Acquired - The Lyft IPO

0:00I don't know about you, but I've literally like, I've been like, I've had trouble sleeping the last couple nights. It's like, I'm so pumped. Yeah, I woke up at 6.30 and like went for, I ran down here to the office and like, I spent all last night and all today just like getting hype.

0:43Well, David, as Vince Vaughn once said to Owen Wilson in wedding crashers, it's wedding season kid. The IPO floodgates are open and we are here with the very first one of 2019, the Lyft IPO. I am so excited. I know. Well, obviously, this is an important moment for Lyft and ride sharing broadly, but what it represents for the entire technology industry is possibly even greater that the good times can continue.

1:12We've had a serious drought in big tech IPOs of the last few years with most of these companies opting to famously stay private longer. There was significant risk that the public markets do not value these unicorns as highly as the late-stage private investment market has been. If Lyft had not overcome its last private valuation, we'd be seeing a lot of articles right now about how valuations for startups across the board would drop and times could get tough.

1:40Now, we've still got a lot more IPOs ahead and we've just seen one day of trading, but from what we know where we sit today, people in the technology ecosystem everywhere can breathe easy. Yeah, the signs are good. I mean, this is huge. We've never seen anything like this before. This is a whole generation of tech companies that are all going to go public all in the next, you know.

2:06Probably two months here. And seriously pent up demand. I mean, all these companies, the full A-plus as David and I were joking. You've heard of Fang, now the A-plus. What is the Airbnb Pinterest, Lyft, Uber, Slack, all from different sort of eras of tech over the last decade and a half, all raising so much in the private markets and here, all in the next six months, all really IPO-ing. Yeah, here they are.

2:35Playoff atmosphere indeed. Let's get to it. Well, I do have to say the limited partner bonus show that we've been doing the one that we did with David's partner Sarah was so timely and so awesome.

2:48because Sarah used to run Corp. Dev at Airbnb and before that a drop box so on the heels of the Airbnb hotel tonight deal that Now funnily enough feels sort of like old news We got her inside take on Airbnb strategy with mergers and acquisitions How to build corporate development functions within companies and we speculated just a bit on where they might be going with with hotel tonight So if you want to listen to that and many other great LP episodes and become a limited partner, you can do that in literally 10 seconds and I promise you literally 10 seconds with just two taps and you can listen to the show right here in whatever podcast player you use for all of your podcast listening. So you can click the link in the show notes or you can go to Kimberlite.fm slash acquired to join and David, I'm not kidding, 10 seconds and you can join and listen right here. It's awesome. Man, the people behind that Kimberlite company are really talented.

3:46Uh, spoiler alert, that's, that's, well, us, but mostly Ben. 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.

4:06Yup, 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. Lugora 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.

4:33for 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. Legora's 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.

5:02And 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.

5:29speak for themselves, when they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1200 legal teams in 50 countries, and crazily, they went from 1 million to 100 million in ARR in about 18 months. Truly insane numbers, and that is the real test.

5:54Plenty 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 to set the stage for David here, as he dives into the history and facts, We sit here on Saturday, March 30, the day after the Lyft IPO. The company raised $2.3 billion in its IPO, priced with a market cap, or basically a valuation, at the top of their expected range, which they had already increased once on their road show, of $24 billion, and closed its first day of trading up above $26 billion. So, David.

6:46How on earth did we get here? I am so excited to tell the story and all the stories behind this. So we're going to tell the history of Lyft and how Lyft, the company that became Lyft, Zimride, that transformed into Lyft, how it got here, how peer-to-peer, ride sharing became an industry. It's hard to believe now, but just about seven short years ago.

7:15It did not exist and is now one of the largest, you know, technology enabled markets in the entire world. What we are not going to talk about on this show is the history of Uber, which is quite different. We will save that for the Uber IPO show, which is coming later this season, hopefully. And Uber started differently. It was not peer-to-peer ride sharing to start and it wasn't until 2013 after lift was around when they pivoted into that. But we'll get into it. We have a long story to tell.

7:42It is a story of transformation, metamorphoses, story of betrayal, a story of good and evil. Basically, your typical acquired episode. So here we go. It's a nonfiction thriller. Indeed. Oh man, this is a thriller. Okay. So we begin our tale in the 1990s with two young men who are growing up at complete opposite ends of the country.

8:10but would one day be drawn together by fate. And on the one side of the country on the west coast, we have Logan Green, who's growing up in Culver City in Los Angeles. And his parents are sort of leftover hippies. His parents are a doctor and a veteran Aryan, but they're pretty, they're pretty activist. And previously, they had helped organize farm labor unions and they really encouraged their, their children and Logan to take that kind of outlook on life, and Logan really takes after them. But unlike them and their activists, he's pretty introverted and focused. And so Logan growing up, he teaches himself how to code. He's really interested in computers and coding. And in eighth grade, this is typical of him, he asks his parents to move the family television

9:00out of the living room and into the garage because it is too distracting from what he is trying to learn to code an accomplished in life. Amazing. I can't say that was me. Yeah, definitely not me either. I was like, can we move the TV into my room? And that's why he is the CEO of Lyft and we are doing acquired. Yeah, we do a podcast. So in high school, this is amazing.

9:24Logan ends up getting a part-time job. He's learned how to code. He gets a part-time job working for a company in Los Angeles called Uwink. Now, what is Uwink? Uwink is the third or fourth, maybe even farther along, company from Nolan Bushnell, the founder and CEO of Atari, who hired Steve Jobs, who then went on and started Chuck E. Cheese. I had no idea that One, I have no idea that U-Wink was a no-one Bushnell company, but two, I remember when I was an intern at Cisco and moved out to California and went to Mountain View for the first time and was walking down these Castro street or Castro Avenue and you see like basically see like

10:09All the web 2.0 logos that you're used to seeing on your browser just sort of like jump out physical signs on each side of the sidewalk. And I remember the you wink building. I even think I have a picture in front of the you wink building because it's just so it just felt so like emblematic of the whole web 2.0 time period. That's amazing. That's amazing. Well, it started down in LA because Nolan after Atari, I believe when he started check your cheese and moved down to LA and it's incredible. Nolan hires, you know, first.

10:37Steve Jobs, and then Logan Green. And so Logan, this was in high school. He had his driver's license at this point. His high school was in Santa Monica, and U-Winks headquarters was in Playa Del Rey, which if you know L.A., Playa Del Rey is not far from Santa Monica. I think it's about five or six miles. It's also on the west side of L.A., but if you know L.A. traffic or L.A. traffic before Lyft and Uber, it was a nightmare to get over there, a beast. Logan has his high school car, an old 1989 740 Volvo that his parents gave him when he got his license, classic, classic old hippie car. He's spending all of this time after school commuting over to his job in Playa del Rey. He's just sitting there and he's like, this is insane.

11:28All of this traffic, all of this time wasted, all of this gas wasted, all this environmental impact. This is crazy. And he starts thinking that maybe he can make a difference. And maybe he should dedicate himself once he grows up to eliminating traffic. And as we will see, that is what he does and makes a big dent in it. So he goes off to college at UC Santa Barbara about two hours north of LA.

11:54And initially he majors in computer science, but eventually he switches to economics and he's really all in on this mission to solve traffic. He decides he is gonna leave his car at home and commit to only commuting back and forth from LA to Santa Barbara with public transit. And this is like insane. I mean, it makes total sense to drive from LA to Santa Barbara. People do it all the time. So it's actually like kind of a huge pain that he does this.

12:21and his sophomore year in college, he learns about Zipcar. Zipcar had just been, been started a few years before and he tries to get them to come to UCSB. They refuse and he reaches out to them and so he says, okay, great, well, I'll start my own car sharing program at UCSB. So he, he convinces, this is gonna become a theme here. He convinces the university to buy a small fleet of Toyota Priuses and then Logan basically reverse engineers the entire way that the zip-car system works. So if you remember at the time, you had a car that was like a prototype. You hold it up to the windshield. You hold it up to the windshield and then that unlocks the door. So Logan reverse engineers this and he installs these on the University of Santa Barbara's Priuses that they had that they had bought. And he gets like a couple thousand students at the University to start using it. Pretty awesome. Yeah.

13:14But there's one thing, though, that that's not helpful for us. This is great for getting around Santa Barbara for students, but when they go home for breaks and when Logan's going home to LA, you can't just like take one of these preesses down to LA. And so he's just to find other ways to get around his lack of a car. So he goes on Craigslist and Craigslist has a portion, has a board called Ride Sharing, which is meant for this purpose.

13:40And it's you know people saying like hey, I'm going from Santa Barbara to LA or wherever and like you know if you want to come in and join me and like pitch in for gas like we can do it So Logan tries this a couple times, but he's like a serious introvert and is really uncomfortable doing necessarily realizes this kind of isn't isn't the best way isn't the best way to do it so Ever the missionary here he takes the next step. He's still a student at UCSB. He joins the Santa Barbara public transit board. Like the municipal authority that governs public transit in the city of Santa Barbara. I'm assuming he's like the youngest ever or something. He becomes the youngest board member ever. Anything. So okay, maybe this is the way that I can accomplish my mission and solve these problems. And it turns out it's not. All he learns is basically a bunch of depressing stuff.

14:30One, he learns that 70% of the cost of every public transit ride in the city is subsidized by the city. So if people talk about lift losing money on every ride today, most municipalities, public bus systems and train systems lose money on every ride. And it's super hard to get stuff done, try new things, or even incremental innovations on the existing system. So the next year, this is the summer before his senior year.

14:59He and his best friend from high school guy named Matt Van Horn. They decide. No way. Yes. That Matt Van Horn. That Matt Van Horn. Best friends from high school in Santa Monica. They decide they're gonna do a big international trip.

15:14their junior year summer before coming back for senior year and initially they want to go to Cuba but Matt's mom at this point in time it was illegal to go to Cuba if you are a US citizen. Matt's mom basically bribes them to go to Africa instead. So they go they spend I don't know if it's a month or two months in Africa and while they're in Africa they go to Zimbabwe and they see this thing that just like to Logan for his mission just like blows his, you know, 21-year-old mind. He's used to all this traffic in the US, and in Zimbabwe, which is this incredibly poor country at the time, almost nobody actually owns a car, but people get around the country and the cities super easily by their unlicensed drivers, unlicensed taxi drivers, who own or at least operate minivans, and they just like have the minivan.

16:03And the people come up to them, like, hey, I'm going here. They get in the car. They wait until they fill up the minivan. And then they drive and they drop people off along the way. It's kind of like a line, you know? It's like a line. And everybody pays a little bit and like the system works. There's no organization. Like there's no app. There's no booking. It just sort of organically works. And so Logan's like, man, like Matt, like this is super cool. Maybe there's a way.

16:31I know I know I'm like throwing you off here, but like we both just for listener sake for people who don't know who Matt Van Horn is Can you can you tell us that so we don't just leave it on hate? No, no, I was gonna bring it up with them Because Matt actually, but not often talked about, becomes the third co-founder of Zimrite of the company that would become Lyft. But he does not go full-time. Instead, Matt was at the University of Arizona. Instead, after graduation, he joins Dig. And he becomes a relatively early employee at Dig and then an executive at Path. And I remember Path was so good. It's too bad it didn't work. Still good.

17:09That's still good. I think it's shut down now, right? Well, another one could. Another one could. Yeah. The concept could. Yeah. Private social network. And Matt now runs June oven, right? June oven. Yep. He is the CEO and co-founder of June oven. So moral, the story everyone should take a trip to Zimbabwe in college. Well, I think that and tech theme we often talk about here on Acquired that is going to become super obvious through this episode and the Uber episode.

17:35It's a small world out there. Like, yeah, it's all the same people are very incestuous in all of these industries and sub-industries. So Matt and Logan, they come back from their adventures in Zimbabwe and Logan starts his senior year at UCSB and this idea is is percolating in his head so much so he decides he's going to He hasn't figured out how exactly to do this by the time graduation rolls around in summer 2006. But he takes a job at the university working as a sustainability coordinator, just so he can stay there and kind of keep percolating on all this. Meanwhile...

18:14on the other side of the country in a very very different environment from you know left over hippie parents in on the west side of LA and then certainly Santa Barbara in Greenwich Connecticut another young man is growing up man named John Zimmer no relation to Zimbabwe. No, no really really soon to be relation to Zimbabwe, but no relation to Zimbabwe. Yeah, can we just like for a quick moment pause here and recognize? So this only came out when I was doing the research. How crazy is it that? Lifts previous name was Zimbabwe and that has zero to do with the fact that one of them is John Zimmer is John Zimmer and it has everything to do with the fact that the other co-founder went to Zimbabwe. And also totally ironic that you know compared to

19:03It's Lyft's big rival, Uber. Lyft does not operate internationally, or it doesn't Canada. Does not operate intercontinentally, despite having started in Zimbabwe spiritually. Yes, so John Zimmer is growing up in Granite, Connecticut, which for...

19:23I think most of our audience probably knows but for those who don't, Greenwich Connecticut is basically ground zero for hedge fund managers and is one of if not the wealthiest zip code in the United States. And for some reason it's like a moths to a flame of like hedge fund managers to to limit living in Greenwich Connecticut. It's a suburb of New York in New York City. And so John's growing up there surrounded by all this Incredible incredible wealth like ridiculous wealth, but for whatever reason like that doesn't like have a huge Attraction to him at least at that at that moment his dad is an executive at Dixie cups

20:03the, which is incredible. It took me a little bit of digging to find that. I was trying to figure out like, what did his family do? So like, you know, they're, they're super comfortable. They're well off, but they're not, you know, in the same league as in terms of wealth. There's a lot of things fun. Cups have been flying off the shelves. I mean, things were times were good. Yeah. He's a marketing executive at Dixie Cups. Maybe a lot of that ends up influencing influencing lift later. We'll see. So John though, just like Logan is equally as focused on what he wants his life mission to be and learns it just as early in life. But instead of traffic and transportation, he wants to work in hotels. Like seriously, that's his dream when he's in middle school and high school is hotels. Ironically, he did not start Airbnb.

20:54But it's a different type of, you know, you can see the parallel to hospitality and, and, and sort of experience crafting. Yeah. And this isn't just, I'm not just like making this up. This isn't just, you know, after the facts and so like, oh yeah, like I wanted to do hotels. In high school, he goes to the high at Regency in, in Greenwich, the hotel there. And he basically talks the man, forces the manager there into giving him a job, even though he's underage. So they have to like call up their lawyers and find a way for like, Allow him to work because he so desperately wants to work there, even though he's not yet 18. This is like the this is the equivalent of putting the TV in the garage. Exactly. This is this is his equivalent. So he goes there and he he ends up he answers the phone. So like this is guests calling from rooms with like, Hey, I've got a problem in my room like come fix it. This is people calling to make reservations, et cetera. Like most people would hate this job. John loves this job. And he loves it so much that

21:51When it comes time to go to college, he applies to go to Cornell, which is a great school of course, and close by. But most importantly, Cornell has the best hotel management program in probably the entire world. As an undergrad, you can major in hotel management at Cornell.

22:07And not only does John do that, he ends up graduating number one in his class. This dude is like really, really good at hotels, which is incredible. But while he's there, though, he takes this class at Cornell called creating green cities and sustainable futures. And I don't know if this was in the hotel management school or or broadly, like look up the curriculum or something. I did. Yeah. I actually did. Yeah. And he realizes as part of this class that transportation within cities is this like you know really inefficient and big problem that is contributing to all this pollution and all these problems within cities and yet at the same time there is this emerging mega mega mega trend in the whole world of urbanization and people around the world continuing to move to cities and that this is going to get

22:59even more problematic and this kind of late bulb goes off in john's head and he says oh wow this is a huge problem everything i've learned about hotel management and literally you know he knows a lot he's number one in his class at hotel management at the best school in the world for it is that the key to success in hotels is occupancy rates and he's like and i'm looking at like transportation in cities and i'm thinking about these cars and the thing about cars is 90 some odd percent of rides are one person in one seat in a car that typically seats, you know, five or seven people. Yeah, huge waste. How do I bring everything I've learned about occupancy rates in hotels? What if I moved that over to transportation? Could I make a big impact here? Yeah, there's just stale inventory everywhere. Yeah, indeed indeed. It's kind of amazing that he didn't start Airbnb. That's another episode to come. So this is all percolating in John's head, but

23:55He's also not quite ready to, he doesn't know what the right, right thing is to do right angle of attack. So senior year-olds arounds and he ends up doing what, you know, all Ivy League students at the time, myself included, did, is you go work on Wall Street and become an investment banking analyst. He's glorious, glorious, noble cause of applying the most brilliant minds to, well, you know, a training ground.

24:23it is it is a training ground and I you know I don't regret for a minute that I did it and and I think John probably doesn't either because it's the summer of 2006 when he graduates and he goes to work as an investment banking analyst at Lehman Brothers and great reputation I mean fantastic firm and really at the moment Lehman was really on the rise yep setting itself up for a big fall to come to come shortly which we'll get into so John goes off, he's working on Wall Street at Lehman Brothers in New York City. Logan is, you know, back from Zimbabwe, he's graduated, he's working as a sustainability coordinator at UC Santa Barbara. How on earth did these two guys get together? So Logan, he's realizing as he's thinking about this and he's thinking about Craigslist rideshare section.

25:15And he realizes the big problem is trust. Like, how do I trust when I get in a car with somebody that they're not gonna, you know, do something bad? And likewise, if I'm driving, how do I trust that the person who gets in my car is not gonna do something bad? Which frankly, looking at how big ride sharing is today, and there have been some horrific incidents, but like percentage wise, it is remarkable how it basically goes off without a hitch.

25:41it's incredible. And that was not the case on Craigslist ride sharing. So that fall in 2006, Logan sees an announcement that changes everything. And that announcement, it changes everything for lots of people, is that Facebook, which was the hottest company, you know, hottest startup in the world at that time. And certainly especially hot with college students and recent college graduates, announces that they are going to open up their platform and invite developers onto it and have their first API and allow people to make apps that include the social graph. And so inspiration strikes hits Logan and he immediately realizes this is it. This is what is going to crack. This problem and solve trust with ride sharing is that if you build the app, if you build the application on top of Facebook, you can see who you're writing with and see people's real identities.

26:39and see who your mutual friends are and you can message back and forth beforehand and that might be exactly the wedge that he needs to to crack the problem. I remember how crazy it was. So first of all, it was like very easy in 2012 to create a, I know we're I'm pulling forward it here a little bit, but like the used to create an account because I think the only way to create an account was locking in with Facebook at that point and how crazy it was that like it sort of made sense on other apps from like, okay, I can see who else is using this app. That's my friend. It was for whatever reason it felt

27:14Like the next step further that I could see what mutual friends I had in common with the driver like when someone was picking me up I was like it was it was the most wonderfully sort of humanizing thing to see like, oh, you have two mutual friends with this person that's picking you up. It instantly takes you to a place where you're going to treat the experience completely differently than you would a random stranger. Completely differently. Not just in terms of trusting that nothing bad is going to happen. Like, that's the worst case scenario, but there's also...

27:45How is this person going to behave in my car? Well, yeah, there's upside opportunities. People end up meeting, developing friendships, relationships, getting married, all this stuff in cars via Zimrads. But yeah, there's also like, is this person going to trash my car? Are they all this stuff? Logan sees this, he says, this is the opportunity. He quickly builds and launches an app on the Facebook platform called Carpool. It's a Facebook app called Carpool and he decides to call the platform behind the app Zimrides, because he's like, yeah, the inspiration came from Zimbabwe. Like, this is what I'm doing. Zimrides. Great. And this was 2008. This was end of 2006. And it's 2006. Okay. The company isn't officially started yet. He's just calling the platform Zimrides. He teams back up with Matt Van Horn, the buddy from from the trip to Zimbabwe. Matt's at Arizona and they start

28:40working on this remotely together. And then in the next spring in May of 2007 is when Facebook publicly launches the they had announced that they were opening up the API in the fall of 2006. They publicly launched the platform. I think this was the first F8. It must have been the first F8 when they do this. And and Logan had he gotten early access to the APIs and built the app and Carpool Slashes in Ride is featured as one of the first apps when Facebook launches the Facebook platform. This is incredible. It just goes to show the power of being there on launch day at one of these platforms or on one of these platforms. I mean, you look at the people that were initially featured as who to follow on Twitter before they built any algorithms around that. And it's like Chris Saka and Ashton Kutcher and like some of these people still have these just unbelievable followings from from getting juiced in that early era.

29:34Yeah, I mean, she'd in a lot of ways acquired benefited from this. Like we weren't at the beginning of podcasting, but we started acquired before the, you know, we beat the most recent Russian at least. Most recent wave. And we got featured on a bunch of podcast players and, you know, that, uh, that growth rate compounds that turns out. So Zimrides featured is one of the first launch apps for the Facebook platform. When this happens, a good friend of Logan's from middle school back in LA.

30:01Name John Siegel. He sees that his buddy Logan has done this. He's like, this is so cool. He posts it on his Facebook wall. Turns out that John Siegel is mutual friends with John Zimmer.

30:15That's how they came together. On the East Coast. This is incredible. Where did you find this? They had met. Zimmer talked about this. He does a lot of interviews. So Zimmer and Siegel had met while studying abroad. I believe in Spain in college. They gone to different colleges. Siegel hadn't gone to Cornell. And Zimmer comes home one night. He's just started at Lehman.

30:37And I guess he's a couple months into Lehman. He's probably just started in his group finished training at Lehman and he comes home at home one night and he sees this post on Seagulls. Well, and he's like, this has got to be fate. Like I've been thinking about this. I know how to like operationally attack this problem. It's all about occupancy rates. I've been thinking about carpooling. My name is John Zimmer. This company is called Zimride.

31:01It has to be fate. So they were things Seagull that night and he asked him to introduce him to Logan. And Seagull does. They start talking. I believe over Facebook to start a couple of weeks later, Logan flies out to New York City. They meet in person and they jam and they just, they hit it off and they decide, all right, we're gonna work together. Now Logan's still working as a sustainability coordinator at UCSB. And obviously Zimmer is still in his analyst program at Lehman Brothers. They're not thinking about starting this as like a real company. It's like the side project. Like great, like we're both thinking about this. Like let's do it. So they stay working on it part time. This is a total aside, but like this sounds crazy today in 2019. But this stuff happens like Jenny and I have

31:50good friends who got married because they met on Jenny's Facebook wall. So like, it's incredible the kind of stuff that happened. Totally. Back in the day. And it was right around the same time too. One tidbit I found that I'm curious if you know the origin of it since you dug into this so much. In the S1, they revealed that even before it was Zim Ride in 2007, the company was incorporated as Bounder Web. Yes. I saw that Bounder Web. I could have figured out what that came from. So, you know, Logan and John, you know, if you're listening.

32:20Hit us up. Love. Yeah. Hit us up. Acquired FM at gmail.com or in the slot. Also congratulations. Yeah, also congratulations. All right. So they're working on it part time. And Matt Van Horne, like he's still involved too. He's the third co-founder. But Matt decides that he's going to stay part time. He's going to be essentially an advisor. And he goes, as we said, to work a dig and then path and now June. But he's been involved with the company the whole time. So the three of them, they decide You know, they have to decide go-to-market strategy. They have the tech, they have the kind of product concept, but where are they going to start? Well, the natural place is college campuses, right? Like, that's where A, that's where Facebook started, and that's where Facebook's, you know, user-based primarily is college campuses in recent grads. Two.

33:12Logan works at a college and three they both you know recently graduated so like okay We're gonna focus on focus on college campuses. That's where some people have cars other people don't have cars It would be nice to be able to put those together to do ride sharing and a lot of cost sensitivity Totally totally so they launch they choose Cornell as the first school that they're gonna launch at I don't know why they didn't do Santa Barbara Maybe like Logan was worried about people finding out when he was working there but they choose Cornell. And within six months, they've signed up 20% of the student body that is actively using this. And the real use case is around breaks. So like school goes on break and like you're driving back from Ithaca where Cornell is to Boston or New York or Philadelphia or wherever. Yeah, load up your car and share the gas money.

34:04Randomly, they then get a bunch of other schools that start using it. Apparently, the University of Wisconsin lacrosse. They didn't do any marketing there, just like, you know, popped up and started network effects. Man, it's a thing. So the...

34:20They're doing this. They start doing at schools that they really want to get adoption at. They start doing these crazy marketing stunts. They go out and they buy a frog suit and a beaver suit. I think they were just suits. I don't think they were specific college mascots. But then they would go to campuses on the weekends.

34:40parade around with signs advertising Zimrod while dressed up in these animals. He seemed like the type of people that would put a pink moustaches on cars for sure. Yeah, you can see where the DNA comes from. And one, one, one time they do this, Zimrod does this back at Cornell. He's, he's on a recruiting trip for Lehman.

35:02And he goes a couple days early, he dresses up in a beaver suit, does this. And then when they do with the info session, he's there with like a managing director in his group and this girl comes up to him and is like, didn't I see you running around campus in a beaver suit the other day? And John's like, yeah, let's talk about that. Which is hilarious, but it works. And so they're trying to land on the business model for this.

35:30And what they decide is they're going to go, once they get adoption at college campuses, they decide they're going to go to these colleges directly and ask the colleges to basically buy a license from them to set up Zimrides as the official car share on campus. So like don't work with Zipcar, or don't do what UCSB did where you buy a bunch of Priuses yourself, you know, have it be the sharing economy, even though.

35:55wasn't caught that yet. And just buy a license from us to operate your own version of Zimrides, which they do in schools pay them like $10,000 each. And at the time they're like, woohoo, $10,000. Great business. Yeah. Turns out that was not the right business model, but we'll get to that in a minute. So they do this for basically a year from 2007 to 2008. Gets into 2008. And Zimmer is coming to the end of his analyst program at Lehman Brothers and he's trying to decide, you know, am I gonna go work in private equity like all my other analyst classmates who are staying in Wall Street, you know, am I gonna go full-time on this Zimrides thing? It seems like it's really working. What should I do? Two things happen that help him make his decision. One, Zimrides gets its first institutional investment. Ben, do you know who the first

36:48institutional investor in Zimrides was there was an angel investor beforehand the VP of finance at eBay Sean Agarwal who is still the chairman of lifts board today. Interesting. But who was the first institutional investor? Is it before floodgate? This is years before floodgate. Huh. Yeah, because that was like 2012 or something. I don't know. It was Facebook. So no way. Yeah.

37:15So not only did it get to the power of launching on these platforms, not only did Zimrides launch on the Facebook platform, Facebook about a year later had started the Facebook fund and they invested $250,000 in Zimrides to help support it because it was this growing app on the platform and they announced the investment on stage at F8 2008.

37:41Did they hold that for a while? Whatever happened to that? So, unclear. It appears it actually was a grant and not an investment, so I don't know that they got equity for it. Yeah, man. I want that kind of funding. Yeah, bad move by Facebook. So unclear. I don't know whether they got equity or warrants or just what, but pretty funny. So once they get the money and Zimmer's like, okay, we got $250,000 like, that's a lot of money. Maybe I can do this. Before he makes his final decision though, He meets up with a good friend's mother who works in the Lehman Brothers building in Manhattan at another finance firm in the building. And she hears about, she must have heard about what he was thinking about and said, like, I got to sit this kid down and set him straight. She sits from down and she's like, John, like, are you thinking about what you're doing? You're about to leave a sure thing like Lehman Brothers for this crazy carpooling startup.

38:39out in Los Angeles. Now this is July 2008. And he's like, yeah, I mean, that is like stream, but you know, I really want to do this. I'm going to, I'm going to do that. And three months later, this storm and brother goes bankrupt.

38:55Whoa, that's right. I was gonna say even before that, I mean, this exchange of sure thing for stupid risk, like this is on 10 acquired episodes. We see this over and over and over and over again. But literally this timing, oh my gosh. Such a sure thing like this august, you know, Wall Street institution, Lehman brothers been around forever, like literally three months later, Lehman goes under financial crisis happens. Far too big to fail. Far too big to fail, indeed. So, but Zimmer's mind's made up.

39:25Before then, he naturally uses Zimrad to carpool across the country from New York out to Palo Alto. He and Logan decide they're both going to relocate to Palo Alto. They're going to make this a real startup. They're going to follow in Facebook's footsteps. You know, they have all this now money and mentorship and help from Facebook.

39:45funny story about that which I will come back to perhaps later in the episode. So they move into I think they get a temporary office for a while but they settle into they decide they're going to get an apartment in Palo Alto that they're going to both live and work out of.

40:00And it turns out that it is next door to Marissa Myers house. And so their windows look out over Marissa Myers backyard. And Marissa, of course, at the time was one of the senior executives at Google who had been there since basically the very beginning and was not yet, but would they like to see you?

40:19Neighbor friends like what's that what happens here? Well, so they talk about you know They'd see and hear you know all these Silicon Valley parties that would happen in her backyard Next door they'd be like they'd look out the windows and try and figure out like who's out there And dream about someday they could they could you know reach those same heights They do it just takes a while so they basically operate this way for the next two years which is crazy. So like they have the 250k from Facebook and the little bit of angel money from Sean Agarwell. But that's it. And they're not making that much money from these universities. So the two of them don't take a salary for in total, for those whole first two years that they go full time on this. They eventually raise a seed round as you alluded to been from floodgate from America there in 2010.

41:14but that's two years later. And then they would raise a series A in 2011. I think in Ann talks about this, I think part of the reason that they were able to raise that seed round was just that Ann and the other investors kind of looked at them were like, well, these guys are like, you know, cockroaches. They just don't die. We'll invest in that. It is incredible how small the beginnings were here. So both the floodgate round and then I can't remember who led the series A. Both of those were Mayfield okay into into the Zimride concept of into Zimride yep recurring revenue from universities yep they were they were this is before lift so not long after the series a that mayfield does in in 2011 Logan and John you know they're they're excited they just raised an a and things are going well but if they're like really honest with themselves they're not setting the world on fire here growth is

42:09Slowing they've they've saturated universities at this point. They've opened up the product for corporate customers, but that's not that compelling like Yeah, ride sharing back and forth to campuses for breaks is a great use case, but like ride sharing to work every day It's also not daily like I mean, they're not building habit here. It's it's a you know low-frequency event exactly exactly so then they were like okay, well, we'll As part of the Series A, we'll open this up to everyone so you don't have to be part of a campus or a corporate network anymore. But then they run back into the Craigslist problem all over again. It's like, I don't know these people. Am I going to get in a car with them? Yep. So by mid 2012, six months ish after their six, eight months after their Series A, they realize the problem here is with the market, not the product, and they need to do something different to solve it.

43:00All right, listeners. Now is a great time to tell you about a longtime 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, an 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. Yep, your risk surface changes every week now.

43:23A 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. And 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.

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44:18every AI tool, the whole environment. And that's the real value. Trust 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.

44:48Okay, so what happens next? Here is the official lore of how Lyft begins. I was like official lore. Yeah, we'll start with the official lore. Great. So it's summer 2012. John and Logan have come to this realization. They talk to the company. They say, here's what we're going to do. We're going to hold an internal hack day to come up with new ideas.

45:12and open your mind. There must be inspired by ODO and how Twitter started here. Open your mind, we'll discuss ideas, we'll vote on what we want to do. Three ideas come out. The first one is called On My Way, which would be an app if you're traveling to alert friends that you are going to see where you are, a safety thing so that friends could track you as you're traveling on your smartphone at this time.

45:40Yeah, it feels like a feature. It feels like a feature that might be part of Lyft, a newbie or something. Two, the second idea they have is called Journey. And what Journey, the vision is people using Zimride to go on these road trips together having these social experiences, Journey would be an app that you could document a trip with photos and videos and music that you listen to and share a memory of a trip. Almost like a game. They're still room for that.

46:08Well, I guess people use the Instagram for this now. Well, first Snapchat stories. I mean, I guess you could argue maybe this could have been stories, not an obviously terrible idea. But the clear winner when the company votes is the third option, ZimRide Instant. ZimRide Instant.

46:29Lift is a little catchier, but Zimrite instant, you know, of course Uber, as we referred to, and not just Uber, but a company called Taxi Magic and a company called Cabulous, all of which we will cover on the Uber IPO episode. You know, they're of course around. They're doing trips within cities, but it's...

46:47more like taxis, they're using licensed limo drivers to do this. It's not peer-to-peer. It's not car sharing. But it's an experience that people love. It's just very expensive. And so they're like, yeah, Zimmeride Instant, what if we did this in a peer-to-peer car sharing way and we use our network of drivers on Zimmeride, but we just do it instant? Ugh.

47:05brilliant idea. Inspiration has struck. Incredible, you know, entrepreneurial moment. And so, of course, they decide to do this. They build and launch an MVP app in three weeks. They're going to call it Zimrite Instant, but they have an intern, a design intern, that's spending the summer with them named Harrison Bowden, who still works at lift today as a designer. He's like Zimrite Instant, like...

47:30That's not too good. We need a new name. How about we call it Lift? And we'll lift a L-I-F-T dot com. And the app, like, that's going to be hard to get the domain name. But let's just change the I to a Y. And like, it looks cool anyway. Let's call it Lift. And brilliant. And the rest is history. Sidecar. So Harrison, a sidecar, where you can slip there. Sidebar. Harrison also designs the first logo. Do you know what color?

47:56Lifts first, logo was, yes, see foam green. Yeah, it's funny. I dug up in preparing for this episode, I dug up my first lift receipt. When they were expanding to Seattle, yeah, it was, they hadn't yet gone with the pink. What was pink was the pink balloon, but the LYFT, which that logo mark has not changed was, was green not pink for see foam green, I should say. Yeah.

48:18I would love to hear why they chose C-Phone Green. Anyway, and this is the legend, this is the lore, and even in the Lift S1, there's a founders letter from Logan and John in it. In 2012, we launched Lift and pioneered the idea of on-demand peer-to-peer ride sharing. In those early days, we were told we were crazy to think people would ride in each other's personal vehicles. One billion rides later, we're able to look back on an industry that has been defined by the product's lift pioneered. Wow. It's like it's a humble brag, little bit of shade, a little bit of, uh, you know, sub tweeting or whatever you want to call it. And certainly, certainly referring to you, but they're, and you know, that appropriately said paragraph that paragraph is not incorrect. And lift and the former's MRI deserve all the credit in the world for doing that. And

49:15and creating one billion rides over the last seven years. However, that's not quite the whole story. And that's what we're here at Acquired to talk about. So, Ben, do you want to hear... The story of Rosenthal has the real truth. Do you want to hear the real story of how peer-to-peer ride sharing started? Come on. Love it. Okay. So, you may have heard of a company called Sidecar. You may even remember a company called Sidecar. Of course.

49:42And by the way, this story that we're about to tell is I think certainly the best story in this episode, probably going to be the best story this season, but even be the best story of all time and acquired. I'm so excited here. Yeah, baby. So okay, sidecar. You know, some people who remember sidecar was a peer-to-peer ride-sharing competitor from about this time. And they may remember, yes, sidecar was first, weren't they? Didn't...

50:09didn't Sidecar invent this concept of ride-sharing? Well, yes and no. Let's talk about Sidecar. Okay, so Sidecar was started by a guy named Suniel Paul, who's still around here in San Francisco, in September of 2011. Now remember, it's summer 2012 when the lift hack day happens. And Suniel...

50:31He's a super interesting dude. He had been an original AOL guy like way back in the day and working out of Washington DC where AOL was based. And then after AOL, he started a company called Freeloader with a guy named Mark Pinkis, which might perk up the years of some of our listeners. Mark of course was later the founder and CEO of ZINGA. And Cineal did not co-found ZINGA with Mark but was an initial investor and was actually a board member of ZINGA for a long time.

51:00After that whole writing in between, he started a company called Breakmail that got acquired for about $400 million. So yeah, he's done a lot of stuff in the Valley. He finds himself by 2009. He is teaching at Singularity University here in Silicon Valley. And he has two students in his class, Sam and Jessica have an idea that they're all kind of working on in the class together to start a peer-to-peer car sharing company. And that ends up becoming get-around.

51:29which is still a large and very successful car sharing company today. And we were actually small seed investors back at Moderna. And I remember working with Sam and Jessica the very early days. This was super fun. The distinction being that you drive that car rather than riding in that car. Yes, you own a car, you put it on the platform, and then somebody can rent that car from you that they then drive. So it's basically a zip car with cars that people own instead of cars that zip cars.

51:58And it's a great idea. Still works really well. And Sunil was so excited about this because he had actually been thinking about this for a long time going back to his freeloader days and it was also percolating around in his head. He had actually filed for a patent back in 2002 and was granted a patent for the system and method for determining an efficient transportation route.

52:23that he was thinking about for car sharing and ride sharing within cities. So, Sunil is so excited that Sam and Jessica are working on this. He says, I want to be your first investor. I want to invest and I want to be executive chairman of the company. And Sam and Jessica are like, yeah, that's like a lot of equity and a lot of control that you want. And they were worried about him.

52:47parachuting in and wanting to take over a CEO, which he probably did want to do. And so they say thanks but no thanks, and they reject his offer to invest. And Sunil gets really angry about this. And so he writes about all this later. We'll link to his bunch of medium posts about all this history. And he's like, you know, it's totally the wrong thing to do. And like I was just so, you know, upset about it. So he's like, I'm going to spiked them. I'm going to go start my own company doing this. Wow. And he's like super honest in these blog posts. So he does that. He works on it himself for a while, competing with Get Around. He eventually decides, you know,

53:23their challenges to the market. He's not doing as well at it as he could. He decides he needs to, he needs to do something else. And so what he wants to do instead is to build, he sees the rise of smartphones. He wants to build a city transit smartphone app. So essentially what like Google Maps on your phone has become today and what he had his part of what he had that initial patent for. So he reaches out, he finds a team of Computer science students in Michigan at the University of Michigan who are also working on this he goes out he flies out there he convinces them to come out to San Francisco and start this company with him including the CEO of the company from Michigan Jahan Khan become CTO of Sidecar and so they start this company and Right around the same time a friend tells Sunil about this crazy thing

54:13that's happening in San Francisco, that he might want to pay attention to because it's pretty related to what he's working on. And he says there's this group here in the city that has started recruiting ordinary people to take their cars and drive around at night and pick up people, other people who request rides from them to get to where they're going out to bars or home from bars. And of course, they're super out there, but this is just ordinary people doing it. And it's working super, super well. And so he was like, oh, yeah, I'm really interested in that. Tell me more. You should take a look. Maybe we should take a look. He's like, oh, yeah. What's the service called? It's called homobiles. Yes, you heard that right. It's called homobiles. And the motto of homobiles is

55:04Mose getting hoes where they need to go. And this is the most incredibly amazing San Francisco e thing that probably has ever been created. It just I love this. This is so great. Land on us. So okay. So you know San Francisco today you come here in 2019.

55:25And it's all techified and yuppies and there's lift and there's Uber and there's Airbnb and everything that's taken over the city. But San Francisco was the birthplace of counterculture. In the 60s, this was sex drugs and rock and roll. And we've talked about this on this great book about the old San Francisco called Season of the Witch. So homobiles was born out of that, not out of the tech world. It was started in 2010.

55:52by Lenny Breedlove, who was a punk rocker and LGBTQ icon here in San Francisco. And as he tells it, he was going to Femcon in Oakland in the in the summer of 2010. And he was driving some babes to the conference. And he says, he got there. And all of a sudden, this is his words, this is quote, he says, all of a sudden, the butchers and trans guys who saw me.

56:19wanted to drive and all the babes and drag queens who wanted rides wanted rides and then I realized this was a serious need that had to be filled and this is awesome but like this actually was this is such a serious need because even in San Francisco which is you know one of the most tolerant and liberal and forward-thinking cities in the country, if you were a drag queen or even not just gay. Any member of a net risk population. Any member of a net risk population. And you were out at night, you were at a gay bar, you were somewhere else, and you were trying to get home or you were trying to get to another place.

56:58Taxis wouldn't pick you up and even Uber like you could get in an Uber but you might still have issues I mean this happens all the time still like you know people get Assaulted people get attacked people get raped and You know if you're part of an at-risk population, this is like a serious worry in your life And so breed love started I thought I can do something about this. He started this organization called homobiles and the concept was if you were you know felt You needed a safe chariot from getting one place to another. You could tax home mobiles and they would dispatch. You could buy a drive for home mobiles and then they would dispatch somebody to come pick you up and take you, you know, in a safe way to where you need to go. And of course, legally, you couldn't pay because they weren't a taxi company, but you could donate to your driver and home mobiles and turned out.

57:52That worked great. And, uh, homobiles at this point, by 2011, had become a big thing in the LGBTQ community in San Francisco. And it turns out they had invented peer-to-peer ride sharing. So, uh, it's so interesting because they get none of the credit for it. Nobody, nobody knows. The only way I found out about this was Sunil writes about it in his medium posts. And if you Google homobiles, you'll find some articles here in San Francisco about it. But even in, uh, we use a lot of, uh, uh, friend of the show Bradstones, uh, the upstarts, a lot of the research reporting he did. He mentioned some mobiles in a footnote, but nobody talks about they were the first ones to actually pioneer peer-to-peer redsharing and doing it for just an extreme need. I mean, this is, you know, I got to get to work in the rain. This is an extreme need. Yeah. This is like, I might die on my way home if I don't have this service.

58:45So, Sunil, as he heard about, he says, okay, great. Well, I got to try this. So, he writes, this is a quote from his medium post, I took home a bills to the airport for a trip to New York. It cost me $20 for a trip that normally cost $50 in a taxi. Wow. This system was cheaper than taxis. Never mind, Uber. Home a bills had been in the press, yet hadn't been shut down. It seemed to be operating in a gray area of regulation by taking donations. We wondered, can we create a scalable technology-enabled version of home-mobiles that could allow us to create our shared-ride vision? That's what they do. They take the home-mobiles operating model, which is individual regular people, unnot commercially licensed drivers, driving for the platform, and then individual regular people via a dispatch service that they build an app version of, summoning them to pick them up, and then

59:42The payment is a donation. And for listeners, if you remember back to the early days of Lyft and Sidecar, when it started, it was not a payment because the regulation is all donations. So Sidecar takes the entire operating model from homobiles, marries it up with the smartphone app interface of Uber, and then they launch in February 2012 in San Francisco.

1:00:10And literally, the biggest market opportunity since Facebook is born. Like, what an incredible story. So, of course, Sidecar would go on to raise a bunch of money, along with Lyft and Doober. They would launch intensities, but ultimately they couldn't keep up in the war of capital that we're about to get into. David, do you know my personal history with Sidecar? I know you have one. Let's hear it.

1:00:33Yeah, so I know Sidecar well and love the service and was a big user in the early days. When I worked at Microsoft, I worked on a couple of companies on the side, one of which was called Red Ride, that I started with a few friends actually at a startup weekend here in Seattle. It was still a side project because we had day jobs, but fairly advanced. It was basically the kayak for ride sharing, which some other great companies are trying to do now.

1:00:59But as we sort of got toward the end of realizing that we weren't going to start it as a, you know, all quit our jobs venture, we were talking with Sidecar and Sunil about an aqua hire and ultimately I decided not to, but, you know, what could have been? What could have been? Well, you could have been part of what happened when Sidecar ultimately did shut down. They got acquired by GM.

1:01:24for the assets, not the operating company, because GM simultaneously invested $500 million in lift and acquired sidecar. I believe they wanted the team and the patent. So remember Jahan, who's from Michigan, he goes back to Michigan to GM as part of the acquisition. He stays there about a week and then he leaves and joins Uber, where he's still to this day. And so Jahan, do you know what he's doing at Uber now?

1:01:52head of product for new modalities, which is bikes and scooters. And always on the cutting edge. And Fred and Andrew Chapin, who was an executive at Uber at the time and is now co-founder and CEO of Wave's portfolio company basis, was a big part of hiring John and bringing him back and bringing him into Uber. So, okay, back to home mobiles quickly, though.

1:02:13this is this is amazing they are still around today and they are still super important in the LGBTQ community so you know even with lift and uber you know as advanced as they are today like this is still an issue for at risk populations you know you don't know even though you can see the profile of your driver when they come to pick you up you don't know what they're what they think how they behave especially towards non normative people like this and so they're still giving Rides at night. They're also they do a lot of they drive people to and from major life events like surgeries and they provide emotional support during that time right before you're about to go into something, you know, life changing. So it's actually now a non-profit. It's a 501c3 and this is crazy. It still is done by dispatch. They don't have a smartphone app and they've been trying to raise money to have enough resources to build a nap. They've been trying to do it for years. And so we felt like Ben and I talked about this before the show. We felt it was important.

1:03:09to kind of pay homage to this organization that started this incredible industry that now has resulted in one and soon to be two massive IPOs. So we're going to make a $2,000 donation from acquired two home mobiles. And we're going to put a link in the show notes in case anybody else wants to too. And we think it would be super cool if the acquired nation could help them get enough resources to finally build an app.

1:03:33Yeah, let's build an app. I'm sure I wonder if there's there's probably some in-kind donations that they could use too, but yeah, super, super prone to be doing this David and I think glad that you broke our normal structure of not discussing anything before the show to keep it all a surprise so we could talk about and do this one. Yeah, we really really wanted to do this. Definitely encourage other other parts of the acquired family to help too. Okay, so back to the story. So lift, you know, we had just told the canonical version of how lift came out of Zimrad. You know, and that maybe too, there was a hack day and, you know, they did decide to work on Zimrad instant and they did launch it and has lift. But before the hack day, after sidecar had launched in February of 2012,

1:04:20Zimride definitely sees what's going on with them, and sees them start to get a bunch of traction. So, and in fact, Sunil and Sidecar, they saw, you know, because they had, you know, God mode for these platforms was not yet illegal. They could see everyone who was signing up for the service and how they were using it and where they were going. They saw that actually Logan and John and Zimride board members were all like super actively using the Sidecar app in the couple months before they started lift. So, By the time the hack day rolls around that summer, you know, everyone at Zimrad definitely knows everything about how sidecar works, definitely knows, you know, the donation model, whether they knew it came from homobiles or not, they now know exactly how the operational model works. And so when they launch lift, you know, they copy it all, but they do to their credit, they do it a lot better. And there are two reasons why they why they do it better. One,

1:05:15which we alluded to earlier, they have the existing network of drivers and supply from the Zimride product that they can onboard on to lift pretty quickly and easily. It's like rule number one in creating a marketplace product. It's like how do you cheat and bootstrap one side of the market? Yep. Yep. Totally. So they've got the hack to bootstrap one side of the market and people hadn't realized yet but would come to be knowing that there's a kind of magic density in ride sharing networks that are related to time that you have to wait as a rider for a pickup. If that time is more than a couple minutes, people will abandon the service. And so by being able to bring a huge portion of a huge network to that tipping point, you get over that tipping point a lot faster.

1:06:00was a major help to lift the other thing that they realize and listeners will probably remember this they realize that like this is still kind of a crazy idea and so they have to do a couple things to a make people comfortable doing this you know getting in cars with strangers but also be raise awareness that you can't even do this so they do three things here we go here we go here we go first In the app, as a writer, when you sign up, they tell you to sit up front. Don't sit in the back like a taxi. You're getting, you know, this is lift is your friend with a car. This is ride sharing. You're not sharing it. Yeah. Yeah. Sit up front, be friendly. And number two, as part of being friendly, give your driver a fist bump on the way in and out. I thought this was so weird back in the day. And you know, you could maybe argue whether one and two helped them.

1:06:48win or not. But certainly the third thing they did helped them win big time. So they already had this supply hack, this distribution hack on the supply side. They needed something though to get demand within San Francisco and feature cities that they launched. And so they came up with kind of a crazy idea. And here's where the frog in the beaver seed costume DNA comes back a few years earlier.

1:07:14John Zimmer had found out about this crazy, this company in San Francisco that made these funny, you know, bumper protectors. If you're parking on the street in San Francisco, just like in New York, like, it's super tight parking. People hit your bumper all the time. And this, you know, ironic hipster company in San Francisco had made a bumper protector that looked like a fuzzy mustache. And so you could put a mustache on your car. It was called a car stash. And so as a joke, Zimmer had started buying a bunch of these and giving them to employees and investors at O back at Zimrad.

1:07:44But then when they're launching lifts and they realize they got to like get people aware of the service and on board demand. They're like, Oh, great. Every driver who signs up for the service, we're going to make them put a big fuzzy pink mustache on their cars. And so like summer 2012, totally, you're not allowed to really put a billboard on. I mean, I guess you could wrap the cars, but like, you know, this is, this stands out way more than that way, way, way more. And You know, it's kind of like when scooters launched. Well, scooters will come back in a minute, but the scooters are sitting on the sidewalk. Here, you've got cars driving around the city with this fuzzy pink mustache. And I remember this, like, I remember coming down to San Francisco at the time and be like, what is with all these cars driving around with pink moustaches? And the word of mouth, like it was real. And it, uh, it lift started to really, really, really take off. And so in this...

1:08:37At this time, it was differentiation from sidecar, right? Because Uber hadn't launched UberX yet, so it was competing against them. Yep, it was competing against Sidecar, but it was really competing against non-consumption. Right, right. Yeah, it makes you go, what's the deal with the mustache, and then you, yeah, it's basically, it's funny, it's not really competitive differentiation, it's more just category awareness. Yep, totally, totally. It was probably the last thing on their minds was competing with Sidecar at the same time.

1:09:06Speaking of competition, Uber is out there. Uber's been around since 2009 at this point. They're doing limo license driver pickups via an app basically dispatch for limo drivers and black car drivers via an app. They start seeing this happening and they're like, oh crap. Uber is expensive and they're making lots of money and there's tons of demand for it.

1:09:32But all of a sudden, here's this substitute product out there on the streets that is massively undercutting us on price. Like, we got to do something. So, now, this is like, people don't remember this. But Uber, they're like, they're really mad because, you know, they're Uber, they have all the reputation, they're so aggressive. But like, they have been operating within the law. And, you know, technically this peer-to-peer...

1:09:56Pride sharing thing, it's in a gray area, but it's not explicitly legal. And so Uber gets super pissed. And they start lobbying and they try and shut down. I remember this from Brad's book. Yep. Yep. So they work really hard for about a year to try and get lift and side cars shut down as being illegal. And they're being super principled. They're like, you know, we operate legally and like, they're not operating legally and regulators should shut them down. Turns out that it doesn't work.

1:10:26Probably partially because the regulators hated Uber because they were so aggressive kind of on pushing the rules within the existing license driver industry. And so this is great. The next year, April, it wasn't until April 12, 2013, when Uber Uber had already launched UberX, but it was still licensed drivers driving Priuses instead of black cars. They pivot Uber UberX into being a direct competitor with lift and sidecar doing peer-to-peer ride sharing. And they announced it. Travis releases a white paper entitled, Principled Innovation, Regulatory Ambiguity around ride sharing apps. And there's the money quote in there. This is so perfect. He says a couple paragraphs in.

1:11:12In the face of this challenge, the challenge being from these unlicensed peer-to-peer ride sharing apps, Uber could have chosen to do nothing. We could have chosen to use regulation to thwart our competitors. Instead, we chose the path that reflects our company's core. We choose to compete.

1:11:32That's a cute, the imperial death march. Yeah, then the entire tone of the lift S1. That's about sustainability and good for the world and great for riders and great for drivers and really like everyone come by on hug. We choose to compete. We choose to compete and compete. They did. So they repurpose. And you know that that white paper was mostly for employees. Like that was that was a rallying cry. It was a rallying cry. 100%. So they repurpose Uber X, which again, already existed, but was not True PewDiePie car sharing. They repurpose it that April into PewDiePie car sharing and the fight is like on. And so it becomes, it was already clear at this point, but then once Uber enters the market, like everybody realizes very quickly that this is it. Like this is the biggest market that anyone has seen in Silicon Valley at a long, long time. It's big, you know, Airbnb was around at this point and was quite big, but Airbnb

1:12:30is quite big because it's a winner-take-all winner in a market for home sharing, which is quite large. Ride-sharing dwarfs the market for Airbnb. It's just not a winner-take-all market. The competition that this unleashes and the behavior that this unleashes in Silicon Valley is just incredible. Let's talk about this. I was going to talk about it in tech themes, but it's worth just touching on it briefly. We talked at length with Brad Stone about this in the episode that we did with him. What episode is that?

1:12:59Uh, it was when we, um, it was. Oh, D.D. Uber and D.D. Yeah. Um, and he makes this really great point that the network effect with Airbnb is super strong across markets. So it becomes winner take all where when you're traveling and you're used to using Airbnb in the last two vacations you took, you're going to use it on the next one. So wherever Airbnb, you know, there's going to be ultimately sort of one, one platform there. However, with Uber, the, or ridesharing or left, whatever, when you.

1:13:28are using it 98% of it is going to be in one city because it's something you use generally where you live and so it's not really that big a deal for market by market to be owned by by different players particularly internationally where I mean it kind of makes sense for you know Seattle and San Francisco to have the same provider but what but not that Yeah, but like what to like there's there's very little that lift here versus the ride sharing company in China Could could even share to be to be valuable as a cross market network effect and so This quickly becomes to your point David even within a country even within a city something that there's gonna be multiple multiple players in Yeah, and and people also didn't realize this for a long time, but

1:14:17I think we'll talk about this in tech themes but where we've gotten to now because that's the case. It also means it's not a winner take all market locally because you can as a company as a corporate entity get enough resources from winning in various markets that you can still compete. It's like whereas if you're trying to compete with Airbnb there's no oxygen in the room whereas there's enough oxygen in the room you know internationally that you can still compete locally and that's why you know you haven't seen.

1:14:47Uber crowd outlift fully or vice versa. And another way to put that is to your point about the tipping point as long as, okay, taking one step back. We're really in tech needs now, but take one step back thinking about marketplace assign business models where the supply side is undifferentiated. I don't care who picks me up. I just need to get there versus marketplace assist, which is the platform provides a bunch of different options at like Airbnb doesn't I get to pick which option I want from the supply side in this marketplace assign which ride sharing falls into because supply is undifferentiated.

1:15:24The services are relatively undifferentiated as long as there's something within three, four minutes of where I'm trying to leave from and it can sufficiently get me where I'm trying to go to for approximately the same price. And so you do end up in this place where as long as there's enough supply for a given geo, then there can be multiple players because both drivers and riders can multi-home. Yep, totally.

1:15:53But nobody knew this just yet. People are thinking like, oh, this is going to be a winner take all market. And like, who are we going to back? So the fundraising race is on. All three companies sidecar lift and Uber start raising massive amounts of money. Sidecar not as much. And that's mostly why they end up shutting down. But Uber starts raising the most amount of money. And not only that they with Part of what they do with the money, they've also realized the magical kind of three minute pickup time threshold. They start...

1:16:25doing this thing called slugging, which is an acronym for supply, long-term operations, growth, or something like that. But really what it means is that all the companies are doing this. They send out employees and contractors to order rides on their competitors' platforms. They get in the car and then they try and convince the driver to switch to their platform. Because the density of supplies is kind of the most important factor here.

1:16:54Yeah, and not only that they they they and I think Uber was more famous for doing this but ordering rides and then canceling them on computers platforms just to Yeah, to be clear Lifted inside car. We're doing it Yes, but we're built a brand around doing it Yes, Uber built a brand around doing it and and they're they're much more successful and particularly in the capitol racing So a year later very quickly an eternity in this market but very quickly in absolute time left is on the ropes like Lift is about to die. What year is this? This is 2014. Everybody's spending huge and huge amounts of money. There's the slogging going on, but also everybody's subsidizing rides and incentivizing drivers just to get density and compete with one another. At this point in time in 2014, Uber had raised 30 times the capital as lift, which was the next best capitalized competitor.

1:17:49I mean, I remember this so clearly, like I'm sure listeners do too, like orthodoxy and the prevailing point of view in Silicon Valley was this is winner take all Uber has one.

1:18:00Sidecar is about to die and lift is going to go the same way. And there's no point in investing in anybody except Uber right now. I definitely felt this way. I mean, I can remember thinking like Uber's such a clear winner. Anyone trying to compete to Fools Aaron. It's amazing that they lost the enormous amount of money they've already raised. Yeah. Totally. And honestly, lift feels the same way too. So they actually initiate merger talks with Uber. Lift goes to Uber.

1:18:29and waves the white flag. And so Zimmer, and at this point in time, Andrews and Horowitz has invested in Lyft, and Andrews and partner, John O'Farrell, they go out to dinner with Travis Kalanick and a male Michael, who says number two at Uber at the time, and they say we want to merge, and they ask for 18% of the combined company.

1:18:54That is exactly how Travis and Emil react. They're like, we're gonna win. You're not getting anywhere near that amount. Like maybe we would consider something a lot smaller. They counter with 8%. Which is still actually, it's still actually a lot. It's almost surprising with those two personalities that they came back with 8% instead of one. Yeah. And equally surprising. And this is like such a defining moment for Lyft. Equally surprising that Lyft doesn't take that.

1:19:24Yeah, but they don't so the two sides can't reach an agreement and lift decides to keep going But they can't raise from VCs because all the VCs are like I'm investing in Uber or nobody So they go out and they raised 250 million dollars from the hedge fund co-to management Which co-to is now a big player and investing in especially late-stage startups, but this was one of the first private company investments they make. You got to wonder here, is there philosophy, and we're going to talk about IPO narratives here in a little bit, but are they thinking that this isn't winner-take-all, or are they thinking, we're going to take a flyer, that these guys are going to be the one? I don't know. I wish I knew we'll have to. Folks at Co2, get in touch with us, and we'll have you on the LP show, and we'll talk about this.

1:20:16I don't know what their thesis was at the time, because it was really contrarian at this point in time. Side note, though, like for Uber, and we'll talk about this on the Uber show to come, this was one of the best things that ever happened to Uber, because had they acquired lift at this point in time, they for sure would have been regulated as a monopoly by this point, like the fact that another...

1:20:37a viable second player in the market was allowed to continue in the US, like, especially given everything that happened at Uber later, there's no way that regulators wouldn't have totally cracked down on them. It's a great point. So, and it's like how Bing is the best thing that's ever happened at Google? Totally, totally. Absolutely, it's true. So, after this, when Uber's super annoyed at this point, they're like, these guys, they keep hanging around.

1:21:06Things get, like, things were already ugly. Things get super ugly. Like, like, probably the ugliest, like, certainly I've ever, not that I was part of this, but that I've ever seen in business. So, in 2013, back a couple, back a year earlier, Lyft had acquired this company called Cherry. Do you remember Cherry, Ben? I don't. Cherry was an on-demand car washing.

1:21:34company. So you could order a car wash while your car was parked in the parking lot. A crew would show up and wash your car. And then you would come out of, you know, work or the grocery store or wherever you were to a clean car. Cool, right? Cool idea. Turns out there's not like that much demand for car washing, but like really innovative stuff that these guys pioneered on the operations front and lift had acquired cherry in 2013 because it wasn't viable as a business but they're like yeah like these guys are like really talented and the CEO of cherry had risen up through lift and at this point become the COO of lift so like the number three executive behind Logan and John and that guy's name was Travis van der Zandin which this is gonna this is gonna ring some bells also for listeners so

1:22:32Travis, Travis VZ, not Travis Kalanick. He's the CEO of Lyft, and he brings a ton of innovations that he did at Cherry into Lyft. So, like, driver onboarding, city launching, like, he massively improves the efficiency of Lyft's operations. But he's kind of cut from a different cloth. There's Logan and John. He's not a...

1:22:53He's not the mission-driven founder here. He's a little more, a little more uber. A little more uber. And he sees in 2014 as all this is going on, he sees the pencil in the swinging uber's way. He believes just like everyone else in the valley that there's no way lift can compete. So he does two things. He goes to the lift board and tries to stage a coup. He goes to board members and he says, I don't think John and Logan can run this company effectively. You should fire them and make me the CEO. And the first thing I would do is CEO is I would go re-initiate merger talks with Uber and land this plan. And simultaneously, while he's doing that, he actually goes to Uber while he's working a lift. And he kind of totally goes rogue and says, hey, I know we just shut down merger talks, but like, we might want to reopen those. And we, the Royal Wee. The Royal Wee. Yeah.

1:23:52And now again, like this, this is really bad, of course, but like, you can sort of see how this could, you could get crazy times of like crazy, crazy measures. Like this is, you would have to believe you were, you would have to be utterly insane to think that any other course of action was, you know, was viable here. Logan and John though, of course, find out about all this and, you know, they are.

1:24:19utterly insane in their conviction and mission-driven zeal for the company. And so they fire Travis immediately. And guess what? A couple of weeks later, Travis ends up joining Uber. So how does this work in like, is this because non-competes are illegal in California? So like you just can. That's how this works. However, of course, lawsuits abound. So lift immediately, soos, both Travis, Van der Zannen.

1:24:47and Uber. Uber turns around encounters who's lived for supposedly hacking into their systems and stealing their information. Eventually, everything settles out of court because everybody realizes like we got bigger fish to fry. Right. We got all these guns pointed at each other and there's like an alien invasion happening above us. Exactly. Well, alien invasion that we are investigating each other, but this is not the battlefront that we're going to do. Right.

1:25:16And so now Ben, do you know what Travis van der Sandin is doing now? I believe he's the CEO of bird. Yes, he is. He left left Uber. I believe in 2017 and started and is the CEO of bird, the scooter company. It is incredible how incestuous all of this is incredible. But yeah, and Travis van der Zannen. I mean, again, like two sides of every story, he is incredibly talented and, you know, a visionary for transportation and operations. Like when he started bird, nobody was doing scooters. And now they're everywhere. So anyway, that's the backdrop to 2014. And coming into 2015, Lyft is Basically out of money, so they're at the end. This is like the story of lift is like they're out of money and at the end and then oh something happens and then they're out of money and they're at the end. And then and then I was hoping happens. Well, so the 2015 version of this is they end up getting hooked up. So Logan and John are out there trying to raise money from anybody. They know they can't raise from VCs. They've raised from Co2. They're talking to any other alternative source of capital.

1:26:38They end up convincing Rakuten, the Japanese e-commerce company, to invest. In March of 2015, Rakuten invests $530 million. Rakuten is at IPO, the largest shareholder in Lyft, larger than any VCs, much, much larger than Logan and John. That saves the company.

1:27:02Totally that time and then they add some more money and this is really can't make this stuff up. I remember when this happens they add more money into the round from acquired super villain, Carl Ikehn. No way. He's in this too. Carl Ikehn, he's back. He is like, we gotta have Carl on the show at some point. Yeah, we for sure do. Yeah, and that one we'll do in person. Carl, we'll come to you. We will for sure come to you. So listeners might remember Carl from Netflix. And what was the other episode he was in? Marvel.

1:27:41And Marvel. Yes. And Blizzard. He also an Activision. Activist investor. And what's great is so Mark Andreessen and Carl like and had had this huge beef like Twitter beef. And Andreessen was the largest VC in lift at the time. And here's Carl like and come again. And I think I think Mark was quoted in the New York Times saying like, Yeah, I mean, we disagreed, but like I never said, he wasn't smart. This is great. So Carl Aiken comes in. They invest $100 million as part of this round. And that keeps the company going for another year. And then the next year in 2016, they're running low on cash again.

1:28:31and they get GM, General Motors, to invest $500 million, that keeps the company going. Which GM made like a quick, I don't know, like 750 million or something, because that was in what 2016 were in. So they turned 500 million into like one on a quarter or something over a few years. Yeah, maybe even more than that, I'm not totally sure. They are, I believe the third largest shareholder, second or third largest shareholder in Lyft.

1:29:00at this point, right? Yeah, which is incredible. But still, like, you know, still, Uber just keeps growing and growing and growing. And, you know, this is the point where Uber's valued at $70 billion. You know, is taking over the world. They're taking over China. And so the summer of 2016, even though Lyft has managed to hang on, they hide the New York Times reports that Lyft hires catalyst, Frank Quattrone.

1:29:26Frank Quattrone's firm, the investment banker, to sell the company, again, to try and sell the company. And they go and they talk to everybody. They talk to GM, who just- Frank Quattrone of the Amazon episode fame, who, with Bill Gurley, took Amazon public. Yes, indeed. And so they go talk to General Motors, who just invested. And so, hey, you should buy the company. They talk to Apple. Apple's working on self-driving cars. They talk to Google. They talk to Amazon. They talk to, they go talk to DD and China. They go back to Uber.

1:29:55Nobody bites. Nobody wants to buy the company. This is the era where the rumors are really starting to swirl around Apple and Project Titan that had rumored to be over a thousand people working on some sort of car. Yeah. It was, you know, this is how much the sentiment was against lift at this point in time. Even though all these people knew how important this market was for you transportation as integral to the future, literally in the case of GM, is the company. Nobody wanted to buy them.

1:30:24The problem was the valuation. So as part of the GM round, the company was valued at $5.5 billion. And so that was just too high. Nobody was willing to pay that to buy it. Later in the summer, this is truly the low point for Lyft.

1:30:41which keeps going. It's just like the body blows. The DD the Chinese red sharing giant had been a lift partner international partner and had been fighting Uber tooth and nail as we talked about on the Brad Stone episode in China. And it was at the end of end of 2016 that they merged with Uber. And so here's like lifts like big international partner.

1:31:08Now is getting into bed with Uber. And it feels very Amazon Whole Foods Instacart. Indeed, indeed. And so it was just really bad. Lifts market chose down to 20% in the US and falling and heading into 2017, it's like...

1:31:27All right, this might be it. And for a reference check on folks, I don't flashing forward, but it's now 39% or at least in December of 2018 was 39% in the US. Yep. So doubled since then. And so what is it? What happens? So what happened, David? Why? How did it did lift double their market share and turn the ship around? Well, as we say so often, as I say so often here on acquired, what external forces could have come into play? History turns on a knife point. It was it.

1:31:56lifto's dad. They were, they were, you know, Uber had the boot on their throat. And then, you know, one of the greatest unforced errors in business history series of unforced errors happens starting in January 2017 with the delete Uber controversy, which of course we'll get into. Oh, it was just the start. It was just the start.

1:32:19Ultimately culminates like what is this little water coming through the dam if I look on it a little bit what's going on back there? Yeah, yeah, and Ultimately culminates in Travis Kalanick getting fired by the Uberboard SEO in June of 2017 and throughout all of this this is the this is the life line for a lift and They start beginning market share in October of 2017 Google via capital G invests a billion dollars in lift and Google had been an early early-ish investor in Uber and their big partner and the self-driving you know future was going to be waymo and Uber and so this about face of Google turning their back on Uber and investing in lift was a huge huge turning point and it says a lot to hear where I believe alphabet

1:33:15or via capital G owns, I think a little over 5% of the company at IPO and GM owns close to 8% at IPO and you can just see the sort of sentiment reflected there where GM earlier put in half a billion dollars and Alphabet later puts in a billion dollars and yet GM has the greater percentage because The valuations were dramatically different at these times. The sentiment around the company had totally, totally changed throughout all of this Uber insanity, which we will cover on their episode. Yeah, totally. And so much so that I don't think it was the alphabet round, but the last round of funding that Lyft raises privately before the IPO yesterday was at a $15 billion valuation. What a turnaround. From nobody will buy the company we are dead to

1:34:0815 billion dollars to IPO to darling of Wall Street. So real quick, yeah, market share, as Ben said, just rises starting in January 2017, goes from 20% in the US to just under 40% now. People are switching. And although I feel like it's mostly stabilized now, but they hit a lift hits a billion rides in September 2018.

1:34:37In November 2018, they acquire Motivate, which operates the city bike share in New York City, and they launch scooters. Side note, scooters are mentioned 159 times in the lift S1. Yeah, I think the only category of things that are mentioned more are autonomous vehicles. Yeah.

1:35:01They do $8.1 billion in bookings in the full year of 2018, $2.2 billion in net revenue. Friday, March 1st, 2019, they filed their S1. This Thursday, March 27th, they priced their IPO at $72 a share, or a $24 billion market cap. And as we said at the top of the show, yesterday, Friday, March 29th, they become the first unicorn, well, not the first unicorn, but the first of the big, big.

1:35:28you know, A-plus companies of the current generation to come out and be public and are finished the day trading in a $26.6 billion market cap. What a story. And here we are at the end of the story, but at the beginning of the analysis. Do you think we can keep this episode around like maybe an hour or 10 and we're sort of like, what do we not talk about? Thanks for bearing with us listeners.

1:35:57You know, these stories are too good not to share. Yeah. All right, listeners. Now 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.

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1:37:16billion 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? So 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. So before we sort of dive into some other stuff here, like I want to highlight a few other key facts. One is at time of IPO, they're now 4700 employees, several hundred of which are working on autonomous vehicles. They don't sort of disclose specifically, but mentions that in the IPO or in the S1. Their take rate is rising pretty dramatically. So if you look at their

1:38:15revenue per ride is up, but if you look at the take rate, the sort of main driver of why revenue per ride is up, it's risen from the beginning of 2017 to around 20%. Up closer to 30%, it's something like 28% now. So what this is really proving is, Because they now have loyal customers, they're able to leverage that into the supply side and gain basically power over their drivers and up their take rate there.

1:38:46They talk a lot about, you know, rides, proactive riders going up and revenue per ride is going up and thus revenue per ride is going up. A lot of the revenue per ride going up is really attributable to this increased take rate over time. And so much so that they're per quarter, like if you look at how down and out they were in 2016.

1:39:09$14 per quarter, they were generating $14 of revenue, which is after the take rate. This is sort of the amount that they get after paying out to drivers. If you look at last quarter, it was $36 per quarter. So they have a lot of levers at their disposal. And I don't want to index too hard on, hey, it's just the take rate because it's definitely not. But it's incredible how they really righted the ship and started turning everything in this direction of people are staying loyal. They're using it more often. We're able to go acquire more customers, although I'd say that's sort of the smallest of the drivers. But 14 to 36 over the

1:39:48course of two and a half, three years, on a per-quarter basis for revenue is huge. Yeah, totally. So David, where I want to go from here is, why don't we talk about the narratives? So we added this section after history and facts. That is sort of the bowl and the baron narratives. So we used to talk about, you know, what these ones are hard to grade.

1:40:16because you don't necessarily know, like, we're too close to it, but it was something that's had to talk about now. But in lieu of that, like, it is interesting to talk about what are the stories that people are talking about that make this something you, you know, you want to get it on. And what are the stories that people are talking about that make you go, yeah, and I think, um, you know, as as is normally the case here, why don't we dive in on on bulls first? So David, what are what are people saying that makes this something that you should be super interested in right now? Well, I mean, number one, the scale and the growth. So eight billion dollars of bookings, you know, of commerce transacted of transactions created is incredible in since mid

1:41:062012, so less than seven years, and increasing leverage on the take rate side and net revenue of over $2 billion, growing incredibly fast. That is very, very exciting, especially to public market investors that are not seeing that kind of growth anywhere else. So I think that's one, two, you know, if you read the lift S1, they talk about how they're not just a ridesharing company, they're a transportation as a service company.

1:41:36And they're building a multi-modal platform, as they say. Now, that's a lot of buzzwords, but like one, I think this started to crystallize for the industry when Dara did come in and take over as CEO of Uber. And Dara, of course, the current Uber CEO came from Expedia. And Expedia, bringing that mindset of like, this isn't about one product, this is about where you start your search for travel at Expedia.

1:42:06and for transportation for Uber and Lyft. And so this is what the Motivate acquisition was about. This is why scooters you mentioned 159 times in the S1. The opportunity here isn't just as big as as ride sharing is, it is all of transportation that they think they can take on. And that's incredibly exciting too. And then I think finally the third piece of the bull case.

1:42:31is, you know, Lyft does include a cohort analysis in its S1 as most come, which is not required, but is becoming more and more popular and is sort of truly the way to analyze these things. Yeah, and if...

1:42:43companies don't tune their S1s, you should be very suspicious these days. And the cohorts are expanding. So if you look at the cohort of 2015 customers, customer, writer customers that came into lift in 2015, they are doing more, the cohorts are expanding. They are doing more volume of transactions and dollars worth of transactions in 2018 than they were in 2015. Like that's, that's, you know, usually you see cohorts deteriorate over time of people use it less as their turn. Expansion is rare and extremely powerful.

1:43:19So a couple other things that I want to touch on here. This is the pure play bet if you want to sort of have some exposure to ride sharing and really domestic ride sharing. You know, Uber is in Uber Eats. They have, they're effectively a holding company for all these other international operations. They themselves operate internationally. You know, if you want to bet as a, it's not quite pure play because it's multimodal, but if you want to bet transportation in the US, this is a, you know, this is the way to do that without mixing in that sort of basket of other things.

1:43:48um... the other thing and it's you can't be a bull here without knowing the bear case first as has been much much covered all over the place the company is losing a lot of money and um... you know they i think david check me on my math here but they they lost almost a billion dollars last year i think that's right yeah and you know so so you gotta look at that and go uh... and and we'll talk more i think about that in the bear case but um...

1:44:17They talk a lot about autonomous vehicles and you know, they've got hundreds of people working on it They're spending a lot a lot of money on it right now. I think it's something like I Don't have it right in front of me, but they you know lift believes that They can materially flip their economics to become a profitable company When self-driving comes into play and they intend to be a leader in that space and so I think if if if you believe that too Then there is reason to believe that that they could get profitable They do listen as a key risk that they're not profitable and may never be so that of course is Love to see that a little bit of a dangerous proposition You know the other thing. Oh come on We don't value companies on the discounted sum of future cash flows anymore. That's so

1:45:07you know, old school. It is scary that the public markets are looking more and more like seed investors where people are valuing on a multiple of revenue instead of a multiple of earnings or perhaps just buying in on a story or perhaps value and growth of a profitability. Like these are things that you typically see in the earlier stages of a company in the acquired Slack. There was talk of a seed PO that is becoming more and more common.

1:45:35You know, no comment there but I do think one other thing for me on the ball case is you know ubers bleeding seems to have stopped But I think for a lot of people, Uber's brand is solidified as at the very best highly transactional, at the very least, a lot worse than that, and lift over and over and over and over again. And there are S1 beats the drum and did all throughout the road show on being a sustainable company, on being a company that sort of does right by its people, be it riders or drivers, that I'm just pulling up an email that they sent to two riders shortly before their, I think actually yesterday during their IPO. And it's titled, for once the good thing, the right thing, the business thing can all be the same thing. And they sent this to all of their riders. I mean, they are doubling down hard on. And they do they have a blog post in Twitter campaign yesterday about being a responsible corporate citizen as now a public company. Yeah.

1:46:41I'm sure. The anti-Uber. Yes. Yes. Or anti-Hawaguber is perceived by some people. Yeah. And you know the other reason why there's sort of a pure financial analysis here too that I think there was a lot of fear that late-stage private investors were not being rigorous and that the public markets when you apply more sort of rigorous discounted cash flows or I don't know exactly how people are modeling this one out but would not be able to continue the valuation rise on a round-by-round basis. But at least from pricing and trading yesterday appears to not be a big concern. And I would say one last piece on the bull piece, which we really should have put in the history and facts, but has been a big change really since the Uber campaign.

1:47:36Lift has been hiring incredible people here in Silicon Valley. This isn't talked about as much of, I think, on the nationwide and Wall Street type narratives around the IPO. But we feel it, and we see it here. Lots of great people who rightly and Sarah worked with at Airbnb and elsewhere, and our friend, Predit Lift, are really, really talented people. We're not working at the company during the earliest days of lift and during the down days.

1:48:05they know are coming there and doing incredible things so like there's a there's a strong talent story around the company too yep yep and i think there's uh you know there there is much more analytical and and sort of uh financially fundamentally oriented analysis and uh we've been putting those in the slack and continue to put those in the slack over time. But I think the key takeaway for us here is that the way that the company has positioned itself.

1:48:35with its riders and drivers, the leverage that they're starting to see, where they actually do have a little bit of pricing power in the marketplace, the differentiation that they have and the talent that they have, as well as the sort of wind that they're back from growth over the last few years, makes it a super interesting company and not in a winner-take-all industry. Yep. And to put a fine point on the bull case, You know, we can debate the merits of valuing public companies on a revenue multiple versus a profit multiple. But it is, you know, it does happen. And certainly it happens in the SaaS world. You know, Lifts valuation is not crazy at IPO. So where they finished trading yesterday, they are trading at a 12X revenue multiple of last year, 2018's net revenue. Now typically you would trade on a forward revenue multiple. I don't know what they're projecting for 2019 net revenue. So that's what they should trade off of. But

1:49:31presuming there's continued growth, they will be trading at a less than 10x forward net revenue. That's not crazy. No, David, let's do a whole LP show on this. This is a good. We'll do that in the next few weeks. Maybe have a public equities investor on to. Yeah, that'd be fun. Okay. Should we shift to the to the bear case? Yes. This is the largest ever net loss for a company entering the public markets for the first time full stop. Boom.

1:49:59There's that and then there's a, you know, that's the headline. I think there's a, has a marketplace investor too. You know, this was one of the things that stood out to me reading the S1. I don't care as much about net income losses because that's how tech companies work. Like you invest a lot in fixed costs as you're going and then as near and you know.

1:50:21product and, you know, operations and infrastructure to do stuff. Yep. I'll read any Ben Thompson article. He talks about this all the time. I think he's totally, he is totally right, which is this is how software and the tech industry works. Incredible investments in fixed costs, but then as you scale revenues, those costs are fixed. Your variable costs are much lower. And so you will become wildly profitable. I'll Google and Facebook and whatnot over time. Airbnb, what have you? The scary thing about Lyft.

1:50:49is that when you do the math and add up all their variable costs relative to their net revenue, they are losing money on a variable basis too. So not only are they not paying down their fixed costs, they are each dollar of revenue that comes in is even ignoring fixed costs, a net negative for them. And so the way you look at this is you add up their cost a good sold the cogs, their cost item for operations and support, and their cost, their line item for sales and marketing. Because sales and marketing, you're having to spend to acquire and retain drivers and riders. It's a variable cost as it's operations and support, and obviously as it's cogs, when you add all those three line items up for 2018 on their income statement, it is larger than net revenue. And that's a scary place to be. Now, certainly the rebuttal to that.

1:51:48is that we are in such a large market and growing so fast that we're spending so much on sales and marketing that yes, that is true, but we need to spend to realize the full totality of the opportunity. Right, that the spend in sales and marketing is primarily for speed purposes, for expansion, and when we back down sales and marketing just to a rate where the market is at steady state, all of our unit economics look good.

1:52:15Yep, yep. And actually, John and Logan, in some of the interviews they did yesterday around the IPO, and they were asked this question, they said this, they were like, you know, we're doing the thing that we think, you know, we should responsibly be doing as managers of this company, which is investing for future growth, and that the future is so bright that...

1:52:32We need to do this. Now of course, the other piece of the bear case here is like you need to spend this much on sales and marketing because you're locked in a knife fight in a bazooka fight with Uber. And so you're still does the market ever actually hit steady state without you spending aggressively and subsidizing every ride exactly exactly. So this is I think this is the biggest bear narrative on on the company and we'll probably weigh on Uber as well.

1:52:59Now, one thing though, if you look at sales and marketing expense as a percentage of net revenue, it is declining for a lift. So that's a really good sign. So in the fourth quarter of 2018, it was 32.7% of net revenue they spent on sales and marketing. They spent over 40% in the third quarter. So they are growing while spending less proportionally. So that's a good sign, but it's still concerning.

1:53:27And I think David, I appreciate your thoughtfulness as a marketplace investor there. There are many articles that are quoting people who have expertise in various things that I'll just give you one that is much less kind than you are here. Hubert Horin, a transportation expert who has long been a critic of Uber and Lyft.

1:53:52Suggest that they have nothing in the document that suggests how this could be fixed. I mean nothing and so I think Just to fully represent what the bears are saying. It's that when you read the S1 People do believe that this will never turn right side up Well, it's not now and they are public so Yeah, it is interesting. I mean, I thought a lot about so this sort of subsidizing every ride concept I wrote a piece on Gequire years ago. I think I'm four years into it at this point of how I sold my car and went full Uber and basically did all the cost modeling and I can't know what it was but I saved somewhere between five and eight thousand dollars a year even if I'm aggressively taking Uber's and lifts everywhere and just not having a car living in the city and you know zip car or car to go for longer weekend trips whatever it is and I

1:54:50Can't help but wonder, like, that cost difference feels too big. Like, it does feel like if you don't have a car and are ride sharing everywhere, it shouldn't be that dramatically different than owning a car. Other, like, that these pricing inefficiencies sort of work themselves out in the market becomes more efficient over time. And so it does feel like, you know, how is it that I can get from Seattle to Bellevue for, you know, $16.

1:55:19in a ride sharing situation. I understand the economic argument for like, well, your car is just sitting there for most of the time, so it makes sense that you're way overpaying for it and insurance and all this other stuff, but it is crazy the degree to which it saves money for me personally, and you gotta just wonder, are we being overly subsidized here? And how long will that go on? And are we now subsidized from the public markets?

1:55:49Yeah, right. Almost assuredly, yes. You know, the true cost of your ride to Bellevue is more than $16. Yeah. Okay. What would have happened otherwise? I feel like we explored some of the paths along the way. I mean, lift to a die. Yeah. I mean, all these companies would die. They need it. Is 2.3 billion going to be enough?

1:56:16Like are we gonna have to see it additional public offerings from from all these companies are I should say Uber and Lyft or just on this episode Do you think in the next 18 months we'll see additional public offerings to get more cash and a lift when they feel that the wind is at their backs for a good time to do another issue when I think this is you know zoom filed to go public last week as well, and we can't wait to cover that one. Everybody's so excited. They're profitable. It's the rare tech unicorn that is profitable. So, yeah, is this the new neural? Like, good question. Yeah. There's actually a really good. I'm going to, this is in tech themes, but we're since we're heading there anyway.

1:56:59There was a finance professor cited by the Wall Street Journal that said that 83% of US listed IPOs that took place during the first three quarters of 2018 lost money in the 12 months leading up to their debut. The journal goes on to note that the previous record for the statistic was that when 81% of stock market debutants were unprofitable.

1:57:25We're against record 81%. This was 83% of the first quarters of three quarters of 2018. That's a lot of companies going profitable, sorry, going public that are unprofitable. Yeah. We're in a new world. It's also hard to square that with the, these companies are staying private longer. You would think if you're staying private longer, you would also get the profitability by the time you go out to go public. I mean, I understand all the arguments, especially as a venture investor, why growth is better.

1:57:54Yeah, it's a it's a brave new world we live in yeah for how long that's the question, you know what? Shouldn't the public this is a good philosophical question, but should the public markets exist in a fairly risk mitigated way so that individual investors don't lose their shorts I mean, this is why we have accreditation for private investors You know should should 83% of companies that are creating offerings for the United States public be doing so unprofitably. Or have we reached a point where we're now using the public markets for something that is suboptimal? Well, a philosophical debate for another day, but I would just say that risk and return are inversely correlated and that is a law of finance. So, you know, if you want high return, you need to take high risk. All right, tech themes.

1:58:51All right, so I'm just gonna roll through five here real quick that were listed in the S1. There's something kind of cool about the fact that the S1s, you know, they list out all these risk factors that are just like, it's great to read how honest everyone has to be and upfront everyone has to be, but then they also list like, hey, what are the key trends in themes that haven't able to do to do what you're doing? So they talk about sharing versus ownership on demand services, flexible work.

1:59:17their mission-driven brand appeal, which I do think is actually on the rise. I feel strongly that people care more than ever about the work that they're doing, and need that to motivate them intrinsically. What certainly has made a huge difference in attracting talent for them and writers in the wake of, you know, the DeLie Duber fiasco. Absolutely. And multimodal transportation. And I think one that they they don't list in there that is super interesting to me is these companies became possible because the iPhone 3G or 3GS launched with an embedded GPS that could be used by third party applications and do things like summon a card you wherever you are and in total create like close to half a trillion dollars in value or

2:00:09Am I over? No, it's like half a trillion to a trillion if you add up all these companies internationally that all basically do this thing of bring a card to me right now when I push this button like crazy that that adding that sensor and API to smartphones just enabled all this to happen. Totally.

2:00:32totally. I mean, I guess that's one thing. That's the only thing I'll highlight because we talked about so many along the way in history and facts, but, you know, Logan and John and Logan in particular thought that the wave they were going to override that would enable Zimride was social. But the real wave that enabled lift was mobile. And, you know, not to discount, you know, that social wave is big and do what none there are very interrelated. But yeah, like you can't underscore how big the mobile computing and smartphone wave was and, you know, ride sharing being only one industry of half a trillion plus dollars worth of value unlocked by it. Yep.

2:01:24Yeah, it's a great point and it likes by sensors GPS and if you think about Instagram cameras features on smartphone hardware. Yeah Okay All right, I've got a few here Two points I'm on it want to make in one point of discussion. So this one we said Craig's list like five to six times earlier this episode, there's so many companies founded by slicing off a piece of Craigslist. And I think it's really interesting that there's large businesses on their own on Craigslist.

2:02:01But when you add more trust, safety, and efficiency to the marketplace by making it a vertically specific application, rather than whatever is happening on Craigslist, they can become a massive business. And so ride sharing while big on Craigslist wasn't as big as it could have been, because you couldn't see who is picking you up. It didn't have all these vertical specific features and real timeness necessary to enable that application. And so I think we'll continue to see even more companies that are something that used to exist on Craigslist, but are a vertical slice that it has unique functionality. Totally. Um, we've talked about this one before, uh, both on the main show, especially in this era of, uh, of, uh, seed peos, but, um, um, I guess it's more like an I seed, oh, like an initial seed. I guess it's, I don't know what the right terminology there is, but seed stage style storytelling, uh, in, in your IPO, you're always storytelling. And then we, you know, it had a great, great, uh, um,

2:03:01you know, the art of pitching a limited partner show to where, you know, you're just always, always storytelling. So much of this S1 is about the problem with the world as it is today, and a little bit less about Liv's particular solution. Like you read through all the pros in like the first, I don't know, 25% of it, and you're like, okay, like I get all the stuff that's wrong.

2:03:28Can you please talk about your product and your solution? I understand the trends. I understand why things need to get better. It's really the huge narrative of beating the drum. There's all these problems in the world. We're going to be the ones to fix them all eventually. Sure, yeah, let's talk about this stuff that we're doing right now and how it's going. Yeah, it's a marketing document. And S1s always have been, but in recent years, people have really embraced the fact that they're a marketing document.

2:03:57There's a quote in there that, like, come on, guys, there's a quote that says, the land devoted to parking in the United States could fill an area larger than the state of Connecticut. It's like, okay. It's so great. It's so great. Yeah. All right. So one discussion I wanted to have with you before we sort of go into value creation, value capture, and then grading is, was it a good idea or not for lift to go first?

2:04:26And is it on top of that is it even better that lift has IPO before we've even seen uber's s1. I mean, it's my answer to this. I've been thinking about this is yes from every angle. Certainly yes for lift, because do the game theory otherwise. Uber comes out first. They're bigger. They're monster. It does great. Uber comes out first. Does great.

2:04:54then lift comes out second and nobody pays attention. Uber comes out first and does terribly. Then lift is still like is going to do terribly because every so you know, so definitely from lifts perspective better to go first. From Uber's perspective, actually, better for lift to go first, right? Because Uber gets to see the reaction to lift, which has been very positive. And now they can tailor their pitch.

2:05:21Accordingly, and I think, you know, I was joking with with the friend yesterday. I think the happiest people yesterday in San Francisco were not lift employees, but Uber employees because they're like, oh, man, if lift is worth $26 billion, like how much is Uber with worth, you know, a lot more than that. We will find out. Yep. I completely agree with all that. All right. So this was a section that we have that I think we'll keep fairly brief here.

2:05:50that was brought up by listeners several times over the last year that is, hey, you guys often talk about, was it transaction good for the acquirer? Was it transaction good for the company that IPO'd and raised that money? But less about, was it good for the world? And not enough about the ratio between value creation and value capture. And so I think we thought it was important, particularly in this one where there's so much discussion around minimum wage and around the contractor versus employee relationship to talk about this because I think less so much on the value creation versus value capture side I think lift has figured out a phenomenal way to capture the value they're creating but it is interesting to try and think about sort of like net value for the world is it a good thing and you know are the masses sort of

2:06:46receiving enough value versus the company receiving a lot of value. And David, I'll turn it over to you. How do you feel about where it lifts sits in this relative to a lot of other companies that are also sharing economy companies and then sharing economy companies broadly? Totally. This is such a complicated question. Yeah. And the cop out, we will talk about this now and give some answers.

2:07:15deserves a way more airtime than we have for it now. As a marketplace investor and a true believer in marketplaces, which I am, you know, I believe in economics. I believe in the concept of expanding the efficient frontier and that what these marketplaces are doing relative to the status quo is expanding the price at which supply meets demand for or expanding the point on the curve where this demand and supply curves me. And when you do that, it is better for all participants in the economy. So like I truly believe that. And I think ride sharing is that case too. Now drivers are very upset and have about a lot of things and have perspectives on that. But if you look at how economically how taxi drivers did in the previous system versus how drivers on ride sharing platforms do, I suspect

2:08:09it is marginally more positive on right sharing platforms. Now, that said, obviously there are problems and there are unintended, intended consequences of all these platforms, you know, from Airbnb to Rover to Lyft and Uber. A super interesting thing now again, back to the best thing for Uber happening was that they didn't buy Lyft, because otherwise they would be regulated as a monopoly. Lyft being a viable second player in the marketplace keeps either lift or uber from exploiting drivers. And so like, you could say, like, you know, we were talking about subsidizing your red to Bellevue. Like, that's a net economic gain to drivers. And that is happening because there is viable competition. Like, this is how economics works. This is the value of competition in the marketplace. So like on a

2:09:01While certainly I recognize all the problems and unintended consequences, I think net on the whole, like if you believe in economics and Adam Smith, like it's working as it, you know, should, which does not mean there are problems. Right.

2:09:20paraphrase a little bit you're basically arguing that look if there's people that have a problem but can't find anybody to satisfy that problem and then you introduce an efficient marketplace where suddenly people who have that problem can pay for it being satisfied and then somebody can make money by satisfying that need then you've created net new you know, yeah, well before before ride-sharing there were two problems with the city transportation marketplace one was with the taxi system one was just it was hard to access for demand so the ride sharing innovations have made the market much bigger by expanding the ease with which demand can access it but also for supply there was a middleman like the taxi companies and the medallion companies were middlemen that were taking economic rents in the market and they don't exist anymore so

2:10:17So net it is, you know, the versus a driver that was working for a taxi company or a driver who is driving on lift and Uber, more of the economic value should be flowing directly to the drivers in this more streamlined system. That's kind of interesting. We should do an analysis or some, I'm sure somebody has, like if you go aggregate all the taxi companies, were they taking more than 28% of a VIG? I would assume.

2:10:47They must well yeah, I don't know where it will be we should I'm sure they've been studies doing the math Yeah, but even just if I think they would have had to have been because the cost of medallions like in New York City or any city were so high So you had to be paying back those fixed cost as a taxi company operator right right right? The only point that that I want to make here is that what has been just Striking and amazing to me is that if you are someone, let's say you're immigrating to the United States and you're plopped down into a city where you don't know anyone. It is unbelievable that you can go and make a wage by walking into a lifts or ubers office, renting, you know, having the full service, Carly's rental, whatever that apparatus is and then boom, you're...

2:11:41off sort of making a living wage and someone argue that of course, but having a job instantly, even if you, none of your skills translate from whatever you were previously doing, I do think that is. I compare that to the taxi system where that was not the case. Yep, totally amazing. Totally amazing. Okay, cool.

2:12:05Okay, so the way that we grade, let's bring this one on home. Yeah, is rather than just issuing, hey, it wasn't a, what do you have to believe five years from now or 10 years from now, whatever, for this to be an A plus and what happens that makes it less than that? And I think just to be quick about this, I think if they can figure out, first of all, if, So there's a chance autonomy hurts them more than it helps them. If the advent of autonomous vehicles just introduces relationships with car manufacturers that disintermediate Uber lift, you know, a lot of these providers, but let's say that they play nice with this ecosystem and that Uber lift actually comes out with their own self-driving vehicles and oh my gosh, they they they

2:12:57They currently are giving what's 72% of the ride to the drivers. The business looks a lot different if they have autonomous vehicles. Obviously, the question is, in the next two, three years, before autonomy comes, which could be, who knows, a decade or more, are they going to be able to get profitable?

2:13:24They need to do a lot more than just get a little profitable in order for the enterprise value to be fulfilled. So I think the big pivot for me is does autonomy actually help lift and get them to a place where at infinitum, many, many years from now, they're a widely profitable company. Yep. Yeah, I think I would reduce it even further, like forget autonomy. Maybe it happens, maybe it doesn't.

2:13:54I think actually, I thought that one of the interviews that John and Logan did yesterday was quite thoughtful about autonomy and also in relation to what we were just talking about with value creation and value capture. Even as autonomy comes, it's going to be useful for some use cases and we'll still need human intervention. The driver isn't going anywhere anytime soon for the majority of.

2:14:20use cases, whether that driver is in the car or driving monitoring it virtually from a command center or what have you. So autonomy is like who knows how it will impact the business. But I think the simple, the A-plus case is they solve the concerns of the bears, which is like they get unit economic profitable.

2:14:49And then I think the downside cases they don't and They'll leave this this competition with Uber is too intense and Everybody keeps losing money very fair. I will say operationally a plus IPO like the way that they actually You know, they needed to access the public public markets for for capital and they did so in a highly non-delutive way and in a way that got cash into the company and a way that propels every bit of the company forward with a lot of momentum. So, I don't think they could have asked for it to go more smoothly than it went. Totally agree. All right. Well, yeah. Listen to you, that was our, we'll move to Cardinals. Thanks for bearing with us. We know that was a lot, but just to underscore again, this is such a huge moment for

2:15:43So we can rally. Like, both lift itself, this whole market of peer-to-peer ride sharing. And as the first of the, you know, this generation of companies to come out and operate in the public markets. So very much a perfect storm here. We couldn't help ourselves from digging in deeply. So thanks for bearing with us. Yeah. Yeah, yeah. All right, my carve out is I had two choices, and I'm going to go with this one because I mentioned Bill Gurley earlier. Bill Gurley is a tremendous venture capitalist, one of the best of all time at Benchmark. He has a talk up on YouTube that he recently gave, called Running Down a Dream, How to Succeed and Thrive in a Career You Love. It is one of the best. If you are a college student, if you're getting your MBA, you know, if you're

2:16:39Even if you're just thinking about a career transition it is one of the most thoughtful and amazing talks about The world that we live in today and how you can work collaboratively with your peers to build knowledge, and leverage that knowledge. And he gives these three amazing stories. And I'm not going to say who they're about because it's wonderful how he reveals them and story tells the whole thing. But these three very unrelated non-tech sort of use cases and stories about people who were artists and visionaries and sort of pursued their dream and became the best in their field that they were doing and it is just really well done. So I really enjoyed it and I think you all too and we'll put a link in the show notes. Cool. I can't believe I hadn't heard of that yet. I'm gonna run, not walk, to go watch that. So great. My carve out also in video format, very different, late-hearted.

2:17:46I got recommended on Netflix. Love the Netflix algorithms. Cricket fever, which is a documentary they did on. Have you seen this in your feed? No, but I'm just worried something you're going to get recommended something on YouTube and I'm going to lose you. I'll never emerge again. Cricket fever about the sport of cricket and about the Mumbai Indians in the which is one of the premier teams in the India Premier League cricket which is I've always been sort of fascinated by cricket but in 2008 the India Premier League the IPL launched it is a new form of short form cricket called t20 it is much more exciting and fast-paced than traditional cricket matches last two to three hours

2:18:36And it's incredible. They have like two leaders and fireworks and like it is the XFL of it's the XFL of cricket, but the IPL is now the sixth most valuable sports league in the world and rising quickly and It's so exciting and fun to watch and so this documentary that Netflix did follows the Mumbai Indians, which are owned by the family of the founder of Reliance. I believe the wealthiest man in India and throughout the season is just so fun. Wow. All right. Well, obviously you'll put it in the show notes. I'll have to check it out. Cool. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

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2:20:07So 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. Well listeners, if you aren't subscribed and you like what you hear, you should. We'll be gloriously covering all of the big upcoming IPOs. And if you want to go deeper on what it's like to build a startup, get interviews with expert operators and VCs and explore some of David and my personal investment theses, you should consider becoming a prestigious acquired limited partner. You can click the link in the show notes or go to Kimberlight.fm slash acquired. And seriously, as I mentioned at the top of the show, I promise you will be overjoyed with how buttery smooth it is to get more acquired right there in your favorite podcast player. Then is multi-talented and a great product manager in addition to everything else. Thanks David. All right, listeners with that, we will see you next time. We'll see you next time.