion batteries? Like why now with the scooters? I think it's a couple things. It's batteries and range at a certain minimum acceptable power and torque that you can deliver. It's the hub electric motors in the wheels. So these things don't have traditional

1:17:23electric motors, they have literally like very tiny motors built into the small seven or eight inch wheels on these things. So that keeps the size and weight down. And then I think it's also just like figuring out that this is the form factor that once you hit those minimum requirements, like it's so much better than a bicycle because it's so much smaller. So like when you're riding it, you only take up the width of a human being, you know, and you're then, like, real massive of a human being plus, like, 15 pounds. Whereas when you're on a bike, like, a bike is big, it's bulky, you can't fold it up and bring it inside. You know, you got to ride in bike lanes, like all this stuff. Whereas a scooter, it's literally just, like, making the human more efficient. Bionic, man. Indeed. It's like a bicycle for a bicycle. All right, on that note. All right, listeners.

1:18:17Now 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. The 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. So 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

1:19:15All right, listeners, if you are not subscribed and you want to hear more, you can subscribe from your favorite podcast client. If you feel so inclined, we'd love a review on Apple podcasts or a comment on Breaker or a tweet or whatever the kids are doing these days. We appreciate listening and hope you enjoyed the show. We'll talk to you soon.