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Acquired Episode 39: Whole Foods Market

Acquired Episode 39: Whole Foods Market

Wed, 21 Jun 2017 00:03

Ben and David are once again live on the scene, this time covering the biggest disruption in grocery since… well, sliced bread: Amazon’s $13.7B purchase of Whole Foods Market. We place this deal in context by diving deep into the long, intertwining history of grocery, tech and Amazon, from the infamous dotcom flameout Webvan (domain name now owned by Amazon) to its much more successful progeny Kiva Systems (acquired by Amazon in 2012) to current Silicon Valley unicorn Instacart (founded by former Amazon logistics engineer Apoorva Mehta). One thing is clear: for Amazon and Jeff Bezos, realizing the longterm vision of the Everything Store truly means building the everything store.

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Yep, yep, completely agreed. Podcasting is the new groceries. Yeah, well, good thing we're here on the scene. Welcome back to episode 39 of Acquired, the podcast about technology, acquisitions, and IPOs. I'm Ben Gilbert. David Rosenfall. And we are your hosts. Today we are coming in hot with the just announced Amazon acquisition of Whole Foods for $13.7 billion dollars all in cash. Are we ever? We are not planning on doing an episode today, but David and I woke up saw the news and absolutely could not resist. We live for this. So here we are. We do. This 4 p.m. PST on Friday, June 16th. The day the acquisition was announced this morning. And hot takes flying all over the internet. David and I do not purport to have any of the answers, but we do have hot takes of our own. So in true acquired fashion, we will probably be wildly speculative. We have no idea what they're going to do with this acquisition. And we certainly cannot give it a grade that we feel very confident about. But it's going to be real fun to talk about. Before we dive in, though, important, important announcement. So Ben's birthday is coming up this week. If you want to get him in present, like me, you should leave acquired a review on Apple podcast. See what we did there. No, seriously. David, get some of my birthday present, too, apparently. I'll write you a review, Ben. But seriously, we have some acquired is growing a lot. And we have some amazing guests coming on this summer. And that's possible because of the growth and the way to keep the growth going is through Apple podcast reviews. So if you haven't, please leave one. We really, really appreciate it. And thanks for being a listener. Well, we do. And now I get to skip my section where I normally ask for Apple podcast reviews. My present to you is giving you a break from this. Perfect. Well, listeners do know that we have a Slack. We're 750 strong now. And it was blowing up today. So if you're a new listener to the show and you want to talk about any awesome news that is dropping on the day that it drops in technology, join us You can join the Slack and be part of the discussion. Our presenting sponsor for this episode is not a sponsor, but another podcast that we love and want to recommend called the founders podcast. We have seen dozens of tweets that say something like my favorite podcast is acquired and founders, so we knew there's a natural fit. We know the host of founders well, David Senra. Hi, David. Hey, Ben. Hey, David. Thank you for joining us. Thank you for having me. I like how they group us together. And then they say it's like the best curriculum for founders and executives. It really is. We use your show for research a lot. I listened to your episode of the story of Akio Maria before we did our Sony episodes this incredible primer. You know, he's actually a good example of why people listen to founders and to acquire it because all of history's greatest entrepreneurs and investors, they had deep historical knowledge about the work that came before them. So like the founder of Sony, who did he influence? Steve Jobs talked about him over and over again if you do the research. But I think this is one of the reasons why people love both of our shows and there's such good compliments is on acquired. We focus on company histories. You tell the histories of the individual people. You're the people version of acquired and where the company version of founders. Listeners, the other fun thing to note is David will hit a topic from a bunch of different angles. So I just listened to an episode on Edwin Land from a biography that David did. David, it was the third, fourth time you've done Polaroid. I've read five biographies of Edwin Land and I think I've made eight episodes of them because in my opinion, the greatest entrepreneur to ever do it, my favorite entrepreneur, personally is Steve Jobs. And if you go back and listen to like a 20 year old Steve Jobs, he's talking about Edwin Land's My Hero. So the reason I did that is because I want to find out like I have my heroes. Who are their heroes? And the beauty of this is the people may die, but the ideas never do. And so Edwin Land had passed away way before the apex of Apple, but Steve was still able to use those ideas. And now he's gone and we can use those ideas. And so I think what acquired is doing what founder trying to do as well is find the best ideas in history and push them down to generations. Make sure they're not lost history. I love that. Well, listeners, go check out the founders podcast after this episode. You can search for it in any podcast player. Most of companies that David covers that we have yet to dive into here on acquired. So for more indulgence on companies and founders, go check it out. Now, David, let's do this. So for the show today, we are of course going to do history and facts as always, but it's going to be a little different than usual. One, because we didn't have the time to do the in depth research that we usually do into whole foods. So it'll be a somewhat truncated history and facts on whole foods, but we'll still tell some fun stories. But we don't think that we can actually give kind of the full analysis and treatment of this deal and what it means without looking at a couple other companies too. So we're also going to talk about web van, key systems and of course, Instacart, which will be a big topic of conversation today and already is in the media given what happened and whole foods being an investor in Instacart. But so to start off, whole foods was started in 1978 in Austin, Texas by a young man named John Mackie and his then girlfriend, Renee Lawson Hardy. And it was originally not called whole foods. It was a natural foods store, you know, mostly for hippies, which they were in the late 70s in Austin. And they called it Safer Way, which was an intentional dig and Safe Way. I have not heard that. That is awesome. It was great. John was on a podcast recently and I think it was in PR is how I built this and it said that they called it then they were sort of hoping that Safe Way would sue them because then it would be like free publicity. But they were so small and insignificant that Safe Way didn't even notice. I think I'd heard in the past that this whole foods is just Texas owned company and it's just shocking. Like growing up, you know, we got one in Ohio. I remember thinking like, oh, this is probably some like San Francisco, like, you know, where are they eating like this? And where would there be like a hippie commune that would inspire this and, you know, keep Austin weird, but shocking that it was in Texas to me. Well, I mean, as we all know, Austin and his stereotypes about it are not always true. But Austin is definitely hippie mecca and wasn't the 70s even more so. But so Mackey kind of basically goes on, he's still the CEO of Whole Foods many years later will continue to be under Amazon. It was announced, but he's basically like the Steve Jobs of grocery stores. So he dropped out of UT to start the company and he talks about kind of when he was at UT, he sort of had this very jobs like experience, you know, like jobs had a read in Portland when he was there for a semester. You know, Mackey kind of didn't like the structure of college and having to have a major. And so he just decided he was going to bum around and take whatever class is interested in and he ended up. He's like exactly the Steve Jobs. It's exactly the Steve Jobs experience. And he ended up through kind of that route getting involved with a vegetarian co-op on campus. That's where he met Renee and started getting into food and natural foods and Whole Foods. And the two of them had this idea that they should start their own store. So they borrowed $10,000 and then they raised another $35,000 from investors and they start safer way. And they put it in an old building and the store was on the first floor and then they had a restaurant on the second floor and then they lived on the third floor. Oh, that is awesome. Yeah, super cool. So they do it for a couple of years and it starts really working and they get lots of business and people really love what they're doing. But of course, because Austin's a hippie town, there are other natural foods markets in town. And there's one called the Clarksville Natural Grocery. And that was run by two guys, Mark Skiles and Craig Weller and Mackie, the Whole Foods CEO, kind of admired what they were doing. He approaches them about merging and becoming a bigger store combined together. So they do and then they had to rename the business and they renamed it Whole Foods Market and thus Whole Foods is born. Yeah. It's funny. We've done other ones that have origin stories in these small mergers too. You look at Illzurnaal and Starbucks, kind of a similar thing. Very, very similar here. He's, Mackie's basically the Howard Sultz and Steve Jobs combined of the grocery business. So they do the merger and then a couple years later, they start expanding. They first elsewhere in Texas and then they go to New Orleans and they buy a company there called the Whole Foods Company. And then basically they kind of learn that growing through acquisition, there are lots of local, natural food stores throughout the country, especially in more liberal hippie areas. It is so true. It is like shockingly true. I did weird little anecdote but I was doing this bike trip up the coast of California last summer and we'd get into these little towns that had, like, it became the running joke of the trip. The little towns that had like three or four buildings and it seems like there wasn't much going on there but have like an incredible natural market. And it is amazing like when you get into these, you know, if those were any bigger, you could totally see the Whole Foods just gobbling that up and it being, you know, right under their brand. Yep. And that's really how they grew by acquiring a lot of those little stores and little chains and then slowly over time turning them into Whole Foods and into, you know, the big, big box store that Whole Foods is today. But kind of as they do that, they're over the decades, you know, this sort of, they catch the wave of, you know, whole natural foods, organic foods. They really help start the organic food wave and publicize it among not just hippies but kind of everybody and especially young people in the American population. So they keep growing and by the mid-2000s, they're above a $10 billion market cap, one of the largest grocery chains in America. Then the recession happens in 2008 and the financial crash and the stock craters then but then it kind of goes right back up and growth continues by 2014. Whole Foods has become the 30th largest retailer period in the US. Wow. But then over the last couple of years, unfortunately for them, growth kind of stopped. So as of, you know, today when Amazon acquired them for the last seven quarters straight, they've had declining sales, declining same-store sales and the stock has fallen precipitously. Huh. Declining same-store sales, like it seems like, I mean, this is like the urban Seattle bubble I'm in but it sure seems like the health food movement is in more full swing than it's ever been. Yeah. People are a woke, David. This was really odd to me too. I just don't know enough about the grocery industry to know what was happening but the little I was able to read and this makes sense is that it was actually kind of mostly growing competition from other stores that are going to be a trader Joe's or plenty of other, even regular grocery stores now are offering plenty of natural and organic foods. Yeah. Often cheaper than Whole Foods. I mean, the knock on Whole Foods is expensive. And you totally see that here. Like I've been shocked with Kroger-owned QFC here in Seattle as last couple of years really stepped up their game to the point where I can get enough really healthy stuff there where I'd actually, I can totally see why the same-store sales would be declining for Whole Foods. Yep. So the stock's been under a lot of pressure for the last couple of years and actually there's an activist hedge fund, Janna Partners, that I believe I believe ended up getting board seats and has been kind of really pushing the company to take a corporate action meaning sell itself. This is totally interesting. So last fall Amazon was, at least this was, I think it was a Bloomberg story, that it was reported that Amazon was considering buying Whole Foods but then Janna stepped in as an activist investor and that calmed down for a little while. And there's been other talks recently we'll get into the Alberts and stuff. But Alberts was considering it take over a bit more recently but on this Janna Partners thing, Janna acquires, I think it was 8.3% of Whole Foods last fall and then is it able to flip it for the premium that they got to Amazon today? And Amazon was interested before Janna stepped in. So I'd love to know that story of how did Janna manage to make that happen when Amazon knew the price was only going to go up when that happened. Yep, yep, well nothing drives acquisition interest like other acquisition interest and viable alternative paths too. So we don't know now but I'm sure lots of stories will come out in the coming months. But yes, as you mentioned back in April it was rumored that Albertsons was looking at buying the company and then today the big announcement that Amazon finally would acquire the company for 13.7 billion in cash. So 42 dollars a share which is 27% premium to wear the stock closed yesterday and on a sort of price to earnings, you know, multiple ratio of 31 versus kind of 14 and a half which is where the average grocery store was trading these days which I assume that's kind of how grocery chains trade. But like disclaimer, we don't know much about the industry. Well, David, this is fascinating. I just had this conversation with a coworker and I was doing some of the research for the show. The annual sales last year for Whole Foods was 15.6 billion and I was like wait a minute. So the market cap of this grocery store is actually less than a single year of revenue which to us in the tech business like you get a two, three, four, ten ex multiple on revenue. And if you look at the grocery store business like apparently not the case and I think actually retail all up, I heard another stat and when I was talking to someone who's kind of in the know about this that boutique retail, actually the general valuation for that is around a quarter of your annual sale. So it really, you know, it's totally different ballgame than we're used to covering. And that just comes down to margins, right? I mean, the margins in retail generally are tiny. I mean, Amazon trades, I believe trades that are much lower revenue multiple than other tech companies because it is a retail business and has lower margins and grocery is like razor, razor, thin margins makes Amazon look like a software business. Yeah. And then well, the other interesting thing. So you mentioned that 29% or I'm sorry, 27% premium listeners, David and I were chatting with a friend who's kind of in the know before the show today and mentioned that Whole Foods had been aggressively pursuing a sale six months ago after Jan a partner has came in and you know, their main intention was to slim operations or streamline operations, which I don't really know how much you can do in the time frame from when they took that position until now. So I can't really speak to if that actually happened, but they were aggressively looking for a seller, you know, for the last six months. And it's fascinating to see like 27% premium over where they're trading in the public markets. It's in the range of what you would expect from these things, but it's certainly on the high end. And it's really interesting and certainly implies that there was a tremendous amount of competitive pressure that even when they were looking to sell so hard, they still had enough leverage to get that sort of a premium. Yeah. Well, and it speaks to what Amazon can do with the business that nobody else can. So let's put a pin in that for a minute. We'll come back to Whole Foods, of course, but we want to talk about these three other companies quickly. So that are pretty key to the story. So the first is the infamous Webvan. So you know, the the brunt of all dot com jokes, you know, back in the day, this company was founded in 96 by Lewis Borders, who is the same Lewis Borders, who was co founder and CEO of the Borders bookstore. No way. Same. I never knew that. All of the intersections across this whole story between, you know, with Amazon at the center and books and retail and like, it's all the same people and it's really key. And I think this is something that hasn't been talked about yet, you know, in the few hours since the deal was announced in the press, but like to really understand what's going on here, you have to understand this background. So borders started Lewis Borders. It was a separate company from borders, the bookstore, but he started Webvan in 96 and immediately, you know, he was a superstar raised capital raised about $10 million. He invested a third of it and benchmark and Sequoia each invested the other third in 97. Sequoia later put in another 50 million soft bank put in another 160 million quickly after that. In Goldman Sachs put in another 50 million. This is all, you know, very quickly in kind of 97, 98 and what the company was doing was delivering groceries to people's homes. Webvan, grocery van. And so they started in the Bay Area, but then they even before they'd really proved that it was working in the Bay Area because they never proved it really worked anywhere. They immediately started investing all this capital to roll out across the country. I mean, this were the days that we talked about in the Amazon IPO episode. So Amazon was, of course, watching this with great interest. So the company ended up going public at the end of 1999. So just a couple of years after being founded, they raised another $375 million in their IPO and their market cap at IPO was close to $5 billion. So at this point, the company had done a grand total of just under $400,000 in sales. Oh my God. I mean, this is why this is the cautionary tale about bubble and pretty quickly, I mean, the musical chairs stopped playing and the company just imploded. So shortly, a little over a year after that in the middle of 2001, they filed for chapter 11 bankruptcy laid off all 2,000 employees that they had at that point. And they lost all the money. So basically, the whole nearly billion dollars that they raised, they just burned all of it. And so this was sort of the initial view that the world had on technology and internet approach to grocery delivery was that you don't want to be webbed and like, look what they did. Yeah. I mean, that's like the very long extended and very painful visualization of that the hype cycle curve where it's, you know, the value isn't there yet. The hype is really high. It comes completely crashing down and then has to slowly build back up to what it once was and may never even reach the hype that it previously hit. Yeah. But what's super interesting about it is how much of that DNA from web van kind of has still to this day held on to the dream of grocery delivery and sort of there's been this perception in the world that grocery delivery doesn't work that web van proved it. But really what web van proved is like how not to run a startup, not necessarily anything about the market. Right. And so there was a company that actually came directly out of web van called Kiva Systems and Kiva was founded in 2003, I believe. Wait, Kiva came out of what it's, this is incredible. Yeah. This web is ridiculous. So Kiva Systems, which Amazon ends up acquiring in 2012, was founded by a guy named Mick Mounce and Mick had been, he had been at web van and he was in charge of logistics in the fulfillment centers that web van had all around the country. And you know, web van knew that the margins on what they were doing were terrible. They were losing tons of money on every order, which is why they, as they grew, they went belly up so quickly. And his job had been to try and turn it around and he didn't have enough time. But he kind of stayed obsessed with this idea about how could you make a fulfillment center, you know, more efficient and be able to eke out better margins out of a fulfillment center. It's like Amazon's whole promise. This is basically the entirety of, you know, Amazon's retail operations today is just solving that problem. So Mick founded Kiva and what Kiva did, he saw an opportunity to use robotics to not just replace human labor. And actually what Kiva Systems do is they don't necessarily replace human labor, but they make human labor much more efficient. They're robots that take palettes and racks that are in fulfillment centers and rather than them just being in the same place and having the employees walk around to pick the items from them. They actually the robots move the racks themselves to the employees and the employees stay stationary. And it's been a major improvement in innovation in distribution and fulfillment center systems so much so. And actually listeners should know, despite we're saying this is a very different Kiva than the Yes. Not micro lending, different Kiva. So in 2012, Amazon acquired the company for just under $800 million and started Kiva had been, had had customers like Staples and actually both Zappos and were Kiva customers, which was probably why Amazon started. Let's make the web exactly why Amazon started to realize after they acquired those companies, the power of Kiva systems in fulfillment centers, Amazon buys the company and then completely shuts down all other third party customers and brings all the tech in house. And as since kind of remade, I believe at this point, probably the majority, if not all of their US fulfillment centers into Kiva run fulfillment centers. Yeah, I'm not sure. I know someone recently that went into work in one of the fulfillment centers that wasn't Kiva enabled. Yeah, it may not be. I believe the goal is to convert every FC into Kiva center, but they may not be fully done yet because it requires a huge amount of CapEx and time to make these conversions. So this has become a big, big part of Amazon and you kind of directly came out of the ashes of WebVan separately. Amazon acquired the acquired the domain name for WebVan. So if you go to today, it won't resolve. But Amazon actually owns it. Oh, wow. And they've been, you know, as the world knows, and we've been talking about on this show for a long time. Amazon's been thinking about groceries. You know, they didn't just wake up this morning and say, gosh, we should buy whole foods. Why do they not point that at Amazon fresh? Yeah, it's bizarre. You would think it would just redirect. They must have been waiting for the whole food acquisition. And now it'll be the name of the Instagram card. Yeah, totally. Oh, man, what a, that would be just amazing. So in back in 2007, even before they acquired key systems, Amazon started thinking about groceries and launched Amazon fresh in Seattle. So if, you know, like us many listeners in the show, you have lived in Seattle for the last few years. You see Amazon fresh bags on doorsteps all over the city. But is fresh only here? So for many years, actually for six years, it was only in Seattle and sort of the lesson that they took and many notches the Kiva founders, but many former web band employees actually work at Amazon now and are part of Amazon fresh. And the sort of key lesson that they took from web band after spending, you know, many years analyzing it both on the Amazon side and folks having lived through it is that the problem with web band wasn't that the business didn't work. It was that they grew way too quickly. And because the margins are so small, growing a new market is incredibly costly because you need density and scale to be able to leverage your fixed costs enough and the distribution costs enough to be able to actually turn to profit. And so if you grow too quickly, you'll really quickly flip the boat upside down, which is what, which is what web band did. Hmm. Makes sense. So for six years, Amazon fresh was just in Seattle. Then in 2013, they launched in LA. And then at the end of 2013, they launched in San Francisco. And next year they went to New York and San Diego and Philadelphia. And basically the rollout has been accelerating ever since. So they're in most major US cities at this point. They're international. They're in London. They're in Berlin. They're in Tokyo and has really been accelerating as they've started to perfect the business at the same time. It's funny, but, but Instacard, I think is actually more pervasive in the US. Yes. Like, I know they're like Instacard just launched in Columbus. I know, and they're getting into a lot more markets than these sort of major top 10, 20 markets. Well, you're foreshadowing the next company being Instacard, but just to wrap up on fresh, they've also been, Amazon has been doing a ton of innovation as we've talked about around grocery with Amazon Go, the pilot that they're launching with cashierless stores in Seattle and pick up. They actually have a location in Seattle now where you can order your, as a consumer, you can order groceries online, drive your car to a center and then have the groceries put in your car. They're doing lots of innovative things around fresh and around groceries in general, even before Whole Foods. Separately, the third track here is, of course, Instacard. Instacard was founded in 2012 by a guy named Approva Mata. Approva had been an engineer at Amazon, and in particular, an engineer focused on fulfillment centers. He was in Seattle and actually left Seattle, moved down to the Bay Area a couple years before and started working on a bunch of startup ideas. We wanted to start a company and eventually came back around to this idea of grocery delivery, but he took a very different approach because he knew from the get-go he talks about this on, I think he was actually also on the NPR how I built this. Talks about, he kind of... So it was a really great talk at startup school one year about how the whole thing started. He knew that Amazon was going to be his main competitor and he had to take a different approach. What Instacard, most listeners know, has done, has said, screw this whole logistics thing. That's really hard. Actually, grocery stores are pretty good at it in terms of keeping the produce fresh and things frozen that need to be frozen and refrigerated and managing the inventory. Don't we just build a thin layer on top of it that's just the delivery layer to give the consumers the product experience they want of grocery delivery, but just have people come directly to grocery stores, shoppers. So basically paying that retail premium and then just solving the last mile problem instead of trying to eliminate that middle man and make that market in the middle. And do a fully integrated system. Like Webvan tried to do back in the day and that Amazon's been building now for 10 plus years. Because Jeff Bezos would say, I couldn't have built Amazon without all the infrastructure already in place, the UPS, the internet, laid by the telephone wires, all these things. So now we can build Amazon on top of it. It's sort of that same approach, but with a different market at a different time. Yep. So, Puerva, he started the company in 2012 and pretty quickly it started growing really fast. And they did Y-combinator right after he started the company and then pretty quickly Sequoia invested after that. I believe led the series A. They've gone on in the last five years to raise almost $700 million. So approaching Webvan levels of investment and what's interesting about that it turns it you know, it's so funny how it's all the same people all over again. Mike Moritz from Sequoia led the investment is on the board and he had led the Webvan investment back in the day. Whoa, I didn't know that. Yep. So Instacart's sitting here today having raised all this money at a $3.3 billion valuation on their latest round. One of their investors, their biggest grocery store partner that they have an exclusive relationship with and it's part of that the company invested in Instacart is Whole Foods. And so everybody woke up this morning and the whole world changed in this space. Yeah, I mean it's heavily, heavily promoted in the stores at Whole Foods. I think if you buy a certain amount then you just get it at store cost instead of, I think this is right instead of paying the Instacart markup for it. It's like much more heavily integrated than any of their other grocery stores and you know, as we'll sort of get to Whole Foods is a super premium brand. Yep. Yep. Just speaking from personal experience, you know, having used Amazon Fresh and Instacart and many of the other delivery services, you know, we would use Instacart often just solely for Whole Foods to get the premium products from Whole Foods. I mean, that was the most compelling aspect of it for us. Yep. I love Instacart. I mean, I've been a user for a really long time and since it launched in Seattle and it's awesome. But, you know, you sort of have to wonder at this point, they knew Amazon was going to be their competitor at the very outset. And, you know, today the news comes out and if you would have asked me a week ago what's, you know, how does Instacart compete against Amazon or, you know, the impending Amazon, then I would have said probably that the Whole Foods partnership was their, their greatest leverage point. And I'm super curious now like do these partnerships like much like music streaming, like if Spotify were to get acquired then all of their rights negotiation that they did with the record labels would need to be renegotiated. Those all, you know, dissolve upon a liquidity event. I'm curious if the same sort of thing happens here or if Instacart can still hold Whole Foods to their, you know, the contractual agreements that they agreed to. Yeah, and I don't think we know yet the early indication seemed to be that the deal that Instacart and Whole Foods had, I believe it's looking like was a four year deal that they were one or two years into and that it does have to be honored. But again, this is, you know, these are private agreements we don't know. So we will, it will be very, very interesting to see. And even if it does have to be honored, you know, you can bet that as soon as that deal expires, you know, Amazon is not going to renew it. Right. Right. Yeah. Tenuous position to be in. I'd be very curious, you know, to sit down with some Instacart folks and try and figure out what they think the mode is right now and what do you do from here? Because maybe the move is, is, you know, not to double down and strive for world domination but to try and figure out how to play in Amazon's world. Well, it's interesting. I mean, you know, we're getting into analysis now. But I think we have to give all the players involved in, in this situation. But Porva has argued quite compellingly, I think, you know, certainly with investors that he knows that Amazon is going to be his main competitor. But that the way you have to compete with Amazon is to compete on a different dimension and do things they can't do. And his argument is that has always been that by just being the thin delivery layer and being able to partner with any, you know, grocery store or other retailer for delivery. And all of those other folks, you know, are scared of Amazon too and sort of need Instacart as a partner that he'll be able to provide, they'll be able to provide a better experience because Amazon itself will have a limited selection only what they care about. Oh, please, please. I'm just going to tell you the other guys. Come on, Amazon starts. Let me give you a, let me give you a playbook. Amazon becomes, they sell books on the internet and they're the retailer of these books and you buy from them. And then we can turn themselves into a marketplace with them. I mean, they're a retailer. Right, right. Gosh, how could you ever imagine third party grocery store sellers coming on to Amazon's distribution and customer management? Okay, nevermind. I didn't know. Yeah. Well, then there's also the fact that, you know, grocery is, it's a very different business than books or any other type of retail. True. Very true. You know, if you look at, you know, what is differentiation in grocery stores? And this is actually probably a big reason why Whole Foods was struggling in recent years. You know, you don't, you need a lot in a grocery store, but you need a set number of stuff. And if you have the stuff that people want, which is the same, you know, you go to a safe way around the country or you go to a, you know, publics in the South or a crogr's elsewhere, like, they're the same. They're the same stuff. So as long as you have that stuff and you have, you know, the, you know, high end natural stuff that Whole Foods has, you know, which again, is differentiation. The only reason, at least me and Jenny used Instacart, you know, if you have that stuff, do you need anything else? Is selection that important anymore? Right. It seems like selection in like all the random stuff on Amazon from a retail perspective is much more long tail distributed than it is in a grocery store. Like a new grocery store, it seems more concentrated towards the head of the curve. Which granted is a lot of skewers, but it's a pretty standard set. Yep. Yep. Spend some time talking to people today and looking around for opinions. And before we get to acquisition, categorize, I just want to like talk about a few things to come out of this story. So one of them is that just yesterday, John Mackie was talking about how there's an activist investor called Janna Partners, which holds 8% of his $11 billion, then $11 billion grocery chain. And he says, we need to get better and we're doing that. But these guys just want to sell us because they think they can make 40 or 50% in a short period of time. They're greedy, and I'm not going to say that because we have a clean reputation, but they're greedy guys. And they're putting a bunch of propaganda out there trying to destroy my reputation, the reputation of Whole Foods because it's in their own self interest to do so. That was yesterday. That was yesterday. Wow. I mean, you can't argue that John didn't do this. The deal was done. It was going to happen. Yeah. There's no way that like, oh, it actually, we did do the deal. And like, he, you know, he is a. So how does he really feel? Well, right. And it's fascinating because what he doesn't really say there, the good news is he can still be an effective CEO inside of Amazon because he doesn't, you know, throw Amazon out of the bus. But like, you know, definitely wanted to continue being an independent entity there. And these guys did get a huge pop. Janet Partners since the time they bought. Oh, that they did. Yep. Another, you know, let's, let's spend a little bit of time and cover some basically hot takes on what this could represent. And then once we kind of cover all that, then I think acquisition, Cater, Goryl, start to come together and make sense. But right now I would imagine they're not going to immediately transform these whole foods into Amazon goes, but like, holy crap, what if they know internally that Amazon go is like such a fantastic experience. And rather than like slow rolling it out and allowing competitors to start coming in. And then potentially whole foods to go up and value as they start doing similar things or go up and value for Amazon as people start seeing the obvious, you know, synergies. What if it's just like, we should own this now so that we can go big fast. With this Amazon go concept. Yep. Which is, you know, on the one hand, and goes been delayed the public launch, supposedly because of, you know, trouble getting it to work public facing lane. But, you know, at this point, I think the point that I was trying to make, that we were trying to make in telling the full story and all these other companies, WebVan, Kiva, Instacart, you know, Amazon didn't just wake up yesterday and they're today and decided to do this. They've been thinking about this category for over 10 years at this point. So if they're going to do this, you can be sure they have a very clear plan. Yep. Okay. So they're really the only ones who can do this. There's a $400 million break up fee on this. So if Instacart gets another bid or pulls out, it's like, or hopefully it's mean, or sorry, whole foods, then you know, it's not being acquired right now. Yes. Yes. Let's be clear about that. We'll talk about that later. Right. Right. You know, it's a $400 million break up fee. So you start thinking like who even else could bid on them and the thing is like nobody in the grocery world has $14 billion in cash. In fact, in the physical retail world at all, like Walmart has $6.5 million of cash. So unless Apple or Google steps in, like Kroger only has $400 million. Dan Primack was raising this point on Twitter. Amazon's really the only one who could win this deal. And so that's sort of an interesting thing to consider. Yep. Totally. Nobody in the grocery world would have the capital to do this. Nope. Nope. Another good one, Geekwire was reporting that a really interesting thing here is that it's really a training ground for AI retail research. Amazon has all these incredible machine learning, artificial intelligence, PhDs, and whole foods has probably zero. I mean, maybe some small amount of data science, but you start to marry the amount of data coming in from whole foods and having Amazon have the ability to deploy that all over the ecosystem, not only to make whole foods better, but to use that in other parts of the business it sure seems to contribute to the flywheel. Yep. Absolutely. Yep. Another good one, I was reading freight waves, a friend who's in the trucking industry, working on a startup there, sent this over. And they were talking about how the thing that's really interesting about this deal is it could dramatically reduce their transportation costs because if they're using whole foods in the back as like urban warehouses for things that they want to start putting around to unlock, imagine Amazon Prime now launching everywhere there's a whole foods because they can keep things in whole foods in a non-customer facing way or maybe they can actually just deliver things directly out of the whole foods retail area. It really opens up the potential of reduced freight costs because you just have so many more nodes on the network. Yep. Absolutely. So then another one that I was not anything I was thinking about is whole foods has, let's see, 456 stores in the US and Canada. Now that's zero international. So Amazon has a global footprint, will we see them start to make international grocery moves? Well, they're already fresh as already in London and Berlin and Tokyo. So you got to imagine, yes. Will they need M&A? Whatever they're doing, the whole foods, will it make sense to buy a big international chain as well? Which, as we talked about is how whole foods grew through app accession. Yep. Absolutely. And then lastly, this one might be a little bit more out there, but who knows? Amazon has reportedly been working on some prescription and pharmacy efforts. And CNBC reported that if Amazon wants to sell prescription drugs, whole foods could provide the real estate on top of not just prescription drugs, but incredibly high value real estate with high net worth clientele all over the place. So it's a premium customer set at premium real estate and they can do all sorts of things with that including launch a pharmacy brand. I feel like we should call this a new section on the show called just like pure speculation. Yeah. I know. Then David Wiley speculate including a whole bunch of things they read on the internet. If it's on the internet, it must be true. That's the mantra of Aquarius. Yep. So all right, with that, should we come back to Earth? Is this your category? Is this your category? Let's do it. Yeah, what do you think? I think I have to say two here. And the two are business line with caveat that Amazon already had this business line. This is just a massive, accelerant and reshaping of that business line. And then the other one is asset, as you were alluding to in the wild speculation section of the show. This is now instantly 450 plus new in last mile distribution centers in cities that are extremely proximate to the majority of Amazon's customer base, which is people middle to high income, people mostly younger demographics that live in cities. So this is an incredible real estate asset that they just acquired. David, it is like you are literally reading out of my text. I think I had those two bold. The new listeners to show we have people, technology, product, business line, asset or other. And those are my two as well. And what's interesting, I don't think either of those is even in a couple hours since the acquisition, I don't think there's any great depth of insight in either of those. But well, I'm looking forward to talking about tech themes. But before we do that, should we hop to what would have happened otherwise? And we should talk about Whole Foods and Amazon. But in particular, I want to talk here about what's the future for InstaCart? Yeah. Okay, wait, pausing on InstaCart real quick. What would have happened otherwise? So when we're thinking about what we were talking about earlier with Amazon marketplace and they have fulfillment by Amazon for customers who are merchants who are on the marketplace, it's interesting to think about first they had to be their own retailer and then they could open up the marketplace. In this case, it seems to me like first they're going to be their own sort of grocer, which let's not forget, I don't think we've said this on the show yet. Grocery is an $800 billion market. Like grocery is the market. And it's like a massive. If you look at all of retail, not just e-commerce, but all of US retail, grocery is about 15% of that. So it is enormous. I mean, it is as big as Amazon's entire business. This is as big as all bigger than all of e-commerce combined right now. Well, I mean, it's basic human stuff, right? Like look at Amazon's hierarchy. Like we need food. We need food each other. And actually, if you look at household spend in order, it's taxes, house, car, food. You're feeling purely at retail. The first two of those don't apply. House taxes and it's car and food, right? And like think about it. Think about Uber and Lyft. And, you know, and well, I'm going to pause here. I'm going to save this for tech themes. Continue. Yeah, yeah. Okay. So massive, unbelievable ridiculous market people need to eat. And it's interesting that to me, Amazon is going the direct route with being the place where you buy the food when they buy owning whole foods and not opening it up as a marketplace. Like one direction they could have gone is to go to every physical grocery store at scale and say you can reach customers online using our platform the way that Instacart did. And it's interesting that they sort of went the other direction with it and really bought their way into possibly unfolding it in the same way that they unfolded from their normal retail. Absolutely. Yeah, I don't know. Like if they didn't buy whole foods, like what they bought a different grocery store, I mean, if you look at Albertson's bought Safeway for $9 billion a couple of years ago. And so that I suppose Albertsons could have bought whole foods. I know they were considering it. You know, Amazon maybe could have bought Albertsons. At the end of the day, it's, I think Whole Foods was the best one to buy because it is the best selection and the most premium customer segment and the most premium real estate. And it actually had to the extent any large chain did it actually had differentiation. I mean, I don't think it was lost on Amazon that, you know, I seriously doubt Jenny and I were the only folks that used Instacard to get Whole Foods and I really doubt that that was lost on Amazon. Yeah, I think you're right. So to me, Amazon gets a heck of a lot more leverage out of buying Whole Foods than Albertsons would get out of buying Whole Foods. And so from a value creation perspective, I guess it's, you know, creates more value for the world for Amazon tone. Yes. So let's talk quickly about Instacard. I mean, what, you know, what do we think is the future for them here? I mean, they have a very large valuation. The product is great. You know, I completely agree with you, Ben. I mean, we love it. But we love it to get Whole Foods, right? This is, you know, big for them. What's the path for it? I have some thoughts, but well, I'll go first. So on the surface, I mean, this is a bad day. It's a very, very bad day for Instacard. On the other hand though, you know, there, I don't think all is lost for them by any means. They have, I think the only model that makes sense to, that is capable of scaling quickly in anything less than a decade long timeframe in this space, which is let the stores that are, and the companies that are good at logistics, do logistics and we'll do the last mile. Right. Zero inventory risk. Zero inventory risk. When we talked about, you know, the web then boat flipping upside down, it was that they had plowed so much money into inventory and their fulfillment centers. And then when they were losing money on every order and demand, you know, a title wave of demand came in. They didn't fail because people didn't want the product. You know, it failed because they just, the capital demands got too great on the business. That's how they lost all of the, you know, $800 million. They were, Instacard doesn't have that problem. More demand is more, you know, gross margin for them. So that's good. And I think with this acquisition, you know, what this is certainly going to do in the medium term, is it is going to drive everybody from, you know, in the grocery pharmacy, you know, any local retail space, you know, if they weren't afraid of Amazon already, they're going to be driven into the arms of Instacard. You know, I think probably starting with Trader Joe's, right? Like if Instacard can land Trader Joe's, to my mind, they're sort of the last bastion of differentiation in this space. And they're sure as heck not going anywhere near Amazon after the Whole Foods acquisition. So I don't think all is lost. Then the other thing for Instacard is, is of course, you know, the other player in the commerce space, which is Walmart, you know, which has been very inquisitive acquired jet, just also, you know, acquired Bonobos today, you know, in a story that was vastly overshadowed by Whole Foods, but acquired ModClaw, plenty of others. You know, they are going to be very interested in this space too. And Walmart's in food, I mean, they have the super stores that are effectively just huge grocery stores attached to Walmart. Now, the problem is been, as you mentioned, Walmart only has six and a half billion dollars of cash on their balance sheet and Instacard's sitting in a $3.3 billion valuation. So, you know, Walmart's not going to spend all their cash on this deal if they buy Instagram. So, returns are limited there. Yeah. Ooh, that's interesting. If you're a poor, do you take Walmart stock? Yeah. Well, you better think hard about that. I mean, I believe jet was all cash, right? I don't actually remember. I think it was. Sounds right. I think it was, you know, which... With heavy, heavy earnings. Heavy earnings, right, but all cash. So, you know, Mark, Laurie didn't have to make that bet. Yep. Okay, I mean, look, you can go ahead to head with Amazon. Like Instacard might actually just deliver like a way better consumer experience. I mean, maybe... I don't know. Well, here you go. It's a dangerous deal. I mean, one thing, here's another thing. There's a red logic that you go down when you start thinking that way, but go. Right. Right. Well, I'll pay a little bit excited. I hit it when you did too. And what I hit on is price, right? The thing is Instacard is more expensive, thing going to the grocery store. And if Amazon... It is. Now, on Whole Foods can make it cheaper. Like, you just can't compete, right? And this is how Amazon won retail. And maybe there's a play for Amazon to aggregate... I'm sorry, Instacard to aggregate the long tail of all these sort of independent grocery stores and smart grocery stores and everything that is not Whole Foods. But you have to imagine at some point, Amazon will open up a marketplace for this. But the thing is... So with grocery delivery, Amazon Fresh is much more on like this sort of... I've actually never done it, but I think on this sort of weekly cadence or bi-weekly cadence, right? And whereas Instacard's much more on demand. Yeah, I think that's right. You can do on demand from Amazon too, I believe. But they try and funnel you to a weekly cadence. Yeah. And this thing for Instacard, the ability to aggregate third party sellers on a platform in an aggregated way where you can... I can go to Amazon and order from three different third party sellers. And since they're all fulfillment by Amazon, they sort of get to my house at the same time. It's all through the same system. Since Instacard uses a on demand system, you really can't actually order from multiple grocery stores because the logistics of that sending a shopper in the next two hours to both grocery stores is prohibitively expensive and time consuming. And so, you know, they're actually isn't really a play to aggregate the long tail, to go to multiple stores. But maybe there's a play to aggregate the long tail where in every local market, you have all the smaller stores on there that Amazon doesn't have with Whole Foods. I don't know. Yep. I mean, yep. But you're competing with the everything store. And aggregation theory, as we've talked about. Yeah. So, it's... Well, we'll see. I mean, I don't think... I certainly don't think, you know, Monday, starting Monday or today that Instacard is doomed. Actually, you know, there certainly are plenty of ramifications from this deal that are positives for them. Yep. But it does just speak to, you know, in the world we live in right now, you know, Amazon is the new Microsoft from the 1990s, you know. Yeah. Dude, that's okay. I'm glad you're going there because that's my first tech team. Yep. I think that one. I think probably one of yours too. In one sense, they're the new Microsoft. And in other sense, the big five right now, Facebook, Amazon, Microsoft, Google, Facebook are way more powerful, just way more powerful because of machine learning, because of the data assets that they have than Microsoft of that era, because I really do think that like there is this like, well, we can out execute, you know, this company right now, because they don't know how to do consumer or they don't know how to... With these companies, like, it's just a matter of time. Like I really thought, like, wow, Amazon fresh isn't as good as an experience for a long time as Instacard, but like at some point, Amazon just has so much cash and these companies have so much cash, they just go in and they buy... Yep. This huge asset and they get this incredible data asset out of it and they learn how to optimize every single experience for every single customer based on exactly their wants and needs. And I think that also with the availability of cloud computing, like, you know, you start in your two... Your two pizza team inside Amazon and it's small and you work on a thing and then suddenly if it's working and you find product market fit, like you get the power of Amazon's cloud behind it. I really do think that, you know, the big companies now have ability to enter markets that, that, you know, they just compete with everyone and they're fierce. Yep. Well, I think it highlights the importance of, you know, if you're gonna do the crazy thing and attack one of these guys head on, well, you can't attack head on, but attack them on their turf. And then, you know, the angle you enter at has to be completely, you know, orthogonal to the angle that they're approaching the market. And I think Instacart, you know, you listen to a porva and, again, it's very articulate and makes a good case for why Instacart can do things and offer things that Amazon couldn't and probably still can't. But I don't know that the angle, like, it was a little too acute, you know, like, as we've been talking about, it's not so totally different that enables a completely different customer experience. And, you know, that's, I think you're right. Like the power that the big five, big four, big five, however you want to categorize it have right now, are, you know, make the power that Microsoft had in the 90s, you know, look, point. Right, agree. And to pile on that point one more time, the market really doesn't believe that Amazon can, can, that anyone can compete with Amazon once Amazon decides to enter a market. Like that's the, Amazon is by far the scariest of those five horsemen right now because that here's how the market responded today when, when this deal happened. Target's down 9%, Walmart's down 5%, Costco's 6%, Sprouts 11% and Kroger 13. Wow. This is Amazon's signals they're going to enter a market and just, which is like, I mean, like, they, they should not be news to anyone like Amazon has signal for 10 years that they're coming for groceries. So, David, the irrationality of the market will never, will never cease to be a topic of this show. Yeah. But actually, that is a good point that I think we should, is worth a moment that as scary as Amazon is, they can't start from zero and destroy you. They, you know, it really, I don't think this would have happened without the 10 years of, you know, from, from Webvan to, you know, to, to Kiva to fresh, you know, and then to observing Instacart. Everybody knew this was coming. So, so, you know, I don't think like, you know, if you're, you know, if you're Airbnb and you're, you know, you have another amazing marketplace, but you're nowhere near Amazon. Like, I don't think Amazon can launch, you know, Amazon, you know, stays tomorrow. Right. Right. So, so there is some solace there. There's plenty of, especially in those marketplaces, right, of building up a big supply and a big man. Yep. Yep. Absolutely. They do not happen overnight regardless of who you are. But I think it also highlights something else that, you know, if I were, I, I, I, I, I, I, I don't happen to believe necessarily the bear case on Amazon right now, but nobody seems to be making it. So, so I'll take a stab. Like, here's, here's my bear case on Amazon as they grow and everything you were just saying and enter so many new markets. There is going to be this incredible, incredible human, you know, human capital management problem there. And I think, you know, Jeff Bezos is amazing. He's one of the best, you know, management leaders of, you know, ever to be able to grow Amazon as it is in such a decentralized fashion. But at some point, even in as, as efficient an, an organization as Amazon, there's communication costs within the organization are going to get higher and higher. So there is probably a natural human limit to how much they can scale in terms of businesses. Yeah. I mean, that's always been the case against big companies in the case against conglomerates for a long time. Question is, has Amazon really found the formula to make that? Well, I think they've done better than just about it. It's a personal thing through a history. Right. But what is the upper limit of their current model? Right. And you know, you could certainly argue that in, you know, today's world and tech, we've talked about this. I think we're in tech themes now on the show about how technology has levered right in like the two pizza teams in Amazon, like a two pizza team started, you know, prime now and Amazon go and Amazon fresh and all these things. Right. So one thing that we shouldn't lose though, like we're going to find this two pizza teams, the Amazon fresh team is around, I'm sorry, the Amazon go team with one location that is only open internally to Amazon employees is like a thousand people. And those are a thousand people with individual personalities and politics and, you know, wants needs and desires. So again, I'm not sure, you know, I don't want to compete head on against Amazon. But if you were to articulate a bear case, to me, that's the, that's the best one right now. Yeah. Another interesting, it's not as much a tech theme, but an Amazon theme is, Amazon's never done an acquisition on this order of magnitude before. Like all of their, their, their M&A strategy sort of changed from buying, buying these sort of properties that they can integrate into their system to audible and, and zappos and things like that to buying like technologies that were even cheaper. And then they, they sort of stay on this like buying lesser expensive technologies for a while or maybe more expensive in the sort of Kiva or elemental technologies or things like that. But really like they haven't been acquiring these sort of, I guess in the media world to be like properties or like, you know, like retailers. And so it's really interesting to come out swinging so hard, like they're really putting a stake in the ground that this is a huge business for us. And there's this great chart on Axios and I'll just read it from the bottom up of, of deals above $500 million. See of QuidZee in 2010, Kiva in 2012, zappos in, in 2009. And those were like 500, 700, 900 million, Twitch for 970 million and 14. The, then the, you have Whole Foods at 13.7 billion dollars. And the next step down from Whole Foods, it's kind of the between Twitch and Whole Foods is an office building that they bought. And in, in 2012 from Volcan for 1.16 billion dollars. So, so literally, this is the, this is the, this is the, this is the, this is the, this is the next, yes, yes, they bought an office building. Yeah, for a, you know, one order of magnitude less than this deal. And that was the next one. But they're bigger than Twitch. That's what they're like, yeah, right. Yeah. Well, anything else you wanted to say on that? No, it's perfect. Perfect lead into the tech team that I really want to talk about here, which is the power of big markets. And the, the lead in that I was, the connection I was making is that, you know, the real estate market is, is enormous. And if you're going to pay more for an office building than you would for Twitch. But you know, I take a step back here. I think a lot of people, certainly the press and the public, you know, kind of look at this whole situation that we've discussed in all these companies and say, man, Silicon Valley is crazy. Venture capitalist are nuts. These people are so stupid. How could you put so much money into web van, you know, into, you know, who knows, hopefully Instacart has a bright future ahead. But maybe that goes to zero too. Like maybe Amazon just killed it. You know, like, how could you do that? How could you be so responsible? And I think the answer is that when you're talking about a market as large as grocery, I mean, literally a trillion dollar market, you know, 15% of US retail, you have to think about it in terms of like, what if I'm right? You know, and, and this is how Amazon and Jeff Bezos thinks about things, right? Is like the power of attacking a large market. It's going to be very hard by necessity because there's going to be a ton of competition. And your odds of success are certainly not 100%. But if you get it right, I mean, if Amazon gets this right, it's literally going to double the size of Amazon and think about how big Amazon is already. And those are... And people thought AWS was a big business now. Yeah. And these are the kind of bets that lead to, I used to word bet. I don't like the word bet because it's not a bet. It's about, you know, the hard work that you do over a decade-long period that Amazon has done to get here and they have another decade ahead to continue to realize it. But if you can be successful in that, you know, that's how you build Amazon scale businesses. Yeah, I love that. I love that. And then venture, it's not about all the ones you lose. It's only about the ones you lose. Well, right. I mean, you know, $800, close to a billion dollars lost on Web-Man, right? But already, you know, if you're... If you take those learnings and you would bought, you know, Amazon shares or, you know, or even Instacart shares, right? Like you would be getting a nice return on that. Yep. You want to grade it? One other one I wanted to do real quick. I mean, I don't know that there's too much more insight to add, but I don't think we can... I don't think we've talked about it yet and we can't have an episode on Amazon without talking about the flywheel. And because I mean, that is really... That is the other, you know, besides making big bets. You know, that is the other core element to Bezos and Amazon's philosophy. And if you think here about, kind of, especially, you know, Alexa, right? And Echoes. And like, where do Echoes live? Like they live in the kitchen, you know? And that, how that business has grown with an Amazon. And then attaching a grocery business to that and, you know, Alexa, bring me some milk, you know? You can start to see the flywheel spinning and that's how you can create this just, you know, uncermountable competitive advantage in a space. Yep. Absolutely. All right. Should we go back to wild speculation and grade this thing? Yeah. Yeah. I mean, I don't know. Like, it's... Okay. So, they've spent, what was it? 13.7 billion dollars, right? Yep. Yep. And, you know, I mean, what... What's the return that get... I mean, that's what... Yeah. So, here's an interesting... What else could they have done with that that could have possibly... Let's see if we can do, like, an expected value calculation. So, you pour that into something else and we can think of what that something else could be. And then, I guess, like, try and figure out what the real efficient possible success... You can go by real efficient of possible America. Right, right. Like, there aren't that many more, like, bigger markets than this. They... And especially, they have an Amazon's already playing in. Transportation. Well, there's three. There's government and taxes. There's US real estate and there's transportation. Those are the only markets that are bigger than this. Wow. It's funny. Amazon doesn't... I mean, other than the buildings they own, they don't really play in real estate. They... So far, aren't really playing in transportation other than logistics. Like, certainly no consumer transportation. We want to make any calls on this show. I know this isn't creating it, but we should, like, make a long bet or something. That in five years, are they competing with Waymo Uber or Lyft or... An Airbnb and real estate. An Airbnb. Yeah. There is so much that Amazon's not competing in yet. Yep. I mean, what you're talking about is, you know, no longer a big five in tech, but a big one. Yeah. I don't know. I've heard times that didn't happen. Well, you know, if we're grating this acquisition and we're being that speculative, I just didn't think it was that much further up a little bit. Yeah. Well, I mean, I think right now, I'm going to give it an A minus, which is in line... I kind of... This feels weird to say given the difference in magnitude between the two of them, but I'm thinking about our last episode in Sound Jam. And in some ways, this feels like a Sound Jam to me. Like, Amazon was going to do this anyway. Clearly, you know, they've been doing it for a decade. This is an acceleration to their plans. And hopefully for them, it works out like Sound Jam worked out for Apple. But I can't give it more than an A minus, even if it does work out beautifully because I don't think it's a fundamental transportation or a transformation. It's not like a... This isn't like an Instagram that's going to come in and just completely take the whole organization in a direction that it wasn't going. It was already going this way. Right. Yeah. The only interesting... The only caveat on that is it could actually be their biggest business in five years. Yep. Yep. But for me, if our A is a next or an Instagram, you know, a business that... Yeah....and a team that just completely transforms a company. Like, this is not transformative. Nope. That's a great point. And well, it certainly won't... Yeah. And absolutely. I think if it fails, well, then there was a lot of money to spend on this. Right. Right. It's really just the opportunity cost of that capital. Yeah. So assuming if they succeed, I give it a name minus maximum grade. Hmm. Maximum grade. Yeah. There we go. Really? Really? I mean, what if they start commanding six of the $800 billion in this market? Oh, but I think they could do that anyway. They didn't need to buy Whole Foods to do that. Hmm. Okay. All right. A minus sounds good to me. All right. There we go. Follow-up. Follow-up. Follow-up. Follow-up and hot-tips. Well, we mentioned Walmart buying a boat of ours. Which I don't, you know, whatever, like, great jet is going to... Does it see a lot of... Target customer fit to me. No, but I think what the deal is is I think that Amazon... I'm sorry. I think at Walmart, you know, through jet is really just trying to buy a bunch of these sort of smaller e-commerce companies that people love and figure out, you know, can they just own a portfolio of these things? They may not sell them, you know, in Walmart or something like that, but, you know, if the goal is to go around and buy a bunch of these like Casper and, you know, Harry's and sort of internet and now, and Warby Parker, like, those sorts of businesses, like, does it make sense for Walmart to own a big portfolio of those? I don't know, but I don't think this was, like, this wasn't a huge outcome for Benobos. No, I mean, not giving hell on to company was around and how much money there is, but, you know, nice exit. Honestly, what it feels like, and I think this is a Ben Thompson tweet earlier, but, like, these being announced on the same day is just like the contrast. It really showed how stark the contrast is where like, Walmart's kind of playing checkers in Amazon's content. Oh, yeah. I love this is, I'm going to throw in one more tech theme that actually I've been thinking about a lot lately and I think is a very powerful one is that Amazon is playing offense. Walmart is playing defense. You don't win by playing defense. Yeah, they're playing defense. Yeah. Especially as a startup, not that Walmart's the opposite of a startup, but like, when you're a startup, like, you have nothing to defend. You can't play, you can only play offense. That's the only way to win. Right. Are you insinuating that Amazon may be playing like a day one company? I hadn't thought of that. So insightful. I know. All right, Carvellts. Carvellts, let's do it. So mine is a friend of the show, Brian McCullough, from the Internet History Podcast, which, if you're listening to this show, you would love that show. Tweeded this link out the other day. I had to just go watch the whole thing because it was like just, it's only these things you can't take your eyes away from. It is Mark Zuckerberg in 2005 coming back to Harvard to give a guest lecture in CS50. Oh, man. I see. I haven't watched it yet. I need to. It is unreal. Like, he's taught, first of all, it's super insightful from like a technology perspective to understand how Facebook succeeded in a way that a lot of other pre-cursors of social networking sites failed. So it's interesting to learn about Facebook's early architecture from a tech perspective. But then on top of that, it is just so stark to see Mark Zuckerberg speaking the way that he spoke in 2005 juxtaposed against the way that we all hear him today and Mark without PR training and Mark without a team of writers. And Mark without a perfect diet and hitting the gym all the time. And he's, you know, he's just insanely off the cuff and almost a little like broy. There's a little streak of that in that. There were two things. One, wire hog. Yeah. Facebook was just a side away for him to launch like a Napster competitor and then two, the Sequoia Pajama pitch. Oh, my God. Yeah. Yeah. Yeah. And in this pitch, he probably earned this lecture. He's like, we have two hours. I'll probably talk for like 15 minutes because I don't know what you guys want me to talk about. And then like probably 15 or 20 times. I know right over the course of the two hours, he says like, yeah, I don't know if this is interesting to you guys at all. I know if this relevant, like, I don't know what you want me to say. I don't know, like, I don't know. Like, I don't know if this is relevant. And you just keep saying that over and over and over again. And you're like, wow, this guy. It's so different. And look at him today. I mean, yep. What matters is potential, not the current state of things. Potential and network of things. Yeah. And flywheels and big markets and playing offense, not events, all of the things. All right. My podcast is the episode this week of Exponent, the Ben Thompson and James Orrs. Great podcast that I'm sure many of you guys listen to and showed if you don't already on podcast. We've talked about this on this show. We did the episode a while back on mid-roll and Stitcher. But it really feels like with Apple announcing that they're going to bring a whole bunch of changes and improvements to the platform of podcasting, like now might be the time. I mean, we've argued on this show where podcasting is obviously near and dear to our hearts. And we are, you know, in the startup and venture world. But that it's just too soon. The market's too small. You can't build big businesses here. But I wonder if now's the time that things are changing. It's a great time to be in podcasting, David. It is. Which is also why it's a great time to tell your friends about acquired. That is, no, it's great. It leads exactly into our show clothes. So listeners, happy Friday night. You probably will listen to this in another time. But David, enjoy your weekend. YouTube in. Listeners, if you haven't subscribed and you want to hear more, you can subscribe from your favorite podcast client. And if you feel so inclined, we would love, love, love a review on Apple podcasts. So with that, go shop at Whole Foods. Go shop at Whole Foods. To more wild speculation in the future. Yes. All right. Thanks, everyone. Thank you.