Acquired - The Starbucks IPO with Dan Levitan

0:01Sorry guys, the sirens going by my wind is here. That's David's in Europe Welcome back to episode 34 of acquired the show about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenthal and we are your hosts Today, we'll be talking about one of the great legends of a historically non-tech company in a technology city Starbucks. And I'm here with Dan Levitan in Seattle. And we are both sipping our Starbucks. So I've got all the milk latte here. Dan, what are you drinking? I'm drinking a tall decaf Americano, the why bother drink. Seriously, what is the point listeners, before we dive into the show, a couple of things I want to cover.

1:02If you're new to the show, we've got a great Slack community. So we've got over 500 people discussing mergers, acquisitions, IPOs, tech news, really anything that people want to create rooms for. So you can learn more about that at acquired.fm and join. Hit us up on Twitter at acquired FM. 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.

1:32Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. LaGora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do, operate with obsessive customer focus.

1:55They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you...

2:08drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Lugora'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.

2:27And they recently launched LaGora agent offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And LaGora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early LaGora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 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.

3:20Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in house at a company, you can learn more at logora.com slash acquired and just tell them that Ben and David sent you. David, can you introduce us to our guests today? Yeah, so as Ben mentioned, we are covering the landmark.

3:48Starbucks IPO today. And we are lucky to be joined by Dan Levitan, who is the managing partner and co-founder, along with the soon-to-be former and original CEO of Starbucks Howard Schultz, of the consumer-only venture capital firm Maveron. And Dan and Howard started Maveron in 1998, since then Dan has invested and served on the boards of many successful companies, including Zoolily, Japanian, Potbelly, and Drugstore.com.

4:18Dan and Maveron are great early stage VC investors and investors both in PSL where Ben works and co-investors with many of the companies I work with at Moderna and really delightful folks to work with. But today we're actually going to be talking about Dan's days before Maveron when he was an investment banker in New York at a firm called wartime shrodering company and he met a crazy entrepreneur from Seattle who had a coffee company.

4:46that was named after a character in Moby Dick and Dan would go on to serve as that coffee company's lead investment banker on their IPO and that's the story we're here to tell today so thank you Dan for joining us thank you for having me guys for acquired listeners out there we've had founders we've had M&A professionals we've had journalists we even had some executives at companies recently acquired on the show but we've never had a chance to analyze an IPO before from the perspective of the investment banker that actually took them public and did the deal. So I'm super excited to have a first here on acquired today. And actually, it's also worth noting the date works out pretty well because right now happens to be the 25th anniversary of Starbucks going public. Actually, June 26th is the 25th anniversary. It is the year of the 25th anniversary, but it is also Howard Schultz's last month on the job before he retires. True.

5:42He's on to his next play. So with that, let's dive in. I'm going to quickly relate the origins of Starbucks because I think it's actually something probably definitely many of our listeners, but most people don't know. And then we're going to dive into the IPO with Dan. But the original Starbucks company, not the Starbucks coffee company, but the original Starbucks was founded in Seattle in 1971 by three friends, Jerry Baldwin, Zev Siegel, and Gordon Balker.

6:10who had met in San Francisco as students at the University of San Francisco and they had become acquaintances of the legendary Berkeley, California coffee roasting entrepreneur Alfred Pete, folks might know Pete's coffee. And the three friends had become sort of disciples of Alfred's and after college. They moved up to Seattle and they wanted to get into coffee roasting themselves. So they started a company decided to name it after Starbucks from Moby Dick.

6:38and they set up shop in Seattle. But they were just a roaster. They roasted beans and they sold beans. They did not brew coffee when it becomes a nice small local business in Seattle. And then we fast forward 10 years to the early 1980s and David, it's important to know they didn't brew coffee and that's not just because they were drawing some hard line in the sand like you could see today of we're not going to be like that every other street corner that you see that has a coffee shop on it or people are brewing coffee and sitting there and drinking.

7:06Many of our listeners are familiar with the idea but that didn't exist. That was a thing that Starbucks would later kind of create. Yeah, that's right. They didn't brew coffee because nobody brewed coffee. That was what you did at home with your folders or your beans that you bought from Starbucks or somewhere similar. So we fast forward 10 years to the early 1980s when a young Howard Schultz who had been in a earlier life a sales executive for Xerox Corporation.

7:34He was working as the general manager of a Swedish company named Hammer Plast that made coffee machines and he heard about these guys out in Starbucks heard they roasted good coffee and he went out to see them and he was actually really impressed and he was so impressed that he spoke to them and sort of begged joining the company and he got a job and so he became the director of marketing for Starbucks and this was in 1982.

7:59So Howard is director of marketing working for these three founders and he goes on a buying trip to Milan, Italy. And he notices something different about Milan versus the streets of Seattle or any other American city. And that's that there are these coffee bars everywhere throughout the city and they serve coffee and people go and they meet there and they hang out there and they're not just places to buy beans or buy coffee to take away. It's actually a place where you sit and you talk to people. And so he's really taken by this idea.

8:26he comes back to Seattle and he tries to persuade the original Starbucks founders that this is something that they should start doing in Seattle, start doing themselves open up cafes in the city. But the founders, they actually have something else going on at the time. And that's that their original mentor Alfred Pete is retiring down in San Francisco and he wants to sell his business to the three founders his disciples. So they say, you know, how are that's nice? If you want to do that, why don't you go do that yourself?

8:54We're actually in the midst of buying pizza and we're going to move back to San Francisco and we're going to do that. Yeah. It's hilarious to think about like today, given where both companies are like, yeah, you know, we've got Starbucks, but now we're not going to do the whole coffee shop thing. We're going to go do pizza. Yeah. Faith is and truth is stranger than fiction sometimes. So Howard actually leaves the original Starbucks in 1985 and he starts a new company pursuing his dream of what he saw in Italy of cafe shops that serve coffee and serve as meeting places in cities. And he starts a new company, calls it Il Giornale, and models it after his Italian experience. So he operates this company for a couple years, grows it in Seattle, has a fair amount of success. And then in 1987, two years later, he approaches the Starbucks founders again at this point, they're focused on pizza and still enroasting down in San Francisco. And he offers to buy the Seattle retail locations.

9:52that are still called Starbucks from them, and he does, and they agree to sell it to him for $3.8 million. Shultz buys the Seattle retail outlets, merges them with Il Giornale, and recrissons the company, the Starbucks coffee company. So David, did he have the $3.8 million liquid to be able to make that purchase? Dan's over here shaking his head. Yes, so this is where I wanted to bring Dan into the story. How did this transaction, the first one, long before the IPO come together?

10:21Well, I didn't actually know Howard until 1991 and that's a story that I should tell but the way the transaction came together is Howard at the time was a 30 something very determined young man and he went to I think the number was about 250 people before they said yes, and that was for real journal.

10:47And then it was easier to raise the money for Starbucks, but no, he was a poor kid from Canarsie, Brooklyn. So he went around Seattle and met the angel community, which was obviously very much more focused on traditional businesses than tech businesses at the time. And he scraped together the 3.8. In fact, one of the stories that is...

11:13largely not told was that there was a group of businessmen in Seattle that had seen Starbucks emerge I think by that time it had seven stores and They weren't sure that this young 30-something-year-old kid was the right guy to buy Starbucks so there was a Movement on the side to see if they could put in quote an experienced person and they were gonna an alternative bid for Starbucks but as has happened many times in the last 45 years Howard prevailed and was able to line everybody up and buy the company and I think Starbucks coffee company started with 11 stores in 1987 wow which is so funny speaking as a quote young 30 something myself these days I feel like now that's old

12:11If you're in your 30s, you have gray hair in the tech world. It's the 20 somethings that are the young entrepreneurs right now. But they were looking for an experienced retail operator, but obviously he proved them wrong. Obviously he did. So he merged the companies and the growth was pretty incredible. So it was 1987 when the merger happened and the Starbucks coffee company was born. They did 1.2 million in revenue that year.

12:40The very next year, 1988, they did 10.2 million in revenue, so almost 10x in one year. But that was because of the combination. Ah, that was because of the combination. Okay, still even then, for the next basically five plus years, they practically double revenue every year, which in a bricks and mortar retail business is hard. Yeah, and it looks like 89, they had almost 20 million, 90, they had 35, 1991, they're up to 57.6. Dan, how did they do that?

13:09What was the driver of the exponential revenue growth for them? Howard was from the very beginning aware that Starbucks really was in two businesses. One business was operating these retail stores and the other was developing a pipeline of these retail stores. So from very early on he focused on hiring ahead of the curve and developing a infrastructure to visit.

13:38and then ultimately build a whole fleet of stores. You know, when I first saw it, I was really struck by the cauldron of consumer passion that people had around Starbucks. And he kind of knew that. And so his whole mindset was, I'm going to build a company that's going to be the development co of Starbucks. And was it sort of like a...

14:01Bezos type mindset of every dollar that comes in. We're going to aggressively reinvest in new store growth. Or how did they so quickly open so many new stores? Well, he raised a lot of equity. And that was the problem then of retail businesses like that. Then they required a lot of equity. And what's funny now by current standards, he did raise a lot of equity back in those days. He raised over 30 million dollars in equity before going public, which was a lot. But now Looking at the tech companies that Maveron and Madrona and the Lake Fund, that's maybe your series A and your series B. The scale has changed dramatically. I think Starbucks raised about 250 or 300 million in equity and total, but for it kind of flipped around and the cash flow generation of the existing store base was greater than the incremental amount of cash required to build new stores. And that's including the IPO. That's including the IPO. Wow.

14:59But no, Howard, I would say is very, very different than Bezos at the start one of Howard's key constituency was his employees and that came from Howard's background with his dad and the fact that his dad didn't have health insurance and so as a result of that Howard was fortunate enough to have a business model where he invested in his people and his people nurtured relationships with customers and so Yes, there was a ton of money invested in the new stores, but things like healthcare for, they called it being stock back then. Yeah, and this was amazing. I mean, every employee in the company from part time Breast is on up, not only got health insurance, but also got stock options, got equity in the company. And one free pound of coffee per week still happens today. It is really incredible that they've managed to preserve that at scale.

15:57I mean, when they announced things, I think it was two, maybe three years ago, but announcing the program for all partners, Starbucks doesn't refer to the Bristas, but every employee is a partner for all partners to be able to attend an online university, ASU, and opening that up to say, you know what, for all of our partners, we're here for your continued growth in education, and we're going to continue to reinvest in you. That's one thing that's really nice to say and very possible, not at scale, and it's just incredible at the scale that they're doing to keep it up.

16:23Particularly when companies go through traumatic periods where everyone questions what are the values of the company which Starbucks had right? I mean I don't want to jump way ahead too much, but so Starbucks hasn't always been the absolute behemoth that we know it today 100% I think that is the story of resiliency tenacity whether or not it's Apple or Starbucks these are not straight lines or Amazon from our episode with Tom talking about Amazon and After the IPO and during the post internet bubble crash, I mean, you could have bought Amazon for the equivalent of five bucks a share. Incredible. Yeah. Dan, I wanted to bring you in here. So the company's growing incredibly fast leading up to the IPO for any company tech or otherwise. So you met Howard in 1991. How did you in New York hear about what was going on out here in Seattle? And how did you meet Howard?

17:21this relationship start that would lead to so many things over the years. Well, as it turned out, I was working in our Los Angeles office at the time and a partner of mine from New York called up and said, there's this coffee company and we have to go visit it in Seattle. And I said, coffee, you know, what are you talking about? How could that be a fast growth business? Because in those days, folders and Maxwell House, and those branded cans of coffee just terrible was a declining business and this guy named Bob israel said to me and trust me let's go to Seattle and I kept struggling to try and understand how this could be a growth business when I first heard him talk about it the only frame of reference I had for coffee retailers was those Greek coffee shops on the corner in Manhattan that served those blue and white cups of coffee

18:19and anyhow, I came up to Seattle and I will never forget the time. It was an August day in 1991 and I took a cab in from C-TAC. And by the way, everyone in the audience might be puzzled at, you know, how could you not check out a company? There was no internet there. You had to literally come to Seattle. Exactly. And unless you knew people in Seattle, it was super hard to...

18:48experience the visual or the what Starbucks was so you literally had to come to Seattle at the time I think they were in Seattle Portland and Vancouver but anyhow I remember getting in the taxi vividly from C-TAC and taking a ride to the hotel and me asking the guy I hear there's a lot of coffee in this town which coffee shop to you go to and he said oh there's a ton of coffee in this town and probably versus today there's one 20th of the number of coffee stores but he says there's a lot of options but I always go to Starbucks and it's the best and then I check into the hotel and before I go upstairs to my room I asked the woman behind the counter I got to get a cup of coffee tomorrow where do you recommend and she said oh there's lots of places but I always go to Starbucks and here's the spy so I woke up the next morning and I always had a principle that I would never not visit the company stores that I was calling on.

19:48So they sent me to the kiosk in city center that's still there over on 5th Avenue just a kiosk not the full store experience it was a kiosk because there was no store near the hotel huh there was so under penetrated versus now and so I sat there for about 45 minutes and people were lining up for this coffee and I was like you know why is this coffee so great and I wasn't a coffee drinker at the time and it was kind of one of the first times I ever had coffee was that day. And so we headed over to Starbucks. And for an hour and a half, Howard just talked non-stop. And he was talking about the business model. He was talking about his people. He was talking about his customers. And this kind of passion that was completely intoxicating and contagious. But I was an investment banker and investment bankers have to sell.

20:45If I couldn't talk I couldn't sell. And I was kind of frustrated because at the end of an hour and a half literally he looked at his watch and basically he made it clear to me that it was over. He closed up his notebook and started walking me to the door basically. And I had just been overwhelmed by this incredible experience about there was about passion but most importantly for me.

21:12It was about a guy who understood that his business was more than his shareholders. He talked about his customers and he talked about his people in an incredibly compelling way. And I was just really struck by that and hadn't really heard that prioritization of people first, customers second, shareholders third from anyone. And so there was a long hallway in the old Starbucks headquarters, which is down near Airportway South.

21:42And he walked me out and in the middle of the hallway, he stopped abruptly turned around and he said, do you know what the problem with investment bankers are? Meanwhile, you haven't got no word in, right? Where do we begin? I could not have gotten a word in. And I said, excuse me. And he said, do you know what the problem with investment bankers are? And I had no idea where he was going at this. And he said, there are no mentions.

22:09investment banking. I love it. And in 1991, mench was not a word in the urban dictionary. Just in the Yiddish dictionary. There was only in the Yiddish dictionary. And that was not widely circulated in 1991. And so I was like, who is this guy saying this? It was really incredible. But to his credit, he gave me the investment banker, the keys.

22:38to getting their business. Well, wait. So was he implying that you were one or was he implying like from there you had to form some relationships so he could get some data on you? Like how did that go? Well, so he was implying that he hadn't met one as an investment banker and that I had the opportunity. He wasn't convinced yet, but he was going to give you a shot. He wasn't convinced at all. And I wasn't convinced that I was going to get a shot. But I remember taking a plane back from Seattle back to LA and In those days, air phone, it was called was super expensive and I spent the whole trip on the air phone talking to all my colleagues saying I had just discovered this incredible company. But what happened fast forward is occasionally came to LA and over time, we just started spending more time together. And in those days, it was harder to get references and he spent a bunch of time with a bunch of different firms.

23:36and kind of narrowed it down. The whole selection of the investment banker is a whole nother story, but it's not really related to tech. It's related to human psychology. But I was particularly fortunate that in our firm, as David said, was part of the IPO, which was an incredibly interesting experience. Basically, the beauty contest went on in the end of March, beginning of April of 92.

24:03and the markets were particularly slow back then. And when you say the beauty contest, what do you mean by that? Over a two day period, the company invited six investment banks in to quote, pitch why they should be part of the IPO. And it was always going to be a small IPO. So it was pretty clear that there were going to be two investment banks, maybe three max.

24:33And there was a bunch of different vectors of which they would make their choice. The chemistry with the people, what the industry specialization was of the people, what the track records of the investment bank were, the trading history. They sent us this seven or eight page checklist that we had to submit the answers in advance. When we got there, they would take you through a tour of the roasting facilities.

25:02We didn't know it, but we were being judged as to who was really interested in the roasting facility versus who was really just there to pitch the IPO. So Howard's assistant at the time, a woman named Laura Moy, Laura took us around the roasting plant and she was making notes that she then backfed to Howard about these people or jerks. And these people are really interested in what we're doing because they were trying to parse through.

25:29who had the heart and the passion and the connectivity with the company and a few months after this Howard told me that they dinged us because we showed up in a limousine because we had five or six people and there were no suburban back then so we showed up in a limo and that was a negative everything was being scripted in this beauty contest which was really interesting and it was an hour and a half presentation and it was a committee of Howard the CFO at the time or in Smith and two directors and it was those four that were gonna make the choices to who to pick between the six possible ones and the two they eventually picked and The company was quite thoughtful and discerning a company like Goldman Sachs was interested in pitching but Goldman kind of said hey

26:26We'd like you to come to New York and meet all of our senior people, but they can't come to Seattle. So boom, they got dinged because they couldn't bring their senior people. Not no like love service there. Exactly. Yeah. All right, listeners. Now is a great time to tell you about a long time friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would not and you're done.

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28:27It's hard to imagine today, but you know as we talked about it and sort of the intro to the history and facts Starbucks today is a verb. It's a noun. It's on every corner in every city in the entire world But back then this was small fry as far as Goldman was concerned, right? I mean even the IPO which we'll get into in a sec prices the IPO priced on June 26th 1992 at a roughly 225 million dollar market cap which was More than that it is today, but these were still very, very early days for the company. Oh, 100%. I mean, there might have been 80 stores, but the visibility of companies was a lot less back then. You have again, you don't have the internet. You don't have dedicated news sources about business. So it was harder to discover these companies, you know, something like retailroach.com where you can go.

29:22and see every perspective, every video of every IPO, that didn't exist. So the underwriters on Starbucks, the lead underwriters were our firm and Alex Brown. And unless you had accounts there, it was hard to get a prospectus. And so the access to information wasn't what it is today. And part of the reason why the company went public, frankly, was the visibility of going to a bigger platform.

29:52In fact, in the months following the IPO without getting ahead of ourselves, the comp store growth significantly increased because they realized the successful IPO would equate to curiosity amongst customers. And of course, one of the reasons to IPO, not always the greatest reason, but for the visibility hit that you get from it. You know, along with raising the capital and getting liquidity for your shareholders, you certainly get that buzz for, you know, a few weeks or a month around the IPO, like we're seeing with Snap now.

30:22Dan, what do you think the competitive mode around Starbucks is? What is the defensibility? Why can't any mom and pop shop knock him out of business? I think there are probably two competitive modes that have been around Starbucks since the beginning. The first is Howard. I would say Jeff Bezos is a competitive mode. I would say Steve Jobs is a competitive mode. These companies are willed into existence through ups and downs because of the resilience.

30:51the grit, the determination and the ability of these founders. I think that's super important. And then in terms of Starbucks, specifically, I frequently talk about the psychological contract that Starbucks has with its employees. And how the strength of that psychological contract manifests itself in the psychological contract between the employees and the customers. And so Starbucks is an incredibly retail facing consumer facing business with 26,000 points of distribution. Wow. And even if you're doing the mobile order and pay, you show up and physically see the barista. I think that certainly Howard thinks the product is much better, but I think if you talk to a hundred people, some might say yes, some might say no. The real differentiation and how they have withstood the competition is because

31:49of the commitment of the people, which then made Starbucks become in customer's mind something bigger than just buying a cup of coffee. And in the annual meeting this week, they talked a little about using their platform and their scale for good. They talked a lot about that, actually. And that's just been a theme that Howard has used for a long time. In just a second, we'll wrap up the history in fact with the IPO itself and then talk a little bit about Starbucks evolution after that. But I think this is something that's super clear with going back and reading the S1, which also was super fun because it came out before the internet. So you have to do some rooting around online to find it. We'll link to it in the show notes. But Danny mentioned Howard, Jeff Bezos, Steve Jobs being moats. I think something that's common to all of them and really comes out reading the S1 is

32:45How deeply Howard understood and the company understood customer loyalty, especially, it seems obvious, but for thinking back to when they started Starbucks or when Howard started El Gio Nale, the idea that you would go and buy your coffee either to take away your drink at a store in a city, that was just something nobody'd ever thought of. It was just you made it at home, but creating this place and this experience where people are going to come back again and again That's what enables the business to work, enables them to invest money in opening the store, invest money in marketing, because when you acquire that customer, they're going to be coming back again and again and again for their lifetime. Yeah. And I remember the research at the time of the IPO was that the average engaged Starbucks customer came 18 times a month. It's accurate for me. Yeah. I mean, that compares favorably with apps today, with like Facebook. Exactly.

33:44I think the other thing I would say is if you know you have 18 opportunities to exceed your customer's expectations or flub it, everything matters. And so your attention to detail and your earn it every day attitude becomes present. I'd like to go back before we leave the IPO just one anecdote. So in an IPO and it's still remarkably similar today.

34:12The management of the company goes around the country and depending upon the size of the IPO perhaps the world and pitches to investors and they do it in two formats. One is group breakfasts and lunches and the other is one-on-ones and the one-on-ones are for the biggest investors fidelity to your own price capital research and so in the Starbucks IPO there were 60 one-on-one schedules over a two week period.

34:42and it was eight or nine days in the United States in a few days in London, Paris, and Geneva. That is a lot of meetings in a short period of time. Sixty- one-on-ones, and so Howard said to me before, right as we were starting, he said, how many of the sixty do you think I'm gonna get? And I said, what do you mean? And he said, well, of the sixty meetings that we're gonna have one-on-one, how many do you think will convert to orders?

35:09And at that time, I had probably done 10 IPOs. And, you know, I said 80 or 90% and he said, I'm going to get 60. And I said, Howard, not 60%, 100% get all 60. Exactly. And I said, you know, Howard, there's lots of reasons why people don't invest, including the fact that the IPO is so popular that they might not get enough stock to be meaningful to them. So don't hold yourself accountable to 100% hit ratio.

35:38And he said, I'm going to get 100% and this is only raising $25 million, right? No, they raised 40 something million part of the offering was a secondary. I see. Not a good sale. No, not a good amount of money, right? They're just not that many shares go around. Definitely true, but everything was smaller back then. So 40 was not a necessarily small IPO in 1992. I see. But as it turns out, He got 59 of those. I'm sure it kills him to this day. Well, no, the story gets better. There was a guy named Mickey Strauss and Mickey Strauss was at a firm called Weisspeck and Greer. Wonderful man may rest of peace. And Mickey decided not to buy it at Weisspeck and Greer. Within nine months after the IPO, who was the largest shareholder of Starbucks Weisspeck and Greer?

36:36And the lesson for your entrepreneurs out there is what goes around can come around. And Howard was so frustrated that Mickey Strauss didn't buy on the IPO, but he then became in the public markets the biggest buyer. So the lesson for the venture capitalist is if you really want to invest in a company, you should turn them down the first time because then the entrepreneur is going to want to get you the second time. I earned that right in the A round.

37:05Yeah, that's such a great story. So we go around the world and it's finally time to price. And the offering was over subscribed eight or 10 times as I remember. And we had filed at 14 to 16 dollars a share. There's literally like 10 times more interest in the IPO than there was room. Correct. Wow. What's normal? Well, and snap and some of these others, it's a lot more. Okay. You know, it's zoolily. I think we had 20 times interest because what ends up happening is if these things get hot, then everyone acts like they really want it, but maybe they don't really want it for the long term. They want it just for the flip. And so it's very hard to gauge real demand versus flipper demand. But what ended up happening at the pricing was the comps went down 30% if there were comps between the time we filed and the time that the company priced.

38:04And by the way, that was so different than you couldn't file confidentially. When we filed, everyone saw our filing. And it was super bad because if you couldn't complete an IPO, then everyone knew that you had filed and you couldn't get it done. And that was quite a taint. Yeah. But in terms of the pricing, the deals way over subscribed and the capital markets guys recommended that we priced the deal at $16 a share.

38:32High end of the range and Howard said no, we have to price it at 17 and the capital markets guys from both firms recommend we price it at 16 and so we had this very awkward phone call Where these wise guys who somehow couldn't really tell you why it was 16 but they felt that it was 16 they kept saying it had to be 16 and Howard kept saying it had to be 17 And it was a difficult spot for me because as the investment banker who's in corporate finance and kind of representing the client, I was kind of pulled toward Howard yet the colleagues in my firm were saying 16, 16, 16 Howard relentlessly prevailed and we priced the deal at 17 and ultimately the stock traded to 2021 that day and kind of the rest is history.

39:32It's gone up 183 times. So you prices at 17, which was roughly a 225 million dollar market cap. And then today Starbucks has a 83 billion dollar market cap. So that's about a 18,000 percent return since then. So the selling shareholders in the IPO probably should have held on to the shares. Yeah.

39:58But like every other early company, they might have had a fiber at 10X at the offering. And so for the apples, the Amazon, the Starbucks, those turn out to be incredibly bad sales. But you have to have patience and tenacity, and you can't be thinking of yourself as a trader. Yeah. And then before we move on from this, what are the implications of pricing at 16 versus 17, both for the company, for the people buying those shares, for the investment bank?

40:27Why was that a contentious issue? Well, the pricing of an IPO is a very complicated thing because you have multiple constituencies. For the company, clearly, they did get more money at 17 and in theory, for the flippers, they would get less money the higher you price. And so I think from the very beginning, the investment bankers are trying to find what a nice bump is but not an incredibly overwhelming bump.

40:57Because it feels like you've left too much money on the table. Yet if it breaks the IPO price, then it becomes a negative story. Right. It's damage goods. Exactly. And one of the things that I always used to counsel public company CEOs is don't let yourself or your people be judged by whether or not the stock today goes up or down. It's you're building a company. And in the long term, they will correlate. But in the short term, they can frequently widely diverge.

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43:05So 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. I want to get into maybe a one-off section if you guys are willing to experiment here. We introduced on the Snap IPO a new section narratives, but one I think that doesn't make total sense and would be really hard to do the research given how long ago the Starbucks IPO happened.

43:34The narrative section that we're going to do going forward is what the company's narrative is that they're trying to tell during the IPO process and what the narrative is in the press and the market around it. But what I think is really interesting, especially for listeners of this show, is that there has been a narrative that's emerged over the last 10 to 15 years around Starbucks. And it's a coffee company, it's a retail company, it's a real estate company, but it's also a technology company.

44:02And I think that's especially for you, Dan, being a technology venture capitalist and a consumer-only technology venture capitalist and founding Maveron with Howard. How has Howard's thinking and the company's thinking evolved from those days when there was no internet? You could only find out about Starbucks if you saw them on the street corner to the days today when you can request your usual mobile order on your phone or from Alexa and then pick it up in the building of your lobby or have it delivered to you.

44:31Yeah, it's changed a lot in 1998 when we started Maveron the whole thought was holy cow technology is integrating into consumers lives in unprecedented ways So how will it change the business models of these companies and I think in 1998 a company like Starbucks or even in 2008 most companies in the retail business thought of themselves as using IT as a way to manage their business but not really as a way to attract customers and I would say in the last ten years with the advent of the web and the power of social media you saw the eye-opening opportunity that social media can drive traffic into stores and that was the first aha that a lot of companies had and Starbucks

45:27Maybe was a little more advanced because with Maveron and Howard was on the board of eBay. So I think it came from that regular retail world, but he was exposed to consciously exposed to technology, perhaps before other traditional retail companies. And I think now I find it kind of somewhat humorous that people refer to Starbucks as a technology company. I would say it's a incredibly powerful consumer company that's utilizing technology to integrate into customers lives. Well, I think it's interesting though, you're right, it is a consumer company, but you mentioned JC Penny, you mentioned Sears. These were its peers for a long time that haven't evolved. Obviously co-founding Maveron with you being on the eBay board, Howard was for a while on the square board. I guess the question is, what along the way

46:24Do you think were some of those key moments when Starbucks built that capability and that part of that transformation into being a technology company when some of its peers didn't Well, there was a guy named Chris Brazil who was the first social media person at Starbucks and He's now in marketing at EA, but anyhow Chris was kind of before his time at Starbucks and just kept pounding on the opportunity that social media had to be an awareness vehicle and a traffic driver. He didn't have much budget but he kind of relentlessly kept on it and I think Howard started seeing that through social media they could literally send people into the stores and if you think about retail one of the key

47:17metrics that every investor looks at is same-store sales and in fact i was privileged enough to know a guy named Jerry Gallagher may rest in peace who was the inventor of same-store sales and i asked him to join the pop belly board with me which he did but anyhow the concept of same-store sales became a valuation driver for these retail companies so at the beginning the first aha was if technology and social media could drive traffic and incremental traffic into the stores then that was worth investing in but as recently as five years ago many traditional food and other retailers really had a hard time investing in technology because they couldn't really see the return they felt it was cool to be on social media but they didn't want to spend the money.

48:10Yeah, I think there's a good tech trend to extrapolate here is the shift from technology as a cost center in the IT spend to a revenue driver and core part of the product organization and the driver of part of the innovation of the company. And I mean, we look at some of the things that have happened with Starbucks, they've had a lot of experiments with other technology company partnerships and bring things in that weren't huge. I mean, there was like that 2012 square deal.

48:39They had that early partnership in the mid 2000s with Apple and iTunes and co advertising there and then they still have I think the song of the week and the app of the week with the free download card in the stores and the thing that ended up really like working in my mind is they have incredible loyalty due to their app or manifested in their app. They were one of the first to pioneer putting those gift cards in the app and now I don't think I've actually used cash or credit card at a Starbucks to buy anything other than reloading my card so I can get my stars they've always been pioneers in loyalty and then using technology as a lever to strengthen the loyalty program in my mind at least that's the thing that they've really exemplified the best in music technology to have any retailer on earth yeah it's funny that you say that because twelve years ago madron and us invested in a company that had order ahead and it went flop what company does that

49:38I've forgotten the name of it. But we literally lost ten million dollars investing in a business that had order off your cell phone. And at the time we had a test going with five or six Starbucks and they didn't think it was relevant. But the complication of understanding this stuff is they didn't think it was relevant partly because the smartphone proliferation wasn't as wide as it is now obviously. And the feature set wasn't as compelling as it was. So I think the stored value component coupled with the order ahead became kind of a compelling feature set. And now I would argue that the suite of products that Starbucks has in mobile order and pay is being clamored for by all sorts of other restaurant and retail companies. Maybe we can mark the official transition and detect the use of the show at this point. We're sort of in it.

50:37Something that we talked about a lot on the show and I'm just such a huge believer in technology is it has to be in service of a superior customer experience and just doing tech or just doing mobile ordering for the technology aspects isn't going to work and this is what I think Starbucks has executed so well on in the last few years is doing order ahead in the app with my stored value.

51:03It makes the experience better because I get my coffee faster, but I still interact with the people there and my name is still written on the coffee and it's wonderful. It's just, I don't have to wait in line. And so it's better as opposed to forcing you to jump through technology hoops just for the sake of jumping through technology hoops. Yeah. And where I've had the most luck working with technology companies is companies that have a great compelling product, but can put themselves in the shoes of the retailer.

51:33or the consumer company and try to understand what that customer experience is as opposed to just kind of selling it based upon feeds and speeds yeah exactly where we've had no luck is where tech companies think that well you know these retailers just don't get it they don't understand the big idea and it's that alchemy of building cutting edge technology that thing can be adopted relevant and embraced by these companies who are responsible for nurturing the relationships with their customers. Great point. Well, before we go whole hog and detect themes here, it's worth stopping for a moment in our what would have happened otherwise section. And we've talked about in at least before the secondary and that initial IPO, they raised $25 million. Did Starbucks ever consider doing that on the private markets like we see a lot of today? I mean, obviously they needed

52:26a capital infusion to continue opening the stores at the rate that they were doing that but I guess the two possibilities are what if they grew more slowly would starbucks be the way it is today and then two could they have raised that money in a different way what if they had grown more slowly they probably wouldn't have the domination that they have unlike a amazon starbucks kind of one market by market and so it was super important for them in their mind to get to markets quickly and eventually build the resources where they could go into a market and kind of own it. And they did that in a number of different ways. I remember when I was privileged enough to work with Starbucks and buying a company called the Coffee Connection in Boston. And it was a venture-funded company by a guy named George Howell. I was funded by a bunch of ECs and we basically told him, you know, we're coming to Boston. Were you going to either steamroll you down or you could sell to us and they did.

53:23And same thing in London, where Scott Svensson from Mod Pizza sold what he called the Seattle Coffee Company to Starbucks, which served as the footprint for Starbucks in those stores. So it's in Howard's DNA that grows, grows, grows. And I think part of that is to give back to the partners and create opportunities. So I don't think in the early days, there was much of a chance that he was going to Slowdown, but you had asked it as a two-part question. I'm sorry. I lost the support part being raised in the private markets. I don't think many of your listeners can comprehend the vastness of what's happened and the changes in the capital markets over the past 25 years. Yeah. There were no, not even late stage quote-unquote, but there were especially no, well, they probably weren't even very many hedge funds period, but there certainly weren't any of them that were investing in private companies. Right.

54:21There were a few crossover funds, but the amount of capital doing that was small. And so Starbucks did a $20 million raise in December of 91. And that was a big race and they used DLJ as an agent for it. So the fact that you have 180 multi billion dollar or more private companies today, that's probably 178 more than there were in 1992. So They didn't have access to the capital that private companies have today, period full stuff. There you go. Well, that's a great lead in to going hard in tech themes here. It's shocking to think of the lack of information and the significantly fewer options available to anyone, to companies, to investment bankers, to venture capitalists in those days. And we see very different companies and very different market dynamics falling out because of, well, the internet.

55:17You know, I think it's so cool that in the coffee industry, there's this concept of waves, right? Everybody talks about third wave coffee and for listeners that aren't steeped, quote, unquote, in coffee culture, the first wave of coffee was the Folgers and the Maxwell House that we talked about. In the beginning of the show, the making your coffee at home, you know, I perhaps on like many of our listeners, I'm old and a perhaps dating myself a little bit and I remember growing up, my parents having the TV on in the morning and hearing the jingles like the best part of waking up as folders in your cup and the good to the last drop Maxwell House. It was never true. It was never true. But then Starbucks, that was the second wave. And that was the first time that this sort of orthogonal business model had emerged in coffee, which was this idea of coffee as an experience, not just as a beverage. And

56:15Starbucks obviously rode that huge wave into becoming orders magnitude bigger than folders in Maxwell House ever were. And then today you have the third wave coffee, which is the sort of disaggregated, you know, the artisanal, brew, small batch roasting and brewing local coffee shops. But I think there's this great analogy between all of that to the tech industry and the internet. The first wave being AOL, right? Everybody remembers the jingle. It wasn't nearly as good as it was supposed to be. And the second wave being The truly compelling version of AOL, Facebook and social. And then we talked about social media earlier. And I think of Starbucks being the social place, Facebook being the social place, the insight being that once you bring human interaction into a market, you can completely transform it. And then you have the third wave today of the further disaggregation of everything happening on Facebook that, of course, Facebook is a big part of with.

57:11messengers and WhatsApp and Snapchat and Instagram taking the photos but basically creating through tech through data but also through humans, you know, matching the best of each individual element for you personalizing it to what you're doing. So would you summarize that as first wave being one size fits all but bad? Yep. Second wise being one size fits all but good with your friends with your friends. Yeah. And then the third wave being not one size fits all truly this Broken up small groups, small batch, highly targeted, highly personalized experiences. That would be a summary of my coffee drug-induced fever dream. Well, I guess where I would go is we've been spending a lot of time at Maveron thinking about voice and how voice facilitates impulse. And I think if you step back, version one was Amazon in...

58:0595 96 where you had to intentionally go and it was hard and in many ways the digital ordering experience has gotten better. It's become more mobile but mobile is only one step toward impulse and we were fortunate enough to be involved from the very beginning at Zoolily which was another kind of impulse experience somewhat of an intersection between QVC and traditionally commerce and the internet.

58:33I think voice is the next frontier. Part of that is obviously artificial intelligence. But at the Starbucks annual meeting this week, they previewed, you get into your Ford car and you order your latte from there and you pick it up on the way to work. Oh, awesome. And so I think you're going to see voice on ramps adopted within e-commerce situations that are going to change the way and how we buy and seems like such an exciting time.

59:02to do that. But you have to do it in a way that reinforces kind of the brand and the buying experience. Dan, I think that's super insightful. I think that's totally right. And I think that, you know, I have the Starbucks app on my phone. I pull it out when I get to the register. I often don't think it's worth it to pull my phone out when my hands are cold in the Seattle weather and punch in there. But If there were, and I know this is a problem on Apple side, not Starbucks side, but I could pull out Siri and say three minutes, Owen Milk Latte, Starbucks third and Madison. And it was just there. I think that's when you break out of that uncanny valley and it actually slots right into your life in a convenient way. Yeah. Everything has to be in service of creating a superior customer experience. And part of a superior customer experience is not taking your phone out and your hand and pushing the button when it's gold out.

59:55All right, on to grading the IPO. So the way that we do this and dance smiling, guests can participate or not, but would love to get your commentary is as we started with acquisitions, we would grade based on was that a good idea for the acquirer to acquire the acquirer. Was that a gigantic money pit for them or did they actually manage to turn that into a one plus one equals three? And then as we shifted over to IPO is the way that we think about it is.

1:00:22What did that event enable that company to do on all three of the pillars that I mentioned earlier of notoriety and brand for the company giving liquidity to those early investors and primarily what did they do with that capital infusion and before diving into it it's worth recapping a little bit that you know Danny made that great point that the DNA of the company and of how it was growth.

1:00:46And they needed to open more stores they needed to go into more markets and the question that's been hanging in the back of my head is were they in a highly competitive landscape like did they need to rush into markets and beat out competitors because there were other copycats coming in and starting these coffee chains that were getting brand loyal or could they have afforded to buy their time a little bit more and just reinvest their profits. Starbucks IPO even back then.

1:01:13When you had a successful IPO in a particular sector, it drew a lot of copycatters. So they went public in June of 92. By the fall of 92, there was a couple of companies that were rolling up different existing coffee chains. Gloria Jeans and I forget the other ones, but many of them have gone by the wayside, but they were trying to put mass together. And what they didn't realize is that they really weren't focused on execution they were focused on creating something that was IPOable but not exceeding customers expectations every day but I would think that part of the reason Starbucks is where it is today is that Howard was impatient and always wanted to grow and as a result of that he got to markets quicker than he might otherwise and you talked about Pete's I haven't seen the numbers for Starbucks San Francisco

1:02:11but I would say that whether or not it's blue bottle or peets or fills or fills the fact that they didn't have the dominant position the way they have it in Seattle or LA enable these smaller competitors to pop up. You know I remember making my first investment in Starbucks within that December 1991 round and you saw this cauldron of consumer passion in a market by market basis and you really asked yourself.

1:02:39Is the East Coast any different? Is it Atlanta? Any different? Yep. And if you came to the conclusion, no, then it's okay. So how quickly can you get there? You mentioned when a company would IPO back in those days, you know, would attract coffee cats, and it reminded me of something Brad Stone said on our episode about the Uber and DD merger, that there are folks in China, especially, but all over the world, that are just reading tech crunch. And as companies raised their first round of venture funding, they're copying themselves.

1:03:08Funny how the acceleration has happened. You know, I think one of the dominant themes of the IPO and lessons from it and from Starbucks and Howard is that focused like you just said, Dan, on exceeding your customer's expectations at every opportunity. You know, and I just look at companies today that are doing that well versus ones who aren't. And again, thinking back to the UberDidi episode and even since that episode, all the challenges that have come out about that company.

1:03:35Not to pile on. Uber has done many, many amazing things, but man, it just is really come out in the culture that like the culture there is not about delighting your customer and exceeding their expectations. And I just think about the competitive bloodbath that we saw in that episode in China and that is playing out all over the world and how Starbucks was able to avoid that even as the copycats popped up by a growing fast, but also be just keeping that core mission of always exceeding the customer's expectations.

1:04:05Yeah, well, I think it starts by just the fundamental belief that at these 26,000 points of distribution everything matters. And you got to provide training and you got to invest in your people such that they feel good about themselves and therefore they feel good about the brand. I mean, they're the brand ambassadors and in many ways I would argue that Starbucks is one of the most difficult daily execution. They have 90 million customers coming through their stores every week.

1:04:34every week. Wow. And they're so visible that every opportunity to screw it up is an opportunity for social media to amplify the message. And I frequently talk to our Maverine companies about relatively speaking, how easy their task is to exceed customer expectations. Because if you have your own distribution, then you just really need to customer service infrastructure that gets what you're trying to do and what the brand says and speaks for. It's just much easier.

1:05:04and I think that's one of the master's of Starbucks but I look at Apple as an example and I look at the Apple stores and I don't know how you guys feel but you know I knew 15 years ago that Apple was onto something when my 70 year old mother-in-law at the time told me how she's making reservations at the Apple store and she just loves it and she's learning so I think it's not a surprise to see Amazon first with the bookstore and then eventually go because it's again Let's take it full circle. Technology for itself is not the issue. Technology for serving customer needs to me becomes incredibly powerful and sticky and dirt. Well said. Completely agreed. I will stop dancing around it and say that yes, very much well said. Obviously I'm biased. I'm sitting in the room here with Dan, but we've gone over this full analysis and I'm going to give this an A. I think for the branding event reason,

1:06:03but enabled them to go into markets and that worked when they spread to these new markets they were suddenly national news and people understood this wasn't this little coffee chain and Seattle on the west coast it was an IPO that people knew about and they had a pedigree and they could move to these new markets with that and then I'm splitting what they did with the capital into idea and execution the idea of what to do with it to continue this frenzy of opening new stores the right way in new markets and moving in was both the right thing to do with that capital and really well executed. I mean, when you look at your stories, Dan, of 59 out of 60 said yes and pricing it at 17, not 16 and still getting that little pop. Not a ridiculous one, but a good one. And you know, I was just pulling up the history of the stock price. I'm just looking at these first few years because I think that's relevant part. There was no like, oh crap moment. The bottom didn't seem to have fallen out. It was like it went to the public markets with a true to the company value and continued to grow from there as the company's value grew.

1:07:03masterfully executed by the investment bankers. I agree 100% on the IPO analysis. But when you say there was no crap moment, there's plenty of times in the history of all these businesses where there are all crap moments. And I think that's another thing that we try to help entrepreneurs with, which is there's plenty of dark days in every business. And I've spent too much time with Howard where People say, you know, how did you know when you were successful? And he kind of is taking a back a little and he says, what are you talking about? I have to earn it every day. We have to earn it every day. Yeah. You know, life's a process, right? It's not a destination. It's a journey. And I think these businesses are tested in different ways. I can give you a bunch of examples where Starbucks was truly tested. It's sitting on the top of the hill now and everyone kind of thinks, you know, it's been a... They've made it.

1:08:02Yeah, but in terms of the IPO, I agree with your assessment. A, I'm an A2 here and not just because we're talking to Dan, like the Facebook IPO is a very challenging one. And we gave that a, well, we gave it two grades, one of which was an A, one of which was I think a C where we both we took a lot of liberties. Anyway, we need to do a bad IPO one of these days soon. It's hard to argue with an 18,000% appreciation since the Starbucks IPO. But for me, the two things taking away from this conversation and you know, your stories and your insights. I'd thought about a lot, but it's the combination of the two, I think, are so powerful and expressed so beautifully within Starbucks and within Howard. It's that Starbucks and Howard had these two equal drives within them, and that one was for growth, then the other one was for exceeding customers' expectations and see, you know, every single time. And I think it's the marriage of those two things that make for the most powerful

1:09:00consumer companies out there. I mean, I think about, you know, and ones that I work with, you know, Dan, we work with together with your colleague David in booster, early stage company that Madrona and Maveron are investors in together. And that's what Frank and Diego and Tyler and the team and John and everybody there, you know, that's what they do every day. They are hyper focused on growth and they are hyper focused on exceeding customer expectations every day. And if you can nail that and sustain that, that's how magical companies are created.

1:09:29And that's in the DNA of the CEO or isn't and I remember the early days of my relationships with Starbucks and as a scrappy investment banker one of the many things that I tried to do was always give store experiences and I was hated within Starbucks because my phone calls at the beginning and then my emails were rooted through the ops department and in Westport, Connecticut at 9 p.m. or 9 a.m. there was a problem and people would go crazy because I would tell Howard and then Howard would tell the head of Ops and then the head of Ops would tell the regional person and the district person and the store manager would eventually get it and people would, oh, you're Dan, you know, we've heard about you. We've heard about your feedback and they would say thank you but and then I contrasted to what happened on Sunday morning and here's the company.

1:10:20As you said 80 billion dollar plus I was waiting on Sunday morning for my coffee at the Starbucks Madison Park and I was stuck behind two large mobile orders physically and so I was waiting for a super long time and I shot Kevin a note Kevin is the incoming CEO of Starbucks. Yeah Kevin Johnson and I kind of framed the problem of and the frustration and I thought that was the end of it. I go to the Starbucks annual meeting and the head of US stores, the head of Adam Bropp and the digital person and one other person all said to me, we saw your email. Thanks for the insight. And it's that one customer, one cup at a time. And that's in the Starbucks vision statement or their mission statement. I wish I had it memorized, but they're going to

1:11:18seed customer's expectations, one cup, one store, one neighborhood at a time. And so there's this incredible balance between detailed execution and yet having a big vision that their employees first and then their customers can embrace. Yep. And after the show, I want you to shoot me Kevin's email and then I'll be able to. I'm sorry, I was appreciate that too. What a great story to wrap on. So we move on to carve out.

1:11:47Yeah, let's do it. So mine is a lot of the time we'll go wax philosophically about some cool burning man video that we saw or some completely unrelated book that we read. Mine is something that I think every single acquired listener will enjoy. And that is an email newsletter called Pro Rata by Dan Primack from the new company Axios. So Dan wrote the term sheet for a long time at Fortune and moved on to help start this company Pro Rato which is.

1:12:13this third wave of email newsletters and there's also a website but I mean the newsletters are where it's at pro rata in particular is great because you get some really good insight by Dan who's a true journalist not to knock too hard on a lot of like tech bloggers but he has the journalistic integrity you would expect out of you know a Pulitzer prize winning you know someone chasing the story for 50 years ago.

1:12:35Really a pleasure to read that and then the cool thing is you get a list of all the companies that have gotten funded today in VC and PE companies have gone public and it really helps me someone that works to create really stage companies. You know identify trends so it's pretty interesting to see what's going on in the world of new company creation. Yeah really good dance work isn't has been excellent for a long time my car about probably also will appeal to I was gonna say all acquired listeners but perhaps not quite all at least those of a.

1:13:05certain generation is a super fun podcast and also fun thinking back to the time of the Starbucks IPO that I discovered recently called the wizard and the bruiser which is a nostalgic take definitely not safe for work by the way so not like this podcast looking at geek culture from the 80s and it just takes me back to my childhood like you know the legend of Zelda sonic the hedgehog you know all the cartoon TV shows Super super fun stuff in these guys are hilarious. So highly recommend. This is my first car about and I was trying to decide whether or not I should be self and grandizing for one of the Maveron companies that I love or not and I've decided to stay away from the Maveron companies. They are all great but we can be self-grandizing or we can be a grandizing for you. So many of the companies they funded.

1:13:58deliver the same kind of growth and superior customer experiences that we've talked about on this show. Well, thank you, David. I hope they deliver the same kind of growth. That's your job as a board member. Exactly. Well, it's the management's job, but anyhow, I'm going to do something that I wish when I was in my 20s and 30s, someone had said to me, because when you're in your 20s and 30s, the table is not set yet. You're still trying to figure out what your table is and how to set it.

1:14:27And there's actually a poem that was written in 1932 by a man named Peter Wimbrill. And the name of the poem is called The Man in the Glass. And I will quickly read the poem because in my mind, it says it all. When you get what you want in your struggle for self and the world makes you king for a day, just go to the mirror and look at yourself and see what that man has to say, for it isn't your father or mother or wife whose judgment upon you must pass, the fellow whose verdict counts most in your life is the one staring back from this glass. He's the fellow to please never mind all the rest, for he's with you clear to the end, and you've passed your most difficult, dangerous test if the man in the glass is your friend. You may fool the whole world.

1:15:27down the pathway of yours and get pats on the back as you pass. But your final reward will be heartache and tears if you've cheated the man in the glass. That's great. Sexist man, you know, it's 90 years ago. So it's really relevant for people, not males. Yeah, and I can say for listeners, one of the first times I met Dan, we were headed a little email exchange afterwards and he sent me that same poem. So I know it's near and dear to your heart and great message thank you for having me guys thanks for coming it's exciting your format and what you're trying to do and help educate people and thank you for having me be a part of it of course all right listeners now is a great time to talk about one of our favorite companies statsig yes there is a reason why the best product teams rely on statsig whether they are iterating on their core product features or shipping AI powered experiences at scale yep in the

1:16:26crazy speed of today's AI world. Shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn.

1:16:38what changes actually created value for customers. And how fast you can use that signal to guide what you shipped next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to Statsig.com slash acquired to get started.

1:17:08Listeners, if you like the show, or frankly, if you didn't, actually, if you didn't, we'd love some private feedback. AcquiredFM.gmail.com. If you did, my God, do we love five star reviews? They help us grow the show, they help us get more listeners, and they help us have more guests on. And quite honestly, what it helps us do is bring on sponsors, and then, like any good growth engine, pour it back into the show and figure out how to improve the quality and make a better product. So, help us do that. Please review us on iTunes, share with your friends, and we will see you next time. See you next time.

1:17:38Who got the truth? Is it you? Is it you? Is it you? Who got the truth now?