Every company has a story. Learn the playbooks that built the world’s greatest companies — and how you can apply them as a founder, operator, or investor.
Tue, 11 Apr 2017 21:58
Hey acquired listeners, Ben here. You'll notice for the first eight minutes or so of the episode, my audio quality isn't the greatest, but bear with us, it'll be crystal clear for most of the episode. Thanks. Is Ocular and occluded from the same route? I don't know. I don't know. Anyway, that feels right. Because I think that's our logo right as a. It's an eye, yeah. Yeah, all right. I can see it. Welcome back to episode 35 of acquired the podcast about technology, acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenfall. And we are your hosts. Today's episode we are covering the Facebook acquisition of Oculus, a much requested episode by a lot of our listeners in the Slack. And one we've gotten a lot of email about. So we've now got enough distance from the acquisition that there's a lot more to come, but we feel comfortable covering it. No doubt about that. And we thought now would be a good time to do it, given some of the themes we talked about on the Snap IPO episode that this would be a good counterpoint, a sort of different approach to a camera company. Indeed. So before we dive in, we have some incredible listeners that leave some great iTunes reviews. And sometimes they're even a little host deprecating. But we love them all the same as long as they're five stars. And they help us grow the show. So as we mentioned a couple episodes ago, if you leave one that we think is worth reading on the air, we're going to go ahead and do do just that. So one we've got from Daniel X is a Moji review, which is trophy, a bag of money, unicorn, which I think is quite, quite appropriate. And this one, this one's a little, I had trouble parsing it at first and then I was like, I see it there doing the subject is yep, yep. And the description is that's one of my favorite phrases Ben uses. Oh man, yeah. And super interesting are up there too. So now I'm going to be incredibly self conscious every time I use those phrases. And thank you so much. We love you just the same Ben. And the user name on that one is Active Users. So thank you to all the Active Users out there that really appreciate my catch phrases. That's great. All right, moving on and happy to leave that behind. But what the poor are trying to make is leave us iTunes reviews, help us grow the show. We love it. And hopefully if you're creative, then we get to share it with the rest of our audience. Speaking of the rest of our audience, we've got a slack. So join us at acquired.fm. You can join the over 500 of us that are in talking about tech, M&A and any news that comes up between episodes. 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 founder. 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 Akiyama Rita before we did our Sony episodes this incredible primer. You know, he's actually a good example of why people listen to founders until acquired 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 to him. 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. David, 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 were 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 a 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. Lots 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 onto the episode. David, can you take us through the acquisition history and facts? I will as always, Ben. So we pick up our story of Facebook's 2014 acquisition of Oculus, the virtual reality company in 2010 when a 17 year old homeschooled kid in Long Beach, California named Palmer Lucky was taking. He'd been been homeschooled for its education up till then and he was taking some classes at at Cal State Long Beach and he had he had a problem and his problem was that he loved video games and and he loved them PC games in particular and he loved them so much that he he had created this like massive setup at home where he had six monitors and he just wanted to get like as immersed into the games he was playing as possible. But even with all these monitors, it still wasn't good enough. He wanted to get like deeper into the game. He wanted like the what I was was writing this I was thinking about the EA sports EA sports tagline you know getting the areas in the game. I think I read somewhere he had like the largest collection of HMDs head mounted displays of currently existing or hacked together hardware in the world before he he set out to build Oculus. Yes. So well his problem was he wanted to literally get get into the game and and so you know lots of lots of kids myself included wanted to do that when I was 17 but Palmer actually did something about it so he went over to USC and USC had this thing has this thing called the Institute for Creative Technologies which is a lab that was created there in 1999 and it was actually funded by the Department of Defense and the idea is that in LA they would combine sort of you know the resources of USC a major research university kind of all the special effects technology in Hollywood and the video game industry which is has a huge base in LA and they'd use it to build advanced training and simulation technologies and what that meant in practice was virtual reality. Yeah I mean it feels a good great thesis to me and it's funny thinking about funded by the Department of Defense boy oh boy have we seen that that is a tech theme over and over again in a lot of these companies yeah I'm gonna copy some cells or the research labs they come out of or you know even research at the history of Silicon Valley and and the importance of of how the semiconductor came to be. Yeah so Palmer a 17 year old kid in Long Beach he talks his way into getting a part-time job at the ICT at USC and he's working on a team that's that's trying to design cost effective virtual reality but he still he still wants to move faster so in his parents garage he starts hacking away with basically like components from smartphones trying to make the device that's really gonna achieve his dreams which is be able to play video games in virtual reality and at the same time he's he's you know on the internet natively as all kids are back then in these days and he hangs out in in forums online and in particular at this one forum called the Mint to be seen 3D discussion forum which is I don't know if it was the largest but it's certainly a very active internet forum dedicated to trying to create virtual reality devices at the time. Yeah man forums were like that's where everything happened back in the day. Totally it's like it's like back in you know the more things change the more they say the same right the original like you know net scape and you know arpinette days yeah and I mean anybody like but predating forums were you know mailing lists and use net and like it's just a constant reinvention of the same thing people see community internet's incredible for community revision revision revision. Yep and you know now we have virtual reality so maybe maybe the next great entrepreneurs will meet you know in on an Oculus around a Vive. Yep. So he's on he's he's posting progress as he's building these prototypes in his garage on the on the meant to be seen forums and turns out that there are among the other posters on the forum or or lurkers on the forum is a guy named John Carmack and that might ring that name might ring some bells for some of our listeners. John is it probably one of the most famous people in the video game world he was the co-founder of id software and id created and John in particular pioneered a lot of the techniques. Quick doom wolf and Stein 3d you know all of the first generation of first person shooter PC games. Yeah and I think his like one of his greatest contributions was the the algorithms to do the shading of shadows so that things look appropriately far away and appropriately lit as you you know approach them or turn corners or you know the things we're taking credibly for granted today but we're actually required a lot of complexity. Yeah and I mean I remember my gosh I was probably in middle school when those games were coming out and like it was they were so far advanced versus anything else on on the PC at the time. The PC or like the NES. Yeah. Yeah. So Carmack is on the forums and he sees and he's on the forums because he is also interested in VR and he kind of shares Palmer's dream that playing video games in VR is going to be a totally new paradigm and really really compelling and actually his Carmack's dream he had id had released doom 3 recently. He wanted to port doom 3 into VR and so he sees he sees all the progress that that Palmer's making and he reaches out to him and there's no there's no great hardware out for VR right like if anybody wanted to port to VR at this point it's like you know highly specialized installations in science centers and stuff right. Yeah I mean basically you know it's the kind of stuff that USC is doing at the ICT for the military or science applications you know you're talking hundreds of thousands of dollars for a room scale installation you know nothing like what the Rift becomes which was you could go on on Oculus's website and order a development kit for $300. So Carmack reaches out to to Palmer ask if he can buy a Rift and and Palmer apparently says he says an interview later he decided he was just gonna play it cool and he's like oh I'll just give you one. So he does and and it's fortunate for for him and for the future of VR that he did this was we're now into 2012 and John Carmack goes to E3 which is the big one of the two big industry conferences for video games the other one is GDC which we're gonna talk about in a minute but John goes to E3 in 2012 which is in June and he gives he gives a big talk and he talks about how excited he is about VR and he shows demonstrates a version of Doom 3 that he's created that is running on the Rift and the Rift is like a totally hacked duct tape together prototype that Palmer had sent him. It was actually duct taped right like there's some that's actually meeting with them where like he actually duct taped the the display to the head mounting piece. Yeah they're great videos online and of course you know after this all the tech and video game press covers this and and then goes and tries tries it out and where's it like the unit is actually duct taped together. Yeah and just like ridiculous watershed moment when when John Carmack is demoing on your hardware at E3 you know it's this is pre kickstarter is that right or is this so this is pre kickstarter there's not even a company yet it's literally just Palmer working on this stuff and and he's at this point I believe either 18 or 19 years old. Crazy. Totally crazy. So E3 2012 is the big moment for what would the artist that would become known as Oculus and a few other folks you know in addition to the entire video game industry sort of take notice and two of the folks who reach out to Palmer when they hear the story about this are two guys named Brendan Arebe and Michael Antonov who also were in the LA area. They had been co-founders of a company called Scaleform which was a sort of video game UI technology company that Adobe had acquired several years earlier. They'd worked at Adobe for a while and then Brendan actually had left and he joined a company called Guy Kai which folks in the video game industry might remember was a streaming video game company that Sony acquired a couple years earlier and the idea being and actually a lot of consoles use this today that rather than buying a game on a you know physical media or downloading it you can play a game just by streaming it over the internet. Oh yeah I remember I remember Microsoft showing off some some tech like this too where the whole idea was that you know you're you're done with downloading the bits to your device and in fact on on this actually a Windows phone demo the device hardware constrained but we have all this amazing cloud computing and we're going to in a low latency way stream your interactions back up to the cloud the game computations going to happen in the cloud and then stream it back down to your device and it'll feel native I feel like I've seen a lot of those demos and the trend seems to be toward powerful clients still like we haven't gone to this where gaming is happening. It's never totally worked right yeah I mean the dream is really cool right that like on any on any client as long as you have a fast enough internet connection you don't actually have to do all the hard rendering on the on the client it can all be done in the cloud and just streamed his video but it's never quite lived up to the promise. Yeah and I think this is kind of a tech trend for me later but I think to quickly derail into it it's we continue to pursue this dual track of pushing the envelope on desktop grade or even yeah it's called desktop grade gamer PCs so you see the Oculus hooked up to really you know really crazy towers and then simultaneously what we were trying to do in a low power way on phones like phones keep getting more powerful and the the processors and phones keep getting better at originally you know apps and then casual games and now a little bit more more serious games on mobile and we're definitely seeing that the trend of you know anyone who was interested in pushing all the intense compute up to the cloud for games that are played on mobile well mobile got good enough to largely just play them themselves and then the ones that require better experiences the intense sort of R&D push the envelope of what can be done is is really still being done on on towers and that's not you know that that's not going away anytime soon yep and especially in VR yep you need one of the things limiting the market right now which we'll get into is you need a super powerful PC to make this stuff work which not that many people have anymore yeah I remember we're interrupting a lot but as a quick aside for listeners I remember going into David's office like a few years ago at Madrona and he's like putting together this like crazy tower to hook up his his dev kit Oculus 2 and telling me about how like VR's here like we're looking seriously at this now like it's the future like people are maybe not consumer adoption right away and I remember thinking like maybe not consumer adoption right away like nobody has a tower nobody's gonna buy a $4,000 gaming rig and like that's still kind of the state of good VR right now yeah I mean we're gonna get into it but we still have that at Madrona it's the thing weighs about 50 pounds it's huge but anyway so so Brendan and Michael coming from scale format and Brendan then immediately from guy guy they reach out to they're really excited about this you know their game guys and business guys in the game industry reach out to Palmer and basically convince him that there's a big company to be started here and that they want to start the company together so the three of them get together with a few other folks who are the initial engineers Brendan's the CEO of the company they found the company kind of in June July 2012 and then immediately afterwards they launched the Kickstarter in August 2012 which which Palmer have been planning to do before him but and and right after E3 but get delayed as they were starting the company and the Kickstarter becomes hugely successful and actually went and rewatched it right before he recorded this and like it is it's great to watch but so funny knowing the history of what happens immediately thereafter so Carmack is is featured heavily in in the video as our folks from Valve including Gabe Newell what the founder of Valve go watch the video what we'll link to it in the show notes he he gives a kind of glowing discussion of Palmer in the future of VR and he says quote we strongly encourage you to support this Kickstarter we meaning you know him and valve oh my god that's awesome it's so awesome so on the strength of this and for listeners that don't know why I was saying that's awesome like valve in HGC would go on to create the only serious competitor to the Oculus right now and arguably better anyway leaving that aside the five and it's hilarious to see him on T. Machueless at the start yeah well and valve's head such a long history with trying to get into VR but but they finally do it right after the Facebook acquisition so that the Kickstarter is hugely successful they had set an initial goal of $250,000 they end up raising 10 times that there is almost two and a half million dollars and then they do something really smart which is after the Kickstarter ends they basically just continue it on the Oculus website and anybody can go there and order order a developer kit for $300 and this is like earlier in the crowdfunding era and it's like amazing to see you know if you're an entrepreneur and you're trying to just put together around a 250k like you don't want to raise 2.4 million because you give up your whole company but like in the isn't crowdfunding great where you know there's there's no equity so it's just like money for you to play around with and sure you have to fulfill those pre-orders and that's the biggest issue with with Kickstarter but like what an amazing what an amazing model to bootstrap a company and get some cash in there you know long ahead of when you're going to ship the units yeah totally and you know and they turn around pretty quickly but but when they when they put the pre-orders up on the website after the Kickstarter campaign there's so much momentum continuing that they're selling you know supposedly for the first couple days that it's up on the website they're selling four to five developer kits DK1's as they come to be known quote-quote DK for developer kit the first one at four to five every minute at 300 bucks pop which is pretty impressive wow yeah so they go along in there they're working on shipping the developer kit they start shipping it and by the summer of next year June 2013 the VCs you know start to get us VCs start to get wind of what's going on down there in Southern California and the company ends up raising a $16 million series a co led by spark and matrix and then and that's in June of 2013 and then right after the first well the company wise the first really big victory happens they that John Carmack actually decides to leave it and join Oculus as the CTO and this is a huge huge moment in the gaming world for the company yep and actually as someone who wasn't following it that closely at the time this was the first time that I took Oculus seriously and I didn't realize that Carmack was in the video or presenting on stage this is the first time I'd heard his name associated with it and suddenly it was like okay this company serious like the you know the creator of doom and quake is joining as their CTO yeah so and you weren't weren't the only person to notice this they they'd obviously raised the series a that summer but Mark Andreessen and Andreessen Horowitz also noticed that John Carmack has just gone and joined this left it and joined this this baby baby virtual reality company based down in Southern California and in December a couple months later Andreessen Horowitz ends up leading a $75 million series B in the company and Mark Andreessen joins the board so what what was the time between that series A and series B uh it was six months or less wow and the other you know sort of a foreshadowing of the future here you know Mark of course and why this is important to the story also happens to be on the board of another company that's going to get involved here which is Facebook yeah yeah that's convenient yes so um that was December 2013 a couple months later at GDC which as I mentioned is the other big industry conference in the video game industry and that happens in San Francisco that's at the beginning of March and Oculus announces that they've been successful with the DK1 and they're coming out with a new version of the developer kit so they're still focused on shipping these to developers they're not ready to release a consumer device yet but they announced the DK2 and that that's going to begin shipping in July 2014 and the DK2 is vastly improved over the DK1 yeah I think I think yeah the DK2 was the first one I had tried and I remember putting on on being like okay this is very different like this is uh you know I understand what the hype is about now but I still wasn't like this is this is the next title wave but then the one after that I think the crescent bay which I don't know if they yeah like how many different presents they never sold they were actually sold the crescent bay that was sort of like the the first iteration of what would become the consumer version that they'd ship in 2016 yeah I think I tried that at 2015 ether or no 2015 CES and they'd take you into this private room you have like a 15 minute little demo with it and that that was the one the crescent bay was the one where I was like okay this is the next title wave of technology yeah it's uh and and it really you know the DK2 the DK1 was was you still had a lot of the duct tape heritage in it and I'd say the DK2 did from a like software perspective but from a hardware perspective it was pretty good and had solid components in it and and when you used it it really enabled the average person uh the average person couldn't you know I think just buy one off the internet and set it up on their laptop however if if you had a friend or knew somebody who had a had a setup uh with the DK2 you could put it on and it would kind of just work and you could see what was so amazing and how different and immersive VR was versus just playing a regular video game yep so uh that was the beginning of March and then very shortly thereafter our recurring character on a on a on acquired uh margazekraburg comes uh comes knocking and he gets in touch with the company and says hey I heard some really cool things about what you're doing I'd love to get a demo yeah yeah do you know how that introduction was broker look is that through and reason or like do you just get an email from zucket facebook that's like hey I don't I don't know it maybe out there listeners if you know uh hit us up on slack or shoot us an email I assume that there were easy channels to to make that introduction happen yeah but somewhat like the like the snap or original snapchat episode zucket I believe as as the story goes you know asked for them to come up to uh come up to facebook's campus and um do a demo up there and and Brendan responds and says hey uh and this is from an interview with Brendan after the acquisition hey you know actually it'd be better if if you come down here because we have better setup here so uh just like he did with Evan Spiegel so get on your private plane and fly down to Irvine mark flies down to Irvine uh meets with aculus is really impressed with what he sees and um and and and it says you know hey we what can facebook do to help you and that quickly leads into acquisition discussions so by the end of the month the deal's done uh it gets announced facebook acquires aculus for 2.3 billion in total of which interestingly only 400 million in cash 1.6 billion in facebook stock and then there was an additional earnout of 300 million but this was similar to the instagram deal and the the failed snapchat deal from the year before and and what's app this is you know sort of cementing facebook and mark zucker bary's reputation as a very aggressive acquire yeah yeah and and I think uh I think it again we always bleed into tech themes here but like it's really exemplifying facebook's phomo i mean they're they're fear of missing out where they see something that they're not currently working on that is uh either uh uh us something with an existing strong network effect like a whatsapp or an instagram that they could unseat them or a powerful new piece of technology that could become the next wave of computing and if they're not on it they're kind of screwed so they've very masterfully had an m&a strategy to uh to kind of make sure that they stay on top and and don't act like the social network of social networks of years years past yeah and um you know we're gonna get into this in the rest of the show but I think what's so cool given how often facebook has shown up showed up on acquired and and all the both the IPO and the acquisitions we've talked about you can really see how and why this philosophy came to sort of rule the day with with mark and and at the company you know through the IPO when they had the huge disaster with mobile and and realizing you know mark realizing as a CEO and the company realizing that um they they had missed that wave and they needed to they needed to paddle over to it you know with all strength asap and that included acquiring Instagram I saw fascinating stat that uh I don't even think about is that so facebook was constantly referred to as a website when they when they launched in for years after and in 2008 they launched a mobile app but nobody referred to them like as an app company and it really took them like four whole years after so that you know they founded in 2004 app launched in 2008 still largely a website even though they had an app and it took them all the way until 2012 to be taken seriously as a mobile company and you know now 84 plus percent of their revenue comes from from mobile advertising and I think that it's interesting to note that like it takes time even though you are on a platform or have a technology to make that the competency of your company and I think that uh Facebook's on opportunity here to you know not let VR evolve around them and then have to play catch up and get on that platform and then like turn the company to be senator on that platform this is an opportunity to say you know we don't know exactly what it is yet if if you know Oculus by Facebook is the platform and other people are on it or if Facebook is delivered over VR through Oculus that much is unclear but what is important is uh they can't afford a four-year lag before starting to play on a platform and and turning the company to be centrally oriented around that platform when that's the one that everybody's on yeah and it's interesting I mean you look at you know the billion dollars they spent for Instagram the 19 billion dollars they spent for WhatsApp the three billion dollars they offered Snapchat you know those were all examples of they were they were too late and they needed to come in and and and take out these uh unsuccessful in Snapchat's case take out these threats that were popping up and they're you know within their current domain but 2.3 billion dollars was a lot of money to spend for for a wave and a technology uh and a modality that was even then you know I think if if rational cooler heads prevailed at that moment looking at the company it was still a long way away I mean we're here in 2017 and it's still a ways away even three years later yeah yeah so okay what was the date of the acquisition it was uh it was March 2014 okay so that 75 million series B was in December of 2013 so uh moving away from the Facebook side a little bit and looking over at the end reason side of this they invested 75 million and then just a little over three months later got let's see yeah well and I think I believe I don't know if it's official but in research I believe the the valuation of the end reason round was between 300 and 400 million wow so that's uh uh call it a 10x I mean somewhat somewhere in that slightly less than less than 10x but still you know that's all no a lot of money yeah well good for them yeah great for them we'll get into um we'll get into acquisition category in a minute here but uh the story doesn't quite end unfortunately for Facebook when they acquire the company um because two things happen over uh while starting immediately but play out over the next couple of years one it turns out that you know Carmack is as important as he was and I really think Oculus the company uh and the technology wouldn't exist without him unfortunately his former employer id software which itself had been acquired a couple years before by a uh video game conglomerate called Xenomax they also agreed that Oculus wouldn't uh wouldn't exist without Carmack and his contributions and they end up suing Oculus and Facebook alleging Carmack a couple things one that Carmack had stolen critical IP from his work at id and taking it to Oculus um and two actually uh in 2012 Palmer Lucky had met I don't know if it was when he was meeting with Carmack or with other folks that did had signed an NDA with the company and uh as a result of everything that happens Xenomax is alleging that he had violated that any that NDA and alleged and then uh and then you know and so so that that lawsuit hits almost immediately after the acquisition and then only just a month ago as we're recording this in February of 2017 a jury in Texas which in software is based in Texas is based in Texas actually rules in favor of Xenomax a $500 million judgment against Facebook uh and Oculus and and Facebook has said that they're going to appeal but still that's not good. Yeah that I mean that takes it from a two point uh uh two point three up to two point three up to two point eight uh but it gets even potentially worse in that Xenomax Xenomax has also filed a court injunction arguing that the courts should halt sales of the rift which would just be terrible. Wow yeah that's that's a far more serious blow. Yeah it hasn't happened yet but is potential clearly they're posturing and trying to bargain between the parties here. Yeah I did some research on Xenomax for for this and uh yeah it's actually it's quite a large video game conglomerate they own a bunch of studios including the one that makes um um video game fans among our listeners will know the Elder Scrolls the Fallout series but guess who is on the board of Xenomax? Uh the only the only thing that wouldn't surprise me is Carl Icon. No but uh almost as good so they they have quite the cast characters they have Cal Ripken Jr the uh Iron Man the best football player yeah. Jerry Brookheimer the uh the movie producer and um uh in addition to less less Moonviz who is who is the CEO of CBS and but this is really the kicker I just couldn't believe it when I read this Robert Trump Donald Trump's brother is on the board of Xenomax. What? I didn't know that says it's true. Boy what a weird company got a conglomerates or a weird man. Yeah totally weird so you can't you can't you can't make this stuff up truth is in fact sometimes more stranger than virtual reality. Yeah and you know we'll have a follow up I'm sure probably not an episode but this will be an in follow up in future episode but um I suspect you're right that the injunction to stop selling the rift is just posturing and trying to get potentially a a settlement or more out of the current ruling or something and um it would shock me if they they stop shipping the rift because of this but it does feel like Facebook's gonna get a pace more money there. Yeah or at least it's it's posturing perhaps trying to get Facebook to drop their appeal. Yeah but the other major thing that happens uh after the acquisition um that uh that we've alluded to on the show is that Valve and Gabe Newell decide that rather than uh rather than just supporting Oculus they actually want to get into virtual reality themselves. So the next year at GDC in 2015 Valve unveils in collaboration with HTC the uh the Chinese consumer electronics company they unveil the Vive which is in many ways a superior product to to Oculus and the rift and the Vive has two key innovations that um the rift doesn't have at that point one are true hand touch controllers so when you would play the experiences or games on on Oculus before Valve came out with the Vive you would have to use either a keyboard and a mouse or or a video game controller an Xbox controller and that's just totally boy is that plea about the experience really pulls you out of the presence which is the whole point of VR. Valve ships these controllers that enable you to move your hands around and grab things and pick things up and and interact much more naturally with the environment and then they also have the the while it's still tethered the headset that you wear still as a cable coming out of it and attaches to the PC there are they're called lighthouses uh that are laser positional tracking uh boxes that you put in the room and that allow you to walk around the room so you no longer just sitting in a chair with your hands on a video game controller like the old video game paradigms but it really changes this into a much more immersive experience and boy what what a what a brilliant freaking end around by uh by valve like there's a software company for for listeners that don't know a bunch about valve uh there's software company they make games and they make a platform called steam and they make I think they make most their money from steam and they get a cut of all the distribution of the games that go out over steam and uh and steam sort of the default way if you're a PC gamer to uh to go and get new games that come out so basically they own the pipe and you know they're super wacky company brilliant brilliant engineers they're brilliant game designers that um of course are interested in VR but like they're not going to make hardware that that that's not in their core competency at all and they've been as David alluded to trying for years to figure out what the right way to get into VR was and for them to be able to you know closely track and and be a fan of of Oculus see that fall into Facebook's hands which yeah it's loosely competitors right at the very least you don't want to put too much of your your company's stake on uh on in in Facebook's control and to be able to in that type of a window turn around find a hardware partner like HTC and get into market with a superior product like it there's a lot of things that will conclude out of this episode but one of them is that there are people at at valve and HTC that are executionally brilliant yeah and valve is a link to this in the show notes uh I suspect a lot of our listeners are are know the company well but for those that don't it is a fascinating place their employee handbook leaked on the internet a few years ago and it's it's more like a manifesto there's uh there's no hierarchy nobody reports to anyone else there everybody decides what they work on there everybody's desk is on wheels and if you decide you want to work on something else with a other team you just pick you move your desk over to wherever that team is and you start working on whatever they're working on and I believe it's a hundred percent owned by Gabe dual so there's no I mean there's not a lot of leaks of stuff from shareholders or public disclosures or any or really even like known market cap of the company it's a very uh yeah it's very very closely held I don't believe Gabe owns exactly a hundred percent but he definitely controls the company yeah just one person and and they make you know nobody knows outside of valve the exact number but but a lot of money I mean billions of dollars of revenue from mostly from steam has been mentioned yeah and if there's an opposite podcast to to acquired it's like so and in the acquired uh or in the corp dev parlance you know acquired is often about the buy not the build um if there was a podcast that was about the build decision instead of the buy decision uh we would really want to like examine what valve does here and what there existing uh business with steam sort of allowed them to do in going into VR and taking this like very expensive risk on something that has has you know super unclear business value especially when they start the venture yeah and they you know they really you know I don't think there's really any two ways about it they out execute Facebook and Oculus over the next two years um Facebook ends up shipping the consumer version of of the Oculus Rift before valve by by a week so the the consumer version of the rift comes out and at the very end of March 2016 um and then at the beginning of April uh valve ships the vibe but again with these two key innovations that Oculus doesn't have and it's not until December 2016 so just a few months ago now that Oculus finally brings out their touch controllers which brings them closer to parity with uh with the hand controllers of of of the vibe yeah and you know what I mentioned earlier that the crescent bay woke me up to the idea that the VR is of uh you know the next title wave and technology um I'd say the next step function was that was the first time I tried the five uh I think that there there was a thing I think Google might have even made it but it was a thing where you could paint and you use the controllers to tilt brush yeah tilt brush yeah and then it was cool it's like MS paint in VR is the only way to describe it um it was an independent company a couple developers and Google ended up acquiring it oh nice nice nice so does that demo and then there's one in a kitchen where like you go in and you're supposed to like you know the job simulator yeah but really what ends up happening is like you can just mess every like you can just pick up pans and heave it at a wall and knock the like this is incredibly thrilling experience of like throwing an entire rolling cart full of dishes on the ground and having no consequences and I'd say that that was the first time we're like I think I was in that thing for like a half hour it felt like five to ten minutes and that was the first time where like I legitimately didn't want to leave like that that was the first time where I was like oh people are gonna get real addicted to this yeah and that's you know I'd say for our listeners that aren't into VR maybe haven't even tried it yet you know go find it's worth it you owe it to yourself if you care about technology and thinking about where waves are gonna you know break in the future go find a friend or go to your local venture capital firm that has a vibe installed and and try out a few things try out till brush it's really you know it'll take you back to the first time you used MS paint on a PC if you're old like me and Ben try out there's this my favorite favorite app in game is in VR these days is by by our friends over at Recruim. Recruim. Really amazing company in Seattle and the best I can describe Recruim is you you just have to play it yourself and you'll you'll be a believer about the potential of VR but that's like the first time I played GoldenEye 64 as a kid and have my first you know like shooter 3D video game experience and Recruim so much more than that but just that pure fun it's it's great yeah and the reason is and we'll get into this and and I think this is part of Facebook's bed is you know Facebook I think Zuckerberg let me read the quote real quick he he's over and over again said VR is going to be the most social platform and I think the super cool thing about Recruim is like you're in there just hanging out you're doing all sorts you're in a room you're playing paintball you're there's like all these different activities you can do but it's all centered around like you're just like hanging out with other people as if it was sort of real life and one thing I want to dissect later in the tech themes is like does that like do you do you agree that the the the you know killer killer app of VR is is a social one but the cool thing about Recruim is like when you when you try you're like wow I really am just like hanging out in here and I could do this for hours with other people yeah and that's what you know what I said it reminded me it reminds me of what it was like playing gold night the first time like the single player campaign and golden I like you know it's fine it's whatever it's good but like golden I was all about playing with your friends and everything like all the talking smack and you know the hours and hours and hours as I spent in high school and college with my friends playing that you know that's what Recruim is like and it really feels like a glimpse into the future yep hey acquired listeners I'm jumping in with a quick update in the next section we talk about where Oculus is today and recent events involving the team there was some pretty big news between recording and releasing this episode so I'm here to tell you Oculus founder Palmer lucky has left Facebook on March 30th Facebook confirmed his departure following a long stretch of Facebook being very quiet about Palmer this came after he denied and then confirmed reports of funding a pro Trump organization called nimble America and then did not appear at Oculus's developer conference now back to our regularly scheduled programming okay so let's finish up history and facts you want to David you want to take us to like the recent events the last last six months to a year and then we'll go on to acquisition category well I think we've kind of done that we know yeah I guess I mean person L.Y. so so Facebook yeah yeah I mean there's been some really interesting things that have happened as Oculus starts to merge more into Facebook so Palmer lucky is no longer the CEO of Oculus but is still at Facebook working on things actually Brandon so Palmer was never the same oh right sorry sorry Brendan Erie Bay step down as CEO he's now managing Oculus's quote PC division which is basically the rift right right and then so Palmer similarly is at Facebook kind of title lists and so the way you can kind of think of of what's going on at at Facebook right now is Oculus is getting more integrated there's still the Oculus group that makes the Oculus rift Facebook has more independent VR teams there's a PCVR mobile VR and and you know obviously we've seen the there's been demos on stage of these incredibly social experiences that may be the future of what Facebook looks like in VR and and you know they're they're shipping the the rift but it's very clear that whereas with Instagram and WhatsApp they stay very separate Oculus is an acquisition where they're getting much tighter integration with the company and and it looks a lot more like a division than it does a separate company and a one huge marker of that is the the whole team or at least a good chunk of the team move from Irvine up to Menlo. Yeah Oculus's headquarters is now in in Menlo Park with the rest of the Facebook campus but I think that's a perfect transition to acquisition category and I think for me clearly this is is well you're curious what you will say Ben but to me it's clearly a business line acquisition I mean this is a new product a new platform not part of the existing wave that Facebook is on that they're buying and and I think you know it was interesting that they initially kept they tried to run the playbook of keeping the team totally separate and totally autonomous and in particular you know kind of at arms length away down in Southern California but then that didn't work out quite so well as they got ended rounded by Valve and now they're moving it much more in you know moving to integrate it much more deeply into the rest of the Facebook company disagree entirely I love it it's I think it's a technology acquisition I would I would say the the signaling initially could could lean more toward business line of keeping it separate of it being its own revenue generator but to me this is a defensive play on protecting the network that Facebook has and their existing business model I think that for them they looked at this and said okay VR is clearly a future we need to make sure that we have a position on the dominant technology platform of the future and we are right now at risk of other people building all the hardware and the platforms and us being having nothing to do with it and then having no leverage in making sure that we have a dominant position on that platform and Facebook has seen they've seen like I guess the point of making is they don't care about the business line of selling Oculus Riffs to people and I think that they've looked around and seen crap we don't actually own the direct relationship with any of our users they're in a slightly tenuous position where you know that people are you know in the Facebook they're they're on it all the time they're on it every day it's an essential part of people's lives and provides a ton of utility but they access it through either their Apple device their Android device they Facebook desperately tried to make their own phone that didn't work like Facebook is in a little bit of a tenuous position in not directly owning their customers and or at least not directly owning the users that they're advertising customers monetize and I think what Oculus is is them trying to get out ahead and making sure that with this technology that clearly evolves to be the future of computing that they aren't going to be upended by by someone else who decides that and we're not going to prioritize Facebook on the platform where all the users are been I think you hit the nail on the head it's about owning the customer relationship at the point of access in the next wave which they don't right now you know it's it's fun doing this episode right now and in particular after the Snapchat IPO but it's hard to judge right now like I think if they had kept in fully in that like oh we're going to keep it separate mindset this would be a failure but now that they're starting to integrate it more deeply that feels like the right approach to me at this point yeah so let me this is the third time I've dangerously danced in detect themes ahead of schedule but let me throw something out there that I think Facebook would be much better off keeping them separate and keeping it like its own little division with a kind of a firewall between Oculus and Facebook because as they so Facebook is a horizontal company Facebook needs to make sure that they are on every single platform in the same way so that the most users in the same way that Google needs the most users they need scale can get access to it and the closer they start to integrate these things the more the danger comes up of them prioritizing Facebook features to be Oculus only and not putting them on the vibe or whatever other platforms come to be and I think that's a really when you're in a play at a company like that you start to get confused as to what the priorities are yeah like I remember being at Microsoft you end up with an i-message situation right totally and and one that I've experienced personally is like you know when you're at Microsoft like at least a few years ago wasn't if you're in office you hear the message that office isn't important business on its own maybe the most important but then things happen where like we don't ship office for iPad because we want to give the surface ahead start and be the only platform with you know with with office on it and so with office being horizontal windows being a vertical we take this over to Facebook and say Facebook is the horizontal and Oculus is the vertical it seems like unless Facebook is believes that the Oculus will be or the you know Facebook VR will be the only VR platform where they will need to reach users it seems really dangerous to start doing integration and I would argue that they really need to figure out how to make sure that they're not prioritizing Facebook for Oculus. This gets into the really interesting part of the show which is you know we talked about how Snap is clearly thinking about their future and what that's going to look like in a whatever augmented virtual mixed whatever you want to call it reality perspective total aside I might talk about this in tech themes but as long as we're like as long as people are debating what to call something it's not a wave yet the wave has not yet broken until like phones are just phones when you're talking about like pda's or smartphones like no you know as once they're just phones once it's just like your glasses then we'll be there. But David the the wave is VR AR MR slash slash slash slash slash slash but the breaking of the wave is clearly coming and snaps working on it apples working on it valve has a very successful arguably more successful than Oculus product in the market so what should Facebook do yeah I mean well one thing you could you could argue they could do is what if they didn't actually let's move into what what happened otherwise what if they didn't buy Oculus but they found a way to make sure that Facebook was great on all of these platforms like how do they get the leverage to make sure that they have a first class relationship with customers of of VR or do they actually have to own one of them to like have an insurance policy that you know they're going to invest a ton of money in making this single VR platform really great but somehow they're going to have the the restraint to never prioritize the Oculus business. Yeah I don't know I mean I think it's the question you were asking which I feel like we need to get Ben Thompson on this show to discuss like can Facebook be a horizontal and a vertical business at the same time I mean I don't know anybody that's ever succeeded with with great restraint man like you just got to make it so clear to all of your employees that like Oculus is an insurance policy and like Oculus needs to be really great but we all but like the main business is Facebook like it it minns money and it's going to continue to make money as long as we don't screw it up. Yeah I mean easy to say in theory right like I've literally never seen that happen before and I don't know that you could sell great employees on that right like if you're if you're the best VR developer screw that I'm going to valve. Yeah well okay here's a here's a potential counterfactual one we've covered on this show Android so Google's a horizontal company Google search and Google services Gmail maps whatnot were great on iOS as on Android obviously and I think it's pretty clear at this point you know like we talked about on that episode the mobile wars are over and that everybody within Google is aligned on making those services work great across all platforms and yet they still have Android but now here's what's key about Android I think to my mind Google doesn't make Android phones I mean that's changing a little bit but right but like the whole strategy was get the software out there get the operating system let other people let other ecosystem partners build a great hardware and get it in the hands of people and that use use Android as a way to make sure that we are going to be able to continue deliver to deliver these great Google services to everybody across all platforms a do you think that's that was the you know that that's a viable strategy be can Facebook do that totally a viable strategy very interesting to like the main takeaway for me is Android itself doesn't make money it prevents Google from having to give money to other people like Apple out of its out of it's give as we talked about a lot of money to Apple yes but they could give many times more money to Apple if Android didn't exist and and for listeners that's the of the search engine affiliate revenues that they they pay out to wherever the search originates from yeah so Google pays on the order of a billion dollars or more every year to Apple in order that Google remains the default search engine on the iPhone and and they actually it's not just like a straight payment it's that Apple actually gets a cut of ad words revenue so it's like a variable rev share for ad words that are served on searches on the iPhone yeah good good to be Apple there so I think that it's good to be Google you've got the best business model of all time yeah so the the Android strategy I mean Facebook totally could build like Oculus OS and then have reference design and then do the same thing that Android did and have have third parties build the the hardware I mean is is is that what daydream is is Google sort of do taking that approach with a daydream VR yeah I don't know enough about it to say for sure but I believe it is similar except that it's on Android phones that are powering it so there is there is that wrinkle it's not like it's a it's not like daydream as far as I know I could be wrong but I don't believe daydreams gonna work on like iOS I think you're right so getting back to the other point that you're making though like I'm I'm not sure it actually buys Google or Facebook much to build the sort of VR software layer and then let someone else do the hardware I mean that maybe it does I don't know I haven't I haven't actually really thought through that I mean clearly that's the approach that valve is sort of taking that like they're going to continue to make money from steam and steam is going to be on all the all the vibes and like HTC you take on all that that a hardware difficulty and risk and and cost for for making the hardware well reminds me a little bit I hadn't thought about this until until you brought it up a couple minutes ago but I think it kind of comes back to Microsoft too right like that's what Microsoft did with the PC yeah which was build the operating system give it to everybody get it out there you know and you know Apple wasn't you know that's great that Apple exists right like we'll make we'll make office for for Mac too you know what and we'll careful you know but I think you know there there are plenty of examples whether it's Microsoft and Windows or Google and Android of that type of approach working it's when you then cross over into trying to be both vertical and horizontal that you get the office for iPad situation yeah I mean I think it keeps coming down to this they just have to figure out a way and Google took years to do this to be clear that Android exists to power the search advertising business and it has to be first class and the great OS on its own to have people use it because it's in a competitive landscape but like it doesn't exist on its own to be Google's main revenue stream and Facebook's just going to have to do the same thing with Oculus and hopefully there's less tumult on the way to get there totally so what would have happened otherwise I mean we're kind of in this section right now but where you know if Oculus doesn't land at Facebook what happens to it well it's a really good question because they'd raised a lot of money really quickly but it was going to take a lot more money to get to where we are now and clearly I mean I think if if Facebook doesn't acquire Oculus there's a chance that maybe Valve continues to partner with Oculus and doesn't go off on its own however if given that they did and if they had an Oculus was still alone and independent you know they would have had to do something because we saw with the execution that Valve had when you bring the resources and the huge amounts of money that a corporation like them can to building new technology like that they they were just going to blow Oculus out of the water you know Oculus probably only was able to hang on because of the head Facebook's resources so I think it's it's hard to imagine Oculus remaining an independent company a fully independent company yeah without needing to you know I mean I guess as we've talked about with both Snapchat and Uber and DD it is possible to raise huge sums of money these days but I think it's not just about the money too it's about being able to get the right OEM partnerships you know the right think about how much how many years and how much effort Apple has invested in creating their supply chain you know the idea that a startup would be able to do that in a within a competitive landscape is hard to imagine these days yep yep and actually here's a great quote from from Palmer Lucky he said I'd say we are five years ahead of where we would have been without the acquisition pointing to the resources needed to improve the hardware technology as well as encourage software developers to build games and videos to watch on it there's a strong argument to be made we would never have gotten there in five or even ten years and there's a great point that like the Facebook brand boosted the network effective developers making stuff for it too yeah and the the we've started talked about the evolution of the rift hardware you know the DK one was like one step past duct tape but the DK the DK two but then you know the consumer version like these are true good consumer products like totally even with a lot of money would they've been able to create that yep okay so what what would real quick what about the flip side of that what would Facebook have done in VR without Oculus hmm well Facebook still hasn't done much in VR but I mean that's the other thing that you know it's just so early right even three years later after the acquisition best guesses are it's growing and growing quickly but I bet there you know there certainly still well less than a million active you know daily active VR users out there in the whole world you know compare that to like six billion daily active users six billion with a bee you know in mobile so I think Facebook is still totally fine yeah I think so too which is interesting to think about and grading the acquisition is they've they've so far paid two point eight billion dollars for a thing that they would have been completely fine without but it's a long bet yep okay tech themes so the running through my list of of I'll just say like check next the ones we've really already talked about but you know Facebook doesn't want to get left get left behind like they did with mobile check already talked about that you know owning the customer relationship okay here's the one that I really want to posit to you so Zuckerberg often says that Facebook is going to be or VR is going to be the most social platform and I'm curious do you think that's actually where where VR is headed or is Zuckerberg saying this because it's like a mash of like Facebook is the company that connects people and it makes the world more open and connected place also VR is the future so we therefore must match these things together because you know our business must survive in the world where VR is the future or or is it or do they actually have a good confluence and work together well I think he's read this is maybe foreshadowing my greeting I think he is both 100% right and Facebook innocuous have executed poorly on it you know I think if you look at the vision that snapchat is putting that snap is putting forward of you know a camera company right which is the closest that I have seen to anything resembling you know normalcy and a true wave in what we're talking about because like I said you know the wave is not quote-unquote VR or AR or MR it's glasses or a camera it's something that real people everywhere are going to use people who don't listen to this podcast and so I think he's right and I think you just look at snapchat or look at record him honestly you know I mean that to me is is what is the example of what's most compelling in this medium is actually being there and and playing with people or or doing things together with people so I think he's right on the other hand I think if you look at the product strategy and the history over the last couple years of what Oculus and Facebook have done you know they're they're behind because it's natural hand movements that are so important to that it's walking around it's the types of things that valve has done with the vibe but it's also what snapchat's done which is like to really make this mainstream you need to get out of the PC entirely you need to make this something that people are going to be open with in the real world you know interacting with other people yep okay so my I think we've talked about a bunch of my themes too the only one I would say you know that we just got a brief mention earlier in the episode but really came out for me thinking about this and doing the research is Kickstarter right like Oculus and the Rift being one of the first not the first but one of the first really breakout companies slash products slash ideas to come out of creative endeavors to come out of the Kickstarter platform and that reminds me of what I think is a deep theme and technology that anytime you can build a platform that enables other people's creativity in kind of ways that you would never imagine that's a recipe for something special whether that's an operating system enabling software developers to create and distribute anything like the app store or like windows or like Apple whether that's Facebook enabling anybody to share you know anything that they want to write or say you know I think Kickstarter is just a really cool example of that and and led to Oculus yep I think it's a great point should we grade it let's do it all right so I I think you're you're you're forced out of this a little bit but like the strategy of Facebook acquiring the preeminent VR's VR company and paying a lot for that I think is great like that's you know I so far if we're you know it at the date of acquisition I'm like this should be an A like I I really feel yeah this makes lots of sense to me Facebook needs to be here I think in the last couple of years of where it's ended up I'm I'm gonna go with a C for this acquisition with you know as as we've said before a high level of variance so when we revisit this acquisition in years to come very open to changing that and I think it's very likely it will change but like holy crap they they they bought Oculus and then a year later a far superior you know piece of technology comes out and it didn't seem that hard for for someone else to pounce on it and especially someone that was so interested in in the Oculus in its development and then on top of that all I really disagree with Facebook integrating VR tighter like I really think that that I think they're potentially at risk of of not making sure that they understand that Facebook needs to be a horizontal platform that that doesn't prioritize anything on Oculus people that work at Oculus should view themselves as working on a thing that is that make sure Facebook doesn't get unseated in the future but ultimately you know Facebook is the business like they should look at their competition as Snapchat even though they work at Oculus yep totally agree I think you've nailed it on this one you know the only I'm tempted to quote Tom from Tom Tom allberg from our Amazon IPO episode himself quoting Jeff which is just such a great line in tech that Jeff saying Bezos is saying that you know it's okay to fail at things it's not okay not to try so I want to give Facebook and Mark Zuckerberg a ton of credit for you know trying here and and seeing you know the potential in VR as a future medium and pouncing on it early on the other hand like he pounced really early and execution has not been great since then so for the same reasons as you've been I'm going to go with a C on this one so far yeah and maybe there's a there's a abstraction here we need to say like huh it turns out if you're a horizontal that needs to have scale and reach every internet connected user in the world then maybe you don't own the hardware platform and like a risk of your business of reaching everyone is that you don't you know you don't necessarily own that direct customer relationship and that just has to be okay like that just has to be baked into these like mega horizontal scale models yep because there's no way like could Facebook have its cake and eat it too could is is there a world where the technology behind Oculus was so breakthrough or anything that they acquire is so breakthrough that it is the only hardware platform and then they reach everyone and get to own the hardware like I just don't see a world where that's possible well what you're talking about is a monopoly on a direct customer relationship and you know monopolies a word that gets thrown around in tech a lot usually in conjunction with network effects and the power there but what's interesting about network effects at least in the companies we've seen them expressed powerfully so far very few if any of those companies actually own the the the means of ingress you know so to speak you know they own it in a sense in that Facebook you know owns the app that people you know come to and spend most of their time in but they don't own the phone you know and and Google owns where people find their information but they don't own the computer or even necessarily the phone even if it's Android right I think it's just maybe harder not or maybe impossible it's unlikely to believe that Facebook would be able to do that with VR in the future yep I agreed okay quick follow-ups so one snap they're still a public company they are they are still a public company they have not completely imploded their stock is trading below IPO price yeah well they're stock is trading up from where they price the IPO but it is trading down from where it closed on the first day of trading sure which is fine the real story will come after they release their first quarter and probably couple quarters of earnings and we see whether they're able to reignite growth yep yep yep let's just hope that everyone that bought in a very excited way on that that first day does not become extremely pessimistic right now and and you know I in my whatever we're not we're not picking stocks we're not forecasting we never time the market blah blah blah I think it's going to bounce back a little bit and let's let's hope for snap sake that the people that bought in our our sort of in it for the long haul and understand that too because I think one interesting point that a friend brought up the other day is tons and tons of millennials bought bought snap because it's the first kind of accessible IPO to them that was both large and something they were super familiar with and people bought an emotion of I like this company and you know you don't want to see all those people you know have a super negative is negative experience and lose out yep well echoes of the Facebook IPO episode go listen to that one if you haven't already I think that is some some of our our best work here on acquired okay other hot take Intel acquiring mobile I been here autonomous cars are a thing forget VR yeah boy sure seems like it huh I think wait is mobile I a camera company in a sense in a sense I it's more like an applied machine learning company it's really fascinating to me that's you know so mobilize a Israeli company they build self-driving car technology and they're bought by Intel for about 15 billion dollars 15 billion dollars yeah yeah and you know what they're really doing is applied machine learning like to me this is a company that is their core competency is is the collecting and synthesizing of the all of the training data and building a pipeline out of that so that they they can appropriately hook into all the systems of someone else that makes the car and make that car self-driving and it's so fascinating to me that as this market gets you know so much attention so quickly and it's so clear that this thing is going to happen that you know by pointing your your technology in the right direction and and really starting to get market traction with the makers of these these cars like if this company was a machine learning company they would assault for a 15th of what they sold for yeah it's interesting I'm I think we might have unexpectedly on this episode touched on a really really deep theme in technology which is this vertical versus horizontal idea ever since we talked about it a couple minutes ago I can't stop thinking about it and thinking about Intel acquiring mobile I and like okay yeah we're gonna be you know we're now gonna sell this horizontal platform to all the car companies to enable them to be to to compete in the in the autonomous market contrast that with a Tesla which actually used to use mobile I components ended their relationship took it in house is vertically integrating taking an apple like approach I mean I mean it's very interesting to see this how this plays out rewind 20 years ago like Tesla is apple they're like yeah totally they're vertically integrating they're selling a you know high-end premium consumer product that's that's priced and experienced in a premium way and they they capture a lot of value and the rest of the value is captured by an ecosystem that is based on Intel that are basically component makers and it's like you know history repeats itself yeah well I think the question is and actually Bentonson wrote a great piece the smile in the last week I believe the smiling curve about this question is can a combination of Intel be the Microsoft not yeah yeah yeah and could Intel be the Microsoft right like and they as I was trying to do here is sort of like level up the stack yep fascinating yep yep fun stuff future episode Intel self-driving OS we will see see what happens coming soon to a podcast client near you indeed speaking of podcast clients uh one that you can listen to on your podcast client uh my carve out this week is the pod save America with Cara Swisher interviewing the the gang from pod save America at South by Southwest so pod save America is the the guys that used to do keeping it 1600 on the ringer podcast network yeah after this election moved over to start their own media company uh called crooked media of pod save America pod save the world and other um left leaning highly cynical very funny uh podcast and uh if if you're into keeping up on on all the stuff that's going on and you want some insights from the people that held those jobs in the Obama administration it's a it's an awesome podcast like pod save America is incredibly entertaining and uh the Cara Swisher interview is phenomenal because she she might be the best interviewer alive like she is so good at yeah like thinking about like what do I want to know what do I think my listeners want to know I'm gonna abuse you until I get those things out of you and you're gonna like it because I do it in such a fun and entertaining way and let you tell your story and give you the respect as the person being interviewed and the and starting from a place of like look I think you're really smart and I think you have a lot to share want to you share those things with us and there's there's this incredible mutual respect between the interviewer and the interview ease and uh I just highly recommend it. We look up to her unacquired and a lot that uh we can learn and and hope to keep learning as interviewers and podcast hosts and journalists in our in our own random internet way kind of sense ourselves listen mine uh real quick for the week uh speaking of uh left leaning uh liberal folks great article in the New Yorker this week that really made me think uh by Adam Gapnek who uh several years ago wrote this great book called Paris to the Moon which is just hilarious being in Paris as I am right now uh for for the next month or two great satire of the French and of Paris but he wrote a wrote a piece called asking the question are liberals on the wrong side of history in uh in the New Yorker and willing to it uh it's really good but one of my one of my favorite elements of the piece of which they're several is sort of asking this question like what does the course of history have to say about whether you know what the themes are behind it which which reminds me of course of our podcast and you know what we do unacquired but Gapnek kind of makes the point that like because events turned out a certain way um because Trump won the election because Brexit happened etc or other things deeper in history like the human mind is such a you know this is conuminent toversky classic stuff is such a like storytelling machine uh that we seize on to that narrative that like oh well that was inevitable and it reflects this deep truth but the reality is like maybe it wasn't inevitable maybe you know it was a probabilistic thing maybe it was even a low probability thing that just happened to happen um and uh I love thinking about stuff like that interesting just because it happened it doesn't mean it was destined to exactly and it doesn't mean that like uh that you should create or accept a gospel about like the truth behind it because the truth is complicated yeah sounds very cool cool lots of we've got listeners thank you so much for uh joining us as always if you've been a long time subscriber as uh as we mentioned in the beginning and uh and you appreciate the show we'd love a review on iTunes make it something stupid make it something funny we'd love to read it on air um and uh it helps us grow the show get more guests and uh and really um bring acquired to more people so yeah feel free to uh if this is your first show subscribe from your your podcast client of choice you can shoot a email at acquire.fm at gmail.com go to acquire.fm join us in the slack gosh I don't know what more I could plug so I'm just gonna call it here find us in VR yeah yes signing off have a good one taxi guys in