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Stratechery (with Ben Thompson)

Stratechery (with Ben Thompson)

Tue, 06 Dec 2022 03:16

Ben Thompson joins Acquired to discuss the business of Stratechery itself and celebrate 10 years (!) of the internet’s best strategy analysis destination. Even beyond Stratechery’s enormous impact itself on business and tech over the years, Ben’s work inspired a whole generation of business content creators — this show very much included — and it was super special for us to give the Acquired treatment to one of our own heroes. We cover the full history of Ben pioneering the subscription internet media business model (indeed SubStack’s seed round pitch was “Stratechery-in-a-box”), and how + why he’s evolved the business since and is now doubling down both on podcasting and a broader vision of the Stratechery Plus bundle… including for the first time content not made by Ben himself! Tune in and enjoy.

If you want more Acquired, you can follow our public LP Show feed here in the podcast player of your choice (including Spotify!).


  • Thank you to our presenting sponsor for all of Season 11, Fundrise. If you’re considering raising a growth round of capital in the next year, you should definitely explore raising some of it with the Fundrise Innovation Fund. Just email, and tell them Ben & David sent you. And if you’re an individual looking for exposure to private growth-stage technology companies, you can invest in the Innovation Fund here.
  • Thank you as well to Pilot and Tiny!


‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

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Ooh, market's got a nice bump today. You're good feeling about your own. Yes, I get these vibes from, you know? I want to room to wake up on this 2021 side of the bed one day. Just be like, you know what? Times for good back then. Because cataclysmic damage that needed to get unwound at some point, but while it was up, it was all good. Do I really need to keep bringing it down the camera? Well, let's take this FOMC meeting off. I'm gonna post a story on Instagram just on a beach with a drink. Hahaha! Who got the truth? Is it you, is it you, is it you? Who got the truth now? Is it you, is it you, is it you? Sit me down, say it straight. Another story on the way. Who got the truth? Welcome to season 11 Episode 8 of acquired. The podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I am the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund PSL Ventures. And I'm David Rosenthal and I am an angel investor based in San Francisco. And we are your hosts. Today we are telling the entire history and strategy of Stratekery. And we are joined by the man himself, Ben Thompson, on the eve of Stratekery's 10-year anniversary. Stratekery is innocently billed on his website as the business strategy and impact of technology. Stratekery, as Ben puts it, started as some guy in Taiwan with no access. Today, Stratekery is a powerhouse, shaping the thoughts and conversation of the entire technology industry around the world at the highest levels. Ben has interviewed Mark Zuckerberg, Johnson Huang, Satyana Dela, Sundar Pichai, Rich Barton, Meredith Copat-Levian of the New York Times, Pat Gelsinger of Intel, and John Collison, and many, many more. Many of which are regular readers. He is the father of aggregation theory, the most important business framework developed in the last 20 years. And Ben really pioneered the internet subscription newsletter business model. We sat down with him to talk about a bunch of his recent changes going big into podcasting, bringing on co-hosts and expanding the empire, and even now launching a Stratekery property that he does not appear on at all. Regardless of what your business model is, regardless, even almost of what your content is, I don't think there's any creator, certainly not any business creator out there today, who doesn't directly or indirectly look to Ben and say, you inspired me, you paved the way for what I do. I mean, we certainly feel that way. I feel that way. David, I even feel like you're and my friendship developed early on from reading Ben's pieces and sharing them with each other with our thoughts. We have these old email threads in 2014 of UNI discussing Ben's writing. Oh, totally. We might talk about that on the episode here. Well, for our presenting sponsor this episode, we are back with Fundrise CEO Ben Miller, and we asked him to share with us what his inspiration was for launching the Fundrise Innovation Fund. And so technology will disrupt every sector, including venture capital. I don't believe any VC would argue they're immune. It happened to commerce, happened to news, entertainment, public markets, etc. But just like every other incumbent, they may have trouble imagining it. And so the mission of our company, Fundrise, is bring about that seed change. So how do we do it? So in my experience, what happens is an industry ages and the stories it tells itself, which were once true, become no longer true. Did you saw this play out in real estate? Yeah. So typically in a financial industry, the essential story is about alpha. The incumbents raise money and create alpha. And that alpha is usually about deal picking, making the best investments. And in other financial markets, for example, public markets, technology made those markets more transparent and more efficient over time and that alpha went away. And Vanguard basically consistently beat the best hedge funds in the world. So that's going to have an venture capital. It'll start where I think we're starting, which is mid to late stage companies, where there is a lot more data. And that's what we're doing. The Fundrise Innovation Fund is a public mutual fund. It's like a Vanguard for the private technology markets. And so if I can paraphrase, it's less about picking the winners to guarantee alpha, but more about increasing transparency and access so that more investors can just get the benefit of beta. These correlated returns where when the market goes up, you're invested in that asset class so you get to go up with it. Right. If you had indexed into cloud from 2012 to 2017, and you just said, I'm going to find the data that indicates the top 10 or 20% of companies with product market fit, you would have been great. I learned this in 2008. The cycle and the market is way more powerful than individual. You think you're adding alpha, but you're actually riding these mega trends. I mean, it's going to happen eventually for sure. It's inevitable. It happens to every sector. I just want to be the one helping do it. And for founders, once you're at that stage, the actual natural best fit and form of capital for you is the equivalent of mutual fund public market capital. And that's what you're bringing for the first time to the industry. Right. Exactly. Our thanks to Fundrise. If you want to join the over 350,000 individuals investing with Fundrise, you can click the link in the show notes. And if you're a founder and you want to get in touch about having the innovation fund to participate in your next funding round, emailed not VC. That's notvc at After this episode, come hang out with the other 13,000 smart, thoughtful members of the acquired community at slash slack. We'll all be talking about it. Without further ado, this is not investment advice. This show is for informational and entertainment purposes only and now onto our interview with Ben. Ben Thompson, welcome to acquired. Thank you. Happy to be here. It's great to have you with us. We've done surveys over the years of our audience. And we say, what is the number one topic that you'd want to see us cover or person we should have on the show? And your name comes up many, many times. So excited to be doing this. You promised me I was number one. Now you feel like there's a bit of a let out going on. We asked who the number one was and you were very high in the rankings. Well, we have another number one though that is very near and dear to our hearts. Ben was searching his email today and he sent me an image over text that was very sweet. It was the first email between us and it was about Stratekery. Okay, fine. I'll take that. David and I think got drinks and we're talking about Uber and it was your don't blame Uber piece from 2014. Yeah, well, it's kind of interesting and retrospect to think about that. I think that was about healthcare and rights and workers and things on those lines. It's pretty interesting. You could probably write a similar piece about easy money and the macro economic environment and lots of pieces. So I mean, it's funny. I haven't thought about that piece in years and years. I usually have a very good memory of everything that I've written. But every now and then I will encounter a piece whether someone linked to it or come up when I'm searching for, I mean, the number one user of Stratekery search. You built that for yourself. I completely forgot that. I wrote about that and usually I go back and read it back. Oh, that's not bad. Sometimes you go back like, I don't know about that one, but yeah, it is what it is. That's what happens. You've written thousands of posts over approaching 10 years now. It's just prolific. It's interesting. I went back and just read the early days preparing for this. You've posted you imported from a Tumblr in 2009 that are like all the way back in the back catalog. Yeah, I've started multiple blogs through the years. I thought they were relevant and interesting. And also I think it's useful to have a back catalog when you launch. I mean, that's something that I do when I launch podcasts now is it's important to sort of establish the first time someone encounters you that this isn't just a flash in the pan sort of thing. It's something that is interesting. You mean like doing 30 episodes of Dithering before you release a single one. You know, in that case, we really wanted to figure out what that podcast should be. And then also working with Johnny can be a bit of perfectionist. So it took us that long to get the website looking to sell you wanted it to guys. I don't know anybody else like that. There was a technical component that went into that as well. But I think it's good for both sides. It's good for the creator because if you can't have the discipline and sort of stamina to build up a back catalog, you're probably not going to have the discipline and stamina to keep going for a long time. So it's almost good internally to sort of get that done. But then also when someone encounters it and then they feel, wow, there's an excitement, not just an anticipation of new episodes that will be down the road. But wow, there's already a whole bunch of stuff here for me to listen to. If you like the first one, he goes into a second one. And I think that sort of second one is super important. This is the point I've made about writing in general. Anyone can come up with one really good post or one really good podcast. I don't mean to say that dismissively. I think there's a lot of people out there with very smart insights. I think it's a very distinct skill and capability to come up with interesting things consistently. And the sooner you can demonstrate that to someone, the sooner they are going to take advantage of whatever means you have to follow or to subscribe or whatever it might be because it's not just a promise of consistency, but it's evidence of that. And I think that's really important to online businesses in general. I think about that element a lot. I also think about every piece of content you create is a sure opportunity. David and I regularly look at each other mid episode and we're like, okay, is this of acquired quality or is it actually net negative for us to release this episode because we've now reduced the average quality of a thing that someone comes to expect from us? Yeah, I mean, well, thanks for putting the pressure on me right up there. I'd better make sure this is interesting. But it's interesting because I would push back against that a little bit. And this is why the consistency part is important. I mean, there's an ongoing discussion. I think there's that new social network post news or something. And I just saw a thing on Twitter. I didn't actually fall through, but they want to do micro payments for articles, which I think are terrible. And there is a tendency in a lot of things to get overly indexed on the consumer, which kind of sounds wrong. Like why wouldn't you want to give the consumer exactly what they want? But just to take the most obvious example, if a creator is not making money, well, the consumer may get what they want, which is free content, but they're not going to get it for very long. There is a short term perspective versus long term perspective, which well know, by charging for this, I can do this over the long run. But from a micro transaction perspective, I think one of the issues is to create the piece of content is very time consuming. And then, obviously, you get the free distribution of the back ends. You have zero marginal cost in the back end. But the problem is you have a timing mismatch with micro transactions between when the payments made and when the investment is made. And so you want to put a lot of time into an article and that hope it gets traction. So I can not just make money, but also repay what I'm doing from there. And I think that the way to think about publishing online is what are you selling? I think when you get in the trap of thinking you're selling a single episode or selling a single article, that's actually getting the incentives wrong. What I'm selling to my subscribers is consistency. And yes, certainly a quality bar. When I write something that I'm not happy with, I miserable for the next 24 hours or if it's the end of the week, I'll wait until next week and that really sucks. Because I certainly have the drive and compulsion to make sure that what I put out is high quality. But at the same time, there's an aspect of what I'm actually selling to my subscribers. And this is more of an implicit promise, but I think it's the reality is the consistency and the regularity and the knowing that something happens, you're going to be able to get my take on it. And I think that's where subscription pricing does make much more sense for content production. Because in this case, you're actually getting the money up front. The money is funding the work as opposed to the work being a speculative bid for the money. And one thing that I've pushed over time and I'm very happy about is trying to get people to sort of annual subscription. So I think my audience at this point is like 70% annual subscriptions at 150 bucks a year. Is that right? It's $12 a month or $120 a year. So you do get a $24 discount by being annual. You save on the stripes. Yeah, it's like a $16 difference. So that certainly makes a big difference. But then also I just think it's good for me and it's good for my customers to know that look, I have a chance to make it up to you. Your internet media business about the business of technology is a very different business than our internet media business about the business of technology across a number of dimensions. There's obviously the business model. Your primary business model versus our primary business model, you being subscriptions us being advertising. But there's also the periodic nature of content. I think one of the reasons we feel such pressure on each episode is we're only dropping one maybe two episodes a month. How many pieces of content are you doing a week at this point? Well, less than I once did believe it or not, usually three written pieces, one interview, two sharp tech episodes and two dithering episodes. So I guess that is eight pieces of content. When I first started the daily update, I was doing two free articles, five paid articles, and a podcast. So that was eight. So I guess I'm doing more now, but revealing my secrets, podcasts are easier to do than writing. So it feels easier today than it was back then. It certainly is a lot. I don't think that will always be the shape of it forever. But yeah, there definitely is a lot more than two per month. So there's a fair pushback. All right. So because this is acquired and I'm playing format, please, David. I'm going to take us back to the beginning and we're going to try not to dwell too long because Ben, I know you've told your story elsewhere, but I think it's important for context. So you get this inkling out of an idea that you can do this and you have an idea for a way to cover the intersection of strategy and technology in a differentiated way than has been done before. And you decide that you want to start doing it. I think you are still doing it while you're at Microsoft in 2014. Is that right, Ben? I had started tons of blogs through the years. I in some respects felt I had missed out because I'm the same age as folks like Ezra Klein and Matthew Glacias. And I was right up for the school newspaper and I started a blog and I'm like, man, if I had sort of kept with it, you know, I could be doing what they do. And then John Groover started during Fireball around 2003. And so there was some aspect of like, well, it's a bummer I missed out on that. It's like the famous Mark Andreessen you show up in Silicon Valley and you feel like, oh darn, it's already all happened without question. So, you know, it's certainly people pushed me, you should write again, you should do it. I think I did those Tumblr posts while I was at business school. And yeah, I mean, it was definitely something that I always wanted to do just from a personal self-interest perspective. But also, it's not enough to just want to do something. There needs to be a market. There needs to be an opportunity. The way I always put it is, there's lots of sites writing about the products. And Wall Street is writing about the financial results, but there's a big gap in the middle there. You know, like, well, what is the strategy that goes into the products? Like, what are the margins in the business models that undergird those products that drive to the financial results? How does company culture impact decision making? Why do companies do stupid things? This was a common question in business school and you would do these interviews, interview prep when you're the first year doing second year students, then you're helping the first year students. And my favorite question was always, what's a decision or product this company has made that you think is a bad idea or you disagree with? And everyone would always have an answer to that. But the more interesting questions, the follow-up question, which is, why did they do that? And what you would see is a lot of people, their answer really was because they're stupid. And the reality is, no one at these companies is stupid. A very popular choice back then is Microsoft making the Zoom players. Like, that's a dumb idea of, oh, oh, oh, well, why did Microsoft do that? It's not just useful for critique, but it's also useful for saying where companies should go. So I think probably Microsoft, either Microsoft or Facebook are probably my two biggest successes as far as an analyst. I think particularly Microsoft, where I think I very clearly articulated what their issues were. And also by understanding those issues, the sort of organizational they were, the sort of capabilities they were, and not just the weaknesses that entailed, but also the strengths that entailed where they should go and the sort of strategy they should adopt. And that's basically the strategy they have adopted. And obviously, it's tremendously successful. But there's no one writing that sort of stuff back in 2013. One of the things we thought about a lot was we are not journalists. And we came at this from having worked in the industries that we're talking about. And obviously you did too, having been at Microsoft Apple and plenty of other places. Was that in your mind? Like everybody you mentioned as reclined, Groober's different. We'll talk about Groober later. But they were journalists. They came out of the media, whereas we were all coming out of the industry. Yeah, it's interesting. I wouldn't classify either client-argletes as journalists. I mean, they were bloggers. That's what they were. And they ended up as somewhat journalists. Although I would say both of them, their best work has always been more analysis than journalism. I mean, maybe it's a stupid classification. But I think about journalists as sort of writing about what is happening at best, uncovering facts. Analysis is explaining why it happened. And opinion is some aspect of saying what you think should happen. You know, those have certainly gotten conflated over the years. That's probably a different discussion. But analysis and opinion, I think, do go together to some extent. But it's actually a line that I'm actually pretty careful about. I really try to not break news. That's actually an explicit choice on my side. I mean, it was an easy decision to make at the beginning because I knew no one. I had like four and a Twitter followers when I started. Everything that I wrote was self-generated, right? It was just my own insight, my own view of the situation. You didn't have any particular access. No access, a negative access. I sort of felt like it's hard because I couldn't write about Microsoft because I was some beyond there. I think that of my work experience, the Microsoft bit was certainly the most impactful, not just because of what I learned about Microsoft, but just what you learn about big companies, I think, in general. And it's very easy on the outside to ethremorify these companies in like a single entity sort of making decisions and doing what you want and doing what you don't. And the reality is it's thousands and thousands of people. There's massive coordination problems. Everyone has a different take, different opinion, which is why the culture stuff is so interesting, which is why the broad shared understanding of what a company is and is not capable of is so important to understanding why companies do what they do because actually tends to be much more impactful than single individuals and definitely single individuals below like the CEO level. And even then what constrains the CEO's actions is a pretty significant thing, but they had to build a team to get apps for Windows 8. And so I was responsible for social media other than Facebook and Twitter. So I guess blogging. I was responsible for publishing. So all the book publishers, Amazon, Kindle, things on those lines, I was responsible for lifestyle. So I really have to know the publishing industry very well, both on like the magazine side, the newspaper side, book publishing side. And all that was certainly useful learning for writing about those industries, but also very useful for understanding apps or dynamics, developer dynamics. It was super fun, very busy, very hype trying to get stuff out the door, working with half-build SDKs and flying over and working with developers. And then what was it watched to kind of suck that through that? But it wasn't what I put till then. So I was at Microsoft and I remember my wife and I knew it was our first ever trip to Hawaii. I think this was the winter of 2012 to 2013 and set down and talked about it. It's probably going to be time to move on pretty soon. I mean, any of Microsoft was always a bit of an upset. I was always sort of an Apple person. That was my obsession. And I wanted to record Apple and the good fortune of being able to intern there. And I was at Apple University when Apple University had just started and the original vision for Apple University was that it's going to be really focused on Apple as this notion of like the top 200. Although I think it's actually today more like top 300 or something. They go to this big company retreat. They're the ones that know all the future plans and everything that's going on. And that's really sort of the decision makers at Apple. And it's not necessarily by management position. Like there's ICs that are, you know, you have no managers responsibility, but are sort of part of that core. That was an amazing experience. And really trying to figure out like what makes Apple Apple sort of defining the culture. And it did seem problematic that it's very hard to write culture down because then that's kind of a recipe. I think for sort of ossification and getting sort of walked into something. What is interesting is it was written a lot about as the sort of Steve Jobs initiative. And you know, I'm sure he okayed it, but he had basically no involvement at all. Tim Cook was very heavily involved. Like the whole Tim Cook doctrine thing that folks talked about he took on the earnings call. That was that Apple University first. Did you coin the cook doctrine? No, I think Horace Ded you did from a Simco. Oh, yeah. The reality is his culture comes from doing. And it doesn't come from saying. And there's an issue like if you've made decisions based on data, right? It's inherently backwards looking because the data has to be generated first. And I think there's analogy to culture along those lines that and the concern about writing it down and getting focused on that is you're sort of locking yourself in. And like cultures are very, very powerful. It's the way that you coordinate a massive company and keep it going in the broadly same direction because there's so many things that you can't articulate. You can't articulate that this is the way we do things. If you did, you would be bogged down like the transaction costs of communicating every little detail are massive. And so culture keeps you going in the right direction. But culture is also very dangerous because if you have to change direction, suddenly you realize you're in a straight jacket. And I do wonder if writing stuff down and saying this is the way we do things is actually like sowing the straight jacket. I'm not sure how that pays off. Right. Culture and process accomplish the same goal in many cases. And so either it can be done in a process lightweight because the culture sort of facilitates it getting done. But then you have no processes to change something if the culture is no longer facilitating what you want to do. Yeah, I think that that's an interesting way to put it. Culture is probably the processes that can't be written down to some extent because it's just an understanding of this is how we do it. I left that summer feeling like this is not the right thing for me. You get to business school. You have to get a job. Everyone else is getting jobs. You know, and it was pretty tough for me. Can you feel like what you do immediately after business school? Like has there such weight to that career decision? And now you just like, yeah, whatever is like a job. Well, I was hell bent on being in tech and I had lots of opportunities and offers. Obviously consulting was an option. It's interesting because that a very nontraditional background being an English teacher in Taiwan. I built a sort of distributed presentation system for a group of schools here. So there was like some sort of like tech angle per se. But really, I was just like an English teacher from Taiwan. We, you know, back to sort of the Ezra Klein madaglacies. You were kind of cut from that cloth before getting into tech, right? Like you were a polysimager, right? You were a team politics? Yeah. And honestly, a lot of that was my background and I grew up definitely blue collar, but my parents were ministers. And you're in a small town of 2000. Like the pastor is like the most educated person around by and large. So there's an aspect. Well, the alternative to working in the factory or on the farm is you go to college, you'd be like a professor or something. There just wasn't even any awareness of any sort of opportunities. And I think this is very not well understood by elites in general and people on the coast where it's not a lack of opportunity. It's a lack of even knowledge that there are opportunities elsewhere. And so for me, going to the University of Wisconsin was like this big act of rebellion and like, oh, I'm not going to go to a Bible college or I'm not going to go to whatever. And in a retrospect, I had the grades and test scores to go somewhere, you know, I mean Wisconsin is a great school, but I probably could have gone to an ugly school or I didn't even apply. That just wasn't on your radar screen. Not even on my radar screen, not on the radar screen of anyone around me. And I think this is a perspective that is probably not very well understood by a lot of our audience. I think to say the least. And so I actually love tech. I was very into it. I like I was the first person I knew around me, get an email address to sort of be online. Did you get the internet at home before you went to college? It was college your first experience with it. No, I bastard and bastard my parents to get internet. I mean, I think we started out with like a Juno account, which is just email only. Oh, wait, was Juno the one that was a D. Shaw spin out? Yes. That was an incubation at D. Shaw when Bezos was there before Amazon. Yeah, it was like a standalone client that was email only and then emerged with net zero. Yep. So even in college, you know, I was super online, me and my group of friends stayed in the dorms next year just because of the broadband connection. Broadband is very loosely here. I think it's like two megabytes up and down. I worked at the student newspaper, which I loved. One of the things that I did at the newspaper was I took over the editorial section my senior year. And so we sat down. We had five things that we wanted to see happen. Well, first we decided number one, editorials will only ever be about things that affect students. And what we did was look, we're going to run an editorial every single day Monday through Thursday, Friday, the whole page will be given away to guest columns. We're going to run an editorial every single day, no matter what and we're going to write about these five issues. And did that mean you writing an editorial every single day? Well, so we had an editorial board, but it basically ended up me writing an editorial every single day. It's going to cave down to not every day with the vast majority. And it's interesting because there is certainly there's an echo of what I ended up doing with my career, right? This sort of daily hitting points, having to generate content. But it was number one, just from a practical perspective, it was fun and interesting. It's something I definitely enjoyed. And number two, it worked of our five sort of things we had goals, we accomplished four of them. So I want to go forward to you're leaving Microsoft. Give me the emotional moment where you're like, it feels like it could work. Like I think there's something here. I think I have content market fit. Well, so to go to the back of the Y-trip, there was an aspect about going to Microsoft's like, well, I should go to a place that is theoretically oppositional to everything I believe in, right? And can I make changes at Microsoft? You know, very sort of arrogant. Really, I learned a lot from Microsoft as opposed to the other way around. I sort of signed up for it knowing this is probably not where I was going to be long term. And after that trip is when I did start Stratekery, I wanted to figure out a way to get back Taiwan at some point. My wife from Taiwan and we enjoyed living here. Also, again, I just felt like there was this whole and opportunity and I sort of looked at Groober as someone that was like, well, he did it. But it was also pretty clear that an advertising based model was probably not going to work. I mean, that was obviously a regular theme of mine about the centralization of advertising under Google and Facebook. And that world of starting a blog and throwing up some Google ads was not going to be a viable one. What made you think that? To my mind, at least, there is a very viable and robust alternative history where Stratekery is an advertising business model. Well, I think that I would have to have started much earlier. And I think Groober's model is the right one where I think he is actually underrated that I think he actually kind of invented native advertising because you read every piece of content that he writes and one of them just happens to basically be an ad. It's the same format, same content as what's there. And I would bet that the rate of consumption to encountering it for his ads are like higher than almost anything else out there. And obviously, Facebook does that at scale and it's all automated itself serve and you scroll through and there's different piece of content you're sure to end and some of them are ads. But you didn't think you could do the same thing that John does. Well, I thought that was a possibility, a potential leg of the stool. But number one, I didn't know that I could do the same format. I mean, what works for him very well is because most of the stuff are short snippets and wake out. It's very easy to check in and read everything. I ended up moving more towards longer pieces. I mean, I did experiment and play around with that format. And it didn't seem right to me. And then also, just strategically, you could see where things were going. This idea that users are going to Google, going to social media. And that's the best and most obvious place to put advertising because that's where the users are. There's understanding about them, all those sorts of things. You know, advertising is an ROI measurement. It's not just what you return, but also how much work do you have to do to get it? And why would someone want to go to a small blog and put the effort of putting it out there, it didn't seem like a very scalable possibility. And meanwhile, at the same time, there have been this new company that was found and called Stripe. And it seemed viable to me that if you thought through the idea, look, if I produce super highly differentiated content, that is something that is not going to appeal to the whole world, but to the people who like it, they'll really like it. And if you have that sort of audience, you should maximize your revenue per user. And the way to maximize your revenue per user is to charge them a subscription. And the tools were then becoming available to sort of do that. Just to validate the point real quick. And David, this is my pushback on there being an alternative history, where a strategy could have been ad driven. For anybody who doesn't read Daring Fireball and doesn't know who John Gruber is that we're talking about, quick lesson when Ben says that he invented the infeed advertisement, you go to, And you see the same exact website that's been there for 10, close to 20 years at this point. And most of it is links out to other things. Some of its long form well thought through pieces. And some of it is sponsored posts. And I consumed just like many other people, the entire feed in an RSS reader. And the sponsored post would show up just like any other post in an RSS reader. Now, I think the set of people who are likely to use an RSS reader and who are likely to go directly to as the place where they're intentionally typing into URL or clicking a bookmarks bar and going to it, that set of Apple nerds is far more likely to do that behavior than anybody else in the world. The world is shifting away from going directly to pages. And a lot of your readers are like, I'm just getting my news from Twitter and wherever else at this point. And I'm not doing the RSS thing. Yeah, I think the more niche you are, interestingly enough, that does happen subscriptions. It can also work well for advertising. I think Gruber was at the right place the right time for Apple for sure, not just in terms of Apple's growth, but also the explosion of the App Store. There was a period where you would have lots of apps as a sort of featured things. And so it works great for him. Again, I did have sponsored posts a little bit when I did go independent because I figured I'd have multiple revenue streams. I didn't remember that. How long did you do that for? Like six months. Again, the ROI wasn't there for me either. I couldn't charge that much. And it was a big hassle and getting it arranged. And then also there's a lot of complicating factors like pushing people to email was not a good fit for that. And so I started to checkery pretty cool that subscriptions would be the core model. I was going to try lots of things to monetize. Clear to you though, but you pioneered that. I mean, there was no sub-stack. I think in many ways sub-stack was, I don't know the exact history, but probably modeled after you. Yeah, no sub-stacks. Seed deck says, your checkery in a box. That was their pitch. So this was a big innovation. Yeah, I mean, I think like the subscriptions did exist. I think on Wall Street in particular, but they were generally like $20,000. And you would get all the hedge funds to subscribe and the banks. And that model still exists. And it's actually a very, very profitable one. But what I do think, Stratekery, innovated was sort of subscriptions at scale, where you're charging a low price relative to $25,000 or $10,000. And you're doing on a self-serve basis. People sign up for their credit card. And again, Stripe was a really important part of making this possible. But there were no real subscription tools. I had to actually hack it all together when I first started. There was like WordPress subscription tools, then there was Stripe and you had to glue them together. And it was sort of a big mess when I started. A year after I started a company called Membriful, then launched, which I switched to them. That made things definitely much easier. And then obviously, I have my own system now. You've worked with an outside development agency to custom build software for which you are the only user to publish Stratekery now, right? Yeah. When at the beginning, it was all me. I built my own page and I did all that integration myself. And I'm not really a developer. So it was very hacky. Actually, one of my nightmares was when I launched the paid product. So I started Stratekery. I messed around for a matter a little bit at the beginning. Actually, the real pioneer, who I should mention was Andrew Sullivan. And he had this manic posting schedule, like tens of posts a day. And he did have a team to help him on the daily dish. And he switched to a subscription when I think he left the Atlantic. And it was successful. Like he quickly was doing a million dollars in revenue a year. But he sort of maintained that manic posting schedule. That was kind of made sense in an advertising driven world where you want people always coming back and getting lots of impressions. And the paywall was super loose. It was like 30 posts and then you hit a paywall or something. And the real reason what happens, he burned out. I think he had some health issues. And he ended up leaving. And it was funny because when he left, everyone's like boggings dad, it's finished, was a failure. And I looked at him. I thought like, no, I think this was actually a huge success. One of the problems was he had this posting schedule and system. And then he tried to drop a paywall on top of it. And so when I thought about Stratekery, I wanted to do the opposite where I wanted a subscription to not feel like from a customer perspective that I was taking stuff away, but that I was giving them more just from a psychological perspective. And so once I realized I definitely want to do the subscription model, I started becoming super disciplined about never writing more than twice a week. This was back in 2013 where I was doing Stratekery because my plan was for subscribers if they subscribe, they'd get more. And it would be like an exciting purchase as opposed to, oh, I'm hitting a paywall. This sucks. And your audience that you were building up before putting the paywall in would still keep getting the same. That's right. And so my initial model was still daring fireball like where I figured, oh, I'd have big articles. And then if you subscribe, you're going to get a whole feed of a bunch of little stuff, my commentary on news articles. I built a new website again as a not very good web developer. And the metric I was paying attention to was people who visited the homepage on days I didn't post. Because to me, those were people that were hoping I had written and they wanted more from me. And I figured the classic, if I could just XYZ of why, but I thought if I get 10% to this audience, that would be something that would be reasonable. And that metric was pretty high. I mean, I didn't appreciate then just how powerful social media was. And publishers bemoan social media, but those are publishers with old business models. If you have a new business model with a very little cost structure, social media is a godsend because you basically get free marketing. What a lot of people don't understand is I think a lot of writers give away way too much content on Twitter and they're out there posting. It's like, why should I read your site? We're just telling me everything you think on Twitter. And the reality is the power of social media is not that it gives you another platform. I have a platform with What it does do is give all my readers a platform to tell other people, wow, this site's really great. Look how smart I am for having a take on this thing that Ben wrote, which you can read about on his website. Right. If you share something that's great, you get the likes and you get the retweets and you get the status of people feeling like, wow, this person is sharing good stuff. And that's really powerful. This is probably an angle. You mentioned the market in Dresden, quote, about I thought I was too late. In this case, it turned out I was early. I was the only person doing this sort of model out there. And there was still an era of 2013 Twitter, 2014 Twitter where people would share links to something and it would break through if it was consistently good. This is also where the principle of having the second article be good is super important. This is I think unique to the social media era where people following to a site and they have paid no attention to what the site is. They don't even know what it is. It's basically a Twitter article for all intents and purposes. So I did what the site to be sort of visually distinct. So I did like a custom font, which back then was very rare. That was sort of a new thing. I had the orange. There weren't very many orange sites back then. And I did a lot of these sort of hand drawings, which were very visually distinct. The Ben Thompson iPad hand drawing. You're a good artist. The boats, even in the first post, the sailboats is quite good. Yeah. They couldn't this for iPads and the ability to sort of edit endlessly. But the reason for that is what I was really thinking about was, oh, they've fallen article. Like, wow, that's a good article. A day waiter, a week waiter, a month waiter, they follow another wink. And like, wow, that's a good, wait, I've been on this site before. It's triggering my memory. And that's really, I think, the key moment. And it's like, oh, yeah, I'm going to follow this guy on Twitter or I'm going to put this site in my bookmarks. So I'm going to put my RSS reader or whatever it might be. And that's sort of the key thing that I think you want to accomplish. This is one of my big criticisms of sub stack. Well, I mean, it's interesting, because sub stack, I think, is achieving some degree of network effects where everyone's familiar with it that your payments already on file. All that stuff is true. But nothing visually about sub stack is memorable. Every single site looks the same. And also, they'll be reading a post now have to like, bring down the address part number. Who am I reading again? The Kurnings also weird. This is a weird typography, and it, but I'm like, it always looks slightly wrong to me when I'm reading the body text. Yeah, I agree. Stratekery, even the name, I know in many respects, it's a bad name for a word of mouth site to be a name that no one knows how to pronounce. But it's not an audio word of mouth to say. It's a word of tweets. It's super memorable for good or bad reasons. It's one of those no exposures, bad exposures, sort of things. More importantly, the URL existed, the Twitter handle existed. It didn't exist in Google search. So there was positive reminders. When did you come up with it? The name that I've always been the most jealous of is a simko, again, to go back to Horostecu. It has all those qualities with the advantage of being pronounceable and easily spellable. So in retrospect, I always make fun of the Stratekery name because it's easy to make fun of. But I do think there's a lot of positive qualities to it that are underappreciated from this memorability aspect. But there is an aspect where it is kind of harder for now. And people are afraid to say it because they're worried they'll say it wrong. And if they say it, they don't want to spell it. So it's not perfect by any means. It is based on the Stratekery movie bit, right? Where it's supposed to be Stratekery? Yeah. So it's strategy intact. And yes, there was the Stratekery bit. And so then I'm like, well, I should pronounce this T-Cury. That was a terrible idea. I think I did that for a month. Didn't even say on the website, it's pronounced Stratekery. Yeah, at the very beginning. Yeah. And then I quickly realized that was a very bad idea because it is strategy intact. So it should be Shrishakuri. Yeah, lots of poor decisions. It's very easy to look back and see all the good ones. But this is how you build brands. The only way is to like do this stuff. I feel like every single time we talk to someone who built something in their own image from first principles with their ideas in a super opinionated way about how they wanted to sort of like birth their internet child into the world. It has all these really rough edges for a while. Yeah. And that applied to lots of pieces. I mean, I had my people visiting the homepage of days I didn't post. So in the meantime, once I was really looking for a job at Microsoft where I could still block. Isn't that all jobs at Microsoft? You just kind of chill and you've plenty of time to blog. But I couldn't write about Microsoft. And also it was getting a lot of attention. Again, I was surprised at how quickly it blew up. I mean, this is where the other Gruber story comes in where at appendicitis. So I'm laying in a hospital bed getting ready for surgery. And I'm like waiting around for a few hours. I had waited to email John because for the same principle I said at the beginning, I wanted to have a body of content, not just like an introductory post. I'll check out my new blog. How many emails does he get about that? Right. And so I waited a couple of months or a month or so and I emailed him say, hey, been a big fan. He had just been on a podcast telling his origin story and he also worked the student's paper and XYZ. So I shared that, you know, like a route related to this. I regret not doing what you did back in 2003, but I'm giving it a shot now. Here's a few articles I'm being interested and I heard nothing back. I didn't notice thoughts. And so, you know, I had my surgery. It was very successful. No problems. A couple weeks later, I'm at Microsoft and I get an email from him pointing out that I made a grammatical error. I think it was something like a jive, jive. Like I used the wrong one. And he's like, I make this mistake all the time. He's like, telling me the etymology of each one. And that's all the email said. No closing, like I love your work or just like, no, full stop. It was just explaining that I used the wrong word and what different words meant to what I probably meant to use. So I thought, well, he's probably going to post a link to the site. So I was very excited. So I'm like sitting on the analytics page and I'm sitting on daring fireballs and when he will post. And I was hoping for just a short link, right? He has all those short snippets. Instead, he, it's a full article. And he starts out saying, all my readers should be reading this new site. I've discovered, I've discovered, of course, college or secretary. It's the best new site I've encountered in years. And he whist like three articles that I've discovered with the help of its author. He's like, you should this article, this article, this article, it's like 500 words of just the most glowing praise imaginable. And then he gets to the end. He's like, but for the first time, I disagree with Thompson. And then he spends another thousand words saying, well, I was wrong about something, which was fine. I mean, I think he was wrong. And then it was the start of a beautiful friendship. Do you remember numerically what happened to your traffic after that? So the thing I always was indexed on was Twitter followers because that was a very clear metric of people who had affirmatively decided that they wanted to know what I had to say. And I don't think it's the case anymore. But for a long time, my percentage of subscribers actually followed was a fixed percentage of my Twitter followers. Huh. Paid subscribers were up fixed percentage. Like people who subscribed to the daily update. Yeah, which meant I knew my limiting factor on subscribers was awareness of who I was. So I had 500 Twitter followers when he posted that. And within 12 hours, I had 1500 Twitter followers. And that sounds very small. I mean, I have 200 and 1000 some followers now tripling out hour over hour. Isn't great rate to compound that. That's right. And also it was a lot of people that were also bloggers or writers or influential. There was two step changes. Instructor's growth. That was really the first one for sure. The next day I get reached out by the head of strategy at Microsoft or weekly later. He's like, hey, can I, we have a meeting? I'm like, oh, shit. I'm in trouble now. He gets summed into the principal's office. At least it's not the head of PR. That would have been way worse. So he ended up being with him. He wanted to hire me. He's like, well, I'll pump you up to level 65. You know, I kind of want to go back to. Is this Kurt Delvenny who was a head of the strategy at the time? No, his name is Charlie song Hurst. Oh, yeah. So I kind of sift about it. I knew he was probably leaving soon. He didn't have a believing shortly after. He's like, no, go live in Taiwan. Just fly back once a month. It'll be fine. But fortunately, I turned him down. But all this is a circuitous way to say I did feel I needed to leave Microsoft. Like this thing was taking off. It wasn't sustainable. Number one, I couldn't write about Microsoft. And it was stuff that people at the highest levels cared about. It wasn't like writing about the finer details of VPNs or something on those lines. And so I'm looking for a job. End up in automatic. And that's where I met Matt. So you went looking for a job in your like heart of hearts. Were you hoping that you could someday not have a job without question? No, she's definitely was my plan. You just felt like you couldn't do it yet. Yeah. I mean, I had a family like it. I had business school debt. I needed to have a job that paid the bills. I wanted to find a job that would let me continue to do this. So automatic worked out. It actually worked out even better because I was like hired as like a growth engineer or whatever, which I didn't really know anything about. But then the team I was on pivoted shortly after I was there to building like a new back end of WordPress. And so there was nothing for me to do. We didn't have a product out. But fortunately, there was a little bit of pushback internally because I was becoming this very visible blogger. It's like what the hell, like this guy's working for us. I thought it was just to have because back then automatic was one of the few distributed companies could live in where he wanted to. So I as soon as I got the job, we moved back to Taiwan. And you weren't supposed to have a second job for sort of obvious reasons. And I think Matt did run some interference for me where he's like, no, don't worry, he's good. And the one thing I did do for automatic is I went through a lot of the company what they were doing. And I wrote this big strategy document about where they're at, what they should do. It had some impact, I think, on where they end up going. You guys should buy Tumblr. Yeah, that was at the time when they were, it had been a very small company. And around that time, they decided to raise a lot of money and grow into being sort of a much bigger one. Again, I don't know how much impact I had. Matt says I had a big impact. He may be being generous. I don't know. But I kind of actually had a working mainly directly with Matt. And he mostly left me alone. And then he would have a question or whatever. And I would think about it and write something up and come back. Well, nominally being the growth engineer for this team that did not have a product in the market. So I owe automatic a lot. But it was also very stressful. I felt really guilty because I'm like, I'm really devoting all my energy and time just to agree. And I'm getting paid by automatic. Just that was internally very stressful to me. And you know, that wasn't the idea of like, I mean, I sound cliche, but I, you know, raising a Midwest blue collar towel. I'm like, I'm getting paid far more than I've ever made than any time my life. And I don't feel like I'm devoting all my time and energy to this company that was very internally stressing. And so I got this job to be like a consultant for this company that wanted to expand Asia Pacific. And I'm like, well, I can do this consulting job and then I can make sure to check your paid things. I couldn't do that was that automatic again. You couldn't have a separate paid job well being there. And so you left automatic to go do this sort of potential consulting thing. Well, no, first I left automatic because I'm like, I need to build this subscription bit and this new website before I started this consulting job. So I left automatic. I'm working on building this. What happened was that consulting shop fell through it just didn't materialize. No way. You burn the votes and then there was no car. So I watched the techery. And again, the idea was you would log in. You get this much fuller experience. And I watched it. And number one, I had something wrong with security certificate. So the first 24 hours no one could make a purchase. And so I'm like, up 36 hours straight, I barely suffer the week before. Because I'm like, finalizing the site. I stupidly had like reached out to like, Cara Swisher at recode. And so she had a pre scheduled post that's going to announce I was going paid. And so I got this stupid artificial deadline that made zero difference other than stroking my ego. And so it was awful. It was a horrible experience. But the worst thing was that the product sucked. It was super confusing. I didn't achieve my goal of having a good experience for non-paying customers that was ideally lure them in. And for paying customers, it didn't work well. It was very janky. And it sucked. It was really, really bad. So over the weekend, I'm just miserable. And I know I screwed up and I burned my bridges and all this sort of thing. And I realized that look, my messed up, the business models right, the products wrong. So over the weekend, I tore the whole thing out. I went back to the old website. And I told the people that subscribed. I'm like, look, I appreciate you subscribing. The formats all wrong. What I'm going to do is for your subscription, I'm just going to email you. I'll email you once a day with the extra stuff that I promised you. And so I felt completely and utterly asked backwards in email. I thought it would all be on the website. I've been thinking this whole time. I'm like, we have not talked about email once. Yeah. And by my tell, he's always been checkers a website first and foremost. But it's like, look, I'll deliver you this extra stuff via email. And it will also be on the website on the sidebar. And you know, it'll be archived there. But you're going to give an email. And it worked out on the long run in the short one, though. I had a one day goal for new subscribers. Well, I guess a two day goal because the site was not for the first day. I had a one day goal, a one week goal, and a one month goal. And I failed to reach all of them and failed pretty significantly, honestly, to reach all of them. And so I'm there. I've given up this six figure job living in Taiwan, business school debt, and an idea that I thought could work, but did not seem to be working very well. And it was very, very stressful. I mean, I stopped paying on my credit cards, because especially back then, Taiwan was very cash-centric. So I needed to preserve cash. I was, you know, not sleeping. I also watched a podcast at the time, which was exponent with James Allworth. So I'm writing, as I mentioned before, seven times a week, plus doing a podcast. I'm doing all the editing for the podcast, all the production, all this sort of stuff. And I thought I'm going to have to go teach English again to like pay the bills at the same time. And then I think like the first month, when I tore all that out, I screwed up the subscription. So I double charged a whole bunch of people said, I processed all these refunds, you know, as customers support. And it was pretty tough. I watched in April. This is April 2014, 15 2014. So next year, it'll be 10 years of checkery, but nine years of it being my job. So fast forward to the summer. We're back in the States. My wife and I had planned a long standing trip. We're going to go to Paris and leave the kids with my parents. You fast forward there a little bit, but you must have had some thoughts in those intervening months where you're like, well, shoot, I'm just kind of to give up on all this, right? Yeah, but like there was certainly a pride factor. I couldn't bail on it. Like, I mean, no one thought I would succeed. I had lots of people reach out to be like, hey, bad. I love you. But the subscriptions are not a thing I've demented. It's not going to work. And a lot of people in tech, especially VCs, which is weird, because they always know exactly what's right. No, they're very conventional wisdom driven. I think in general. So I can still picture I was sitting at the kitchen table at my parents house in Wisconsin. And you looked at the numbers. And my may subscribers were more than April. June was more than May and July was on pace to be more than June. And we're still talking like a couple hundred, not very many. Oh, and I also had like multiple levels. So some of the people I'd like to three and our level were I was supposed to like chat with them and have subscriber calls and all this sort of stuff. Yeah, everybody starts that way and then quickly gets rid of it. And I'm also trying to do like sponsored posts. It really just an overwhelming amount of stuff. But I looked at those numbers. I'm like, I think it's going to work. And so I paid off all the credit cards that had been running up for the last few months. My wife's like, so we cancel the trip. Like, no, we're not canceling this trip. You know, she was very mad at me. She's like, you threw away this six-figure job. And so I didn't want to tell her how poorly things were going. You didn't give her access to the analytics? No, of course not. And we're not canceling our trip. Things are going great. And so we flew to Paris, ran the credit cards all back up again, of course. And in Paris, I remember I would wake up every morning at 4 a.m. sitting in the bathroom and read a daily update. And then my wife would wake up and we sort of like go all for the day. And that ended up being true. It just sort of kept increasing. I mentioned there was two big step changes. The Gruber one being the first one. In November, I actually ended up reaching a thousand, which is my one-year goal. So I hit my one-year goal much earlier than I expected. You know, one year, a hundred dollars a year, a hundred thousand dollar run rate. Funny thing about exponential growth, you miss the early goals, but you nail the later ones. Yeah, I don't think exponential growth really applies to my business, but maybe more so at the beginning, there's more of an exponential curve. I mean, the problem with a word of mouth business and exponential growth is people run out of people to talk to. And so that's the limiting factor. Right. It's only the new subscribers give you the exponential. Right. There's a little bit of exponential with every new subscriber. They will tell new people. But networks get exhausted. And so it's more than linear. But it's if you zoom out, it's really linear. Is the way this sort of growth works. But so what happened was in November, I put a little post out. First, I simplified my models and no more this 300 level, cheap level, one price, and one product. That's all you're getting. And then number two, I'm like, hey, I got a thousand subscribers. Business model works. You know, this is definitely going to be my job sort of going forward. And in the next 24 hours, you got 250 new subscribers. By far, the biggest step change in my subscriber growth. Did all the VCs email you again and say, Ben, you're a genius. Will you please come talk to our portfolio companies? I was right about my metric of people visiting the home page and they said, didn't subscribe. What I was wrong about is that the vast majority of people thought I would fail and go out of business. They didn't want to lose their money. And so they didn't subscribe. But once it was clear, I would be an ongoing entity. Then like, oh, okay, I guess my money will be safe. And so I will now subscribe. I was right about the market. I just, I didn't understand that psychological aspect. One thing that I think is great for the sort of the, I went back to the sub stack making it easy to pay. I think the real great thing for sub stack and sub stack writers today, it's not just that it's easy to pay, but people aren't scared to give their money to some random writer on the internet. And they were previously and now they're not. And I think that's really great and something I'm very proud of. Wait, so what was it about yours where they suddenly became not afraid? Because I had a thousand subscribers. I was making $100 a year. It was that they thought that before they knew that you were secure, that you might just stop writing and then they would have paid you and then they would get nothing for it. That's right. I think that that was really the case. And so then since that, I've never had a growth explosion like that since that 25% growth in one day. But it's been sort of slow and steady since that point. That accidental email hack. How do you think about it? Now you say you still think about Sturetekry primarily as a website. But how do you think about email now? Like obviously it's a big part of what you do. Yeah, well, it is, but it's not. I mean, I think if you see the stuff that I've done, for example, now you can consume the daily update via a podcast or my articles via podcasts, I think that's actually very much in line with my vision and view of Sturetekry, which is this is a publication that I write and I will make it as easy for you to consume in the way you want to consume as possible. And back in 2014, that meant sending emails. And certainly there's all the advantage of emails that everyone's talked about. It's a fee that everyone checks daily. You don't need permission to get into there. There's no algorithm. You know, it's funny because I think once that came along, it became overwhelming and people started setting up rules to send other emails to a folder, which they never checks. So your packets are the same problem. Self-imposed algorithm, which is where podcast is great. It's the same idea. It's a feed that people check that I mean, it works through polling, but people it feels like push. And that's certainly a great thing from an independent publisher perspective. And I think in line with my vision, I mean, one of my criticisms of Sturetekry was I think there were two email centric to start. Again, I think the web experience is important. It's super important for growth, because that's where people find out about stuff is often via social media and sharing links. And email is a tactic. It's not a strategy. And at the end of the day, the strategy is about differentiation. It's about consistency. And I want it to be easy to use and fit in your life. And email was a way to do that. Again, sort of backed into now podcast a way to do that. You can get Sturetek Argos and all the SMS, which gives you a link and you can read on the website. Obviously, I've always had RSS. And I just want to make it as easy for you to access the content that you're paying for as possible because that sort of makes the whole thing go. And you know, you mentioned, churn, the beautiful thing about this model is number one from a writer perspective. All I really need to worry about is keeping my subscribers happy. And so like, you know, should this be a free article? Should it be paid? Well, you know what? If it should have been free, but it made it paid, that's fine. My subscribers feel like they got a great article that they paid for. And they feel good about that. And that recurring revenue is really, really powerful. And then also, that's my marketing channel. It's them telling other people about that this is good. And you should sort of check it out. I want to things we do with passport is a big way. Stuff spreads is people forwarding emails. And passport is the technology infrastructure you've built to enable other people to build Sturetekri like experiences. If they're white listed by you, how's that work? No, it's just my stuff for now. I mean, obviously, we would love to make it probably available. But it's not all finished yet. And there's customer support issues and things that would entail that. But something that I would like to do. But one of the things we did with that is I linked to myself a lot, which people make fun of and deserve really so because it's kind of a running joke between me and my readers. But a way I think about Sturetekri is it's a live thing. It's an ongoing sort of journal of my attempt to understand the world, to understand technology. And sometimes I was right about something and it's always fun to point back and say I was right. Sometimes I was wrong. It's like, why was I wrong? What mistakes that I make? Sometimes there's a trend. And it's like, well, this happened back then and this happened here. And then again, I think about it as being sort of a live thing. And so waking back to myself is a way to do that. It's also a great way to trigger that second article sensation where you read an article and then there's a link right there and you go read another article. Wow, that was also really good. And then there's XYZ. So one of the things that I want to do with passport was how can I really leverage email forwarding to accomplish this, especially when I'm linking to paid articles. So like one of the things we do there is is every link to myself in a trajectory email is tokenized and that token goes one link deep. So even if that email is forwarded to you, you can go read old stuff. So you get that second article sensation. Now if you're in that second article, when you click another link, now you're going to pay a wall and then you're going to realize, oh, I have to pay to get this. But there's all these little bits and pieces that the description of all makes possible, which is really leaning into just serving your customers, trying to make it as good of an experience for them as it can be and the other really important about subscriptions is there's always debates about people just write for clicks and blah, blah, blah. And then the publishers or the editors will come back to know, we don't even show our writers their click numbers. Like they don't know all we want them to do is great content. And I think that's so foolish because everyone wants feedback. They want affirmation. They want to know, did I do a good job? And if you don't even get access to your click numbers, where do you go? You go to Twitter. Like what are people saying about me? Right. You will find a way to figure out if you resonate or not. Right. And who's on Twitter? The biggest loud mouse, right? I'm one of the things I word on Twitter about Twitter very early on was I would be very engaged on Twitter. I'd be responding to people. And that's only an occurred to me. I'm responding to the same 10 people or 30 people or whatever it is, right? So true. Yeah. You're engaging with 0.2% of your audience. Right. And so that's a fixed number. And meanwhile, I have a feedback mechanism, which is my subscriber number, which is going up, which means I know there's a huge number of people that like and appreciate and are sharing. And it's all dark matter. I don't know who they are. I don't know where they are. But they like what I'm doing. And I need to anchor on that. Not worry about with the loud also Twitter are saying. And so subscriptions give this feedback mechanism and feedback mechanism for people that will never email you, that will never contact you, but they will pull out their credit card and they'll give you money. And I think that's so valuable. And so positive from an incentive structure. Now, there is a downside where subscriptions are niche, right? And I do think you tend up people will, if they dislike you, they can stop paying. And there is a worry and a challenge that you're not like pandering to your audience, whatever it might be. I think I'm kind of lucky because I was so early, because I was the only person in the space doing this sort of stuff. I got to a large enough audience size where I could not care. And if someone wants to cancel their subscription, I don't care. In fact, if someone comes back and if they are just over the top rude or disrespectful or insiduating things about me, I will not just cancel their subscription. I will refund them their entire purchase and say, please, just never come back. Isn't that the nice thing about an approachable price point? You're like, actually, your dollars are insignificant to me because my number of subscribers is so much larger. It's very different than like if Apple decides to stop advertising on Twitter. It's like, oh crap. Oh, oh, oh, oh, oh, I'm so sorry. I'm so sorry. Come back. Yep. That's exactly right. And again, when I've been able to do that when I had a very small number of subscribers, no, but I mean, it was easier back then because I mean, I started in 2013 and the entire opinion of the tech press and Wall Street is that Apple was doomed because of course, it looked like Apple Windows Mac. So I had the lowest hanging fruit in the world to sort of pick, right? And be like, no, I don't think Apple's doomed to be honest. That's what I wrote that white condition was wrong because all the disruption people were like, you know, Apple's for sure screwed unless they go down market. I'm like, no, I don't think they need to go down market. And so that was great because it's not like I was writing anything that controversial. And so I didn't even run into any issues where people would try to hold it over me. And by the time I got into issues where that mattered, I was large enough that it didn't matter. So I think I was definitely fortunate in that regard. For our second sponsor of this episode and all of season 11, thank you guys for a great season. We have one of our very favorite longtime members of the acquired family pilot dot com pilot sets up and operates the entire financial stack for startups and growing companies. That means your finance, your accounting, your tax, even higher level CFO like services like investor reporting, all of which as we've talked about all season, you would either be hiring a big four, not a big five accounting firm to do for you or building out your own finance team or doing it yourself as a founder, none of which are good decisions or good leverage on your time and resources as a startup. Pilot is a much better decision. They take literally all the headache of finance and accounting off of your plate as a founder and a startup team. And they provide you with their own team of experts, actual financial accounting experts and technology to set up your financial infrastructure and run it right now. We've talked about this a lot on this show, but it really is worth talking about this defining characteristic of pilot. They integrate with the APIs of all the modern startup grade platforms like stripe and brex, gusto, Shopify, square, etc. But most importantly, the next five that come after that, they know how to make that work seamlessly with your company's book. So you can always use the best tools available to you and trust that your accounting bookkeeping provider will have the ability to keep up stripe itself is an investor in the company alongside Sequoia index and Bayzo's expeditions. There are no other accounting firms in the world that can say that. So if you are still using quick books on your own as a founder or paying someone to integrate a bunch of stuff on your behalf or paying an old school accounting firm head on over to slash acquired make your life easier thanks to the pilot co-founders was seem Jessica and Jeff for providing this awesome 20% discount for the first six months of service if you go to slash acquired thanks pilot. Thank you pilot. Can you share like what is the shape of the curve look like in terms of if you graph it on the x axis is time and on the y axis is number of subscribers from the start of strutacry today we talked about going up to a thousand and then adding to 50 and that step change even if it's like relatively linear has it sort of tapered off over time like are you saturating the world of tech people who care about business strategy. Yeah it's interesting because there's been different periods where it actually I thought I was starting to taper and that actually accelerated this is probably 2018 2019 around there over the last couple years it has tapered off it's not quite what it was which is fine in terms of the growth is tapered off. I needed subscription revenue if it stays flat you're a great shape. Yeah well and then also I raised prices a couple years ago which is the only time I've raised prices and I still kind of mildly regret it. It's funny because everyone's like always your prices too low you should raise prices. That's definitely the absolute easiest way to increase revenue. I think the easiest thing for me to do would be to just keep doing what I'm doing and just raise the price of dollar a year every year and for sure my revenue increase would very much outweigh my turn. I mean honestly the biggest change that happened when I did raise prices was it didn't affect growth at all except that I had a lot more people switched to annual subscriptions because I like pre-announced it's like hey if you want to get a year at the old price which is great because I want people on annual subscriptions as we sort of discuss at the beginning so I could do that. I think my view on it has always been I think on the internet in general markets are much larger than people think. I thought it was much larger than all the folks that are critical of my model thought and it's been larger than I thought all along right I thought it would take five years to build or to watch as my business it took a year and I would rather explore the edges of that market how big it is as opposed to sort of maximizing my revenue too soon and so that's sort of number one. Number two is I do want to have an impact. I do want people to read by definition the larger your subscriber base the more your sort of marginal customer is not aware of you is not immersed in the space their willingness to pay is going to be lower and so when you start raising prices you're going to hit a wall very fast thing as far as subscriber growth sort of by definition that's sort of number two. The sort of shift over the last couple of years has been well is this it I've reached my natural base or whatever it might be which is again massively larger than I ever expected I just wanted to pay the bills. Yeah like tens of thousands of people that pay you to read your work and millions of people that I'm sure come to your website and read the free product like there is a real market for this. I definitely push back on the millions I think it's interesting because I do think this is an area where I do feel like I got there in time I think the ability to spread on social media on Twitter has really diminished you know Twitter famously really started devaluing tweets with links a few years ago which I think has made the product much worse I mean that's how we ended up with all these threads because those spread more oh threads oh my god yeah which all should be blog posts so I think that has heard it the other thing that has hurt my growth frankly is really see stuff as a podcast so my subscribers love it half my subscribers now listen instead of read which is amazing that's how I consume every single post yeah and then the other good thing is people with churn because emails have build up and they look at their inbox there'd be like 20 and red emails and they're like why am I paying for this whereas an eight minute podcast just feels like I can knock this off real quick so it's been very good for churn but the problem is people don't share podcasts right you listen to a podcast you go to the next podcast you do xyz whereas if you're reading something it's super easy to tweet it or to forward the email click forward yeah yeah so I do think that might be the biggest issue on why my growth so down to be honest which is fine it is what it is and you're obviously leaning more into podcasts right I did face edition this year which is growth is somewhat leveled off do I raise prices and just sort of be happy with the base that I have and I figured it'd be worth a shot to see if I can restart growth in this case by sort of working to increase in broad and the value of a secret subscription and not just my own content so I watched the other with gruber obviously is not my podcast partner a couple years ago that was like an add-on so you pay extra and you get dithering and that was really on the only make more money for my best subscribers as a way to raise prices on my best subscribers without explicitly raising prices right was launching did they're in a business decision or just a this is going to be a fun thing with a good friend or both of both and then also I had this technology for pay podcast that was a way to do it and so yeah we watched it it's been successful I mean it has you know I think like from day one we had like 10,000 subscribers and then it's sort of leveled that's it's got like where we stuck we didn't turn it all but like how do you grow pay podcasts we haven't done anything around free episodes and marketing we will but that was a de facto price raise on my best customers and when I wanted to sort of explore this space it's like well is my market as big as it can be and is there a way to sort of go broader I figured out the newsletter thing like I think subscriptions make tons of sense for podcasts because people get so attached to a podcast they get so attached to a particular host and it becomes such a part of their routine to a much greater extent than reading which is sort of more of an affirmative choice have to go read this where's like oh this is my podcast player guess all this into this next and so I think it's a great product for subscription but it's totally unclear how do you actually build a podcast particularly a paid podcast it's really hard to get people to start to listen to it and so in general I think writers tend to succeed with podcasts because writing is a good marketing medium it's again it's spread easily just pass the URL so people will become familiar like oh yeah I'll try your podcast because I like you as a writer but if you're just a pure podcast how do you sort of grow and so what I've decided to do is the other things no longer to be an add on it's going to be a part of a stacker subscription so now again your stacker subscription is worth more because you have this sort of extra piece and you got it for quote unquote free so you don't sell it separately at all well it is available separately again it's cloned with john and some of his subscribers maybe don't like me so they want to go subscribe they can but it's no longer as an add on checkery if you are a subscriber you get dithering it's part of your subscription watch the new podcast called sharp tech that again there's both free episodes and paid episodes it's available to all stackers subscribers so your description is worth more and so people are sort of opting in just to make the point clear because I've listened every single episode of dithering including the back hell I before you launched I started recently listening to sharp tech and of course sharp china what you're about to talk about it seems to me that sharp tech and dithering is sort of like well I get Ben and I get Ben's thoughts and I get a lot of the same thoughts and I basically am picking whether I like Andrew or John better and I'm also picking the format and duration of the episode yeah right now the bundle is kind of a joke because it's mostly just me right and different flavors have been I only have so many opinions I have a lot of opinions but I only have so many so it's not in its long term place now for sure and it's very tricky because there is an extent to your point about if you release a bad episode of acquired you do worry about churn am I diluting what shitekry is to someone it's no longer just an email and now I'm reintroducing the possibility that people feel overwhelmed with content and then they also feel like I'll Ben's repeating himself all the time I think there's a lot of underrated risks in doing what I'm doing but number one I think watching sharp china was a good signal to my audience of what I do want to sort of accomplish going forward where that's a collaboration with bill bishup who writes synopsis and it's the first secretary product that I'm not on but I think it's a important topic understanding china I think it's of a similar tone and quality level of what you should expect from shitekry do I expect all shitekry writers list to know of course not some people like me specifically and I'm not on there so they're not going to be interested but I think for a lot of folks it's like well I keep hearing lots of news from china where do I go I'm already shitekry subscriber there's this other product here and if they become a regular sharp china listener I've now decreased my churn that much more for that sort of person and I think again a big part description is just churn management it's like I want to make sure this is a long time subscriber and you get that recurring revenue over time as you might imagine there are plans for other podcasts you know sort of be added in the long run and we'll see what happens I mean growth has I think picked up over the last couple months so early indicators are that it's working where I'm increasing the value and will make up for the cost would I make as much if I just raise the prices and didn't bring out the additional costs of paying for andrew and other broadcasters and those lines probably not again the revenue maximizing thing for me would be a state with memberful and just right shitekry and it's nice and simple yeah but number one I've always been worried about getting stale I know I have critics I hear about on twitter who think I already am but they're point two percent of your audience well who knows they're very well on twitter right number two one of these I'm so proud about worship shitekry's I was a most well known for shitekry but I'm so proud of the business model and that it exists and the fact that sub stack is out there and there's hundreds or thousands are how many people making their living doing this and I feel responsibility for that in a very positive way and I really want to get this working for podcasts I think there's a similar opportunity and so helping to help pioneer that is fun building software is fun even though it's cost me a lot of money as you might have mentioned producing new podcast fun figure out this bundle thing is fun how do you cross link stuff like you know if you listen to shitekry episode because we know who you are because it's a unique feed to you you could just add another podcast without having to sign in or do anything like really smoothing out this experience of cross promotion it's fun and I think I'm fortunate enough that shitekry has been successful enough that I can make choices that at least in the short term are more optimal for figuring stuff out and having fun even if it's not revenue optimal and obviously there's upside maybe it'll end up being a huge thing and you know make much more money than I ever would have just doing shitekry but I do feel very fortunate that I can make that choice in the shorter medium term nice thing about having no outside shareholders your your own little Zuckerberg over there ruling by fiat on whatever sounds most fun to you you know no activist shareholders no for sure I actually thought about building a sub stack a few years before they want to actually had a team together and ended up falling apart but my big hesitation was always I just wasn't sure if it would be venture scale and from my perspective if you have the stamina and capability to produce regularly subscriptions are amazing ability to sort of bootstrap and again you're asked people to pay for the regular production of content it's actually a very straightforward transaction and can be sort of very sustainable how many of those are venture scale businesses I think maybe not as many and you're right it comes with a bunch of compromise comes to trade offs you have to optimize in certain ways and I think venture is a phenomenal thing I think I'm not anti venture at all just anti venture for me personally I don't think it would make much sense I like the lifestyle so lifestyle business for me you were talking to two venture capitalists who have a business which is structured the same as yours so I love that we've had this part of the conversation because I was really curious I mean selfishly for us I'm curious your thoughts on there are corporations that have large numbers of people that make products that are scalable and then at the opposite end of the spectrum there's being talent you're a solo business but your business is being talent in other people's productions but the internet has enabled this whole new class of stuff like Stratekery like acquired like not boring like what have you how big do you think this third class of whatever it is we are can be is that part of what this experiment is for sure like I'm not passionate about like Meta's business prospect I definitely have takes on it you know I think that's the other company I've mostly been pretty right about over the years along with Microsoft or probably my two long standing best calls but I'm not like waking up in the morning killing myself like if their stock goes up or down I don't really care you're not gonna go work at Meta I'm not gonna work at Meta I think that's a pretty safe I mean Meta wants to buy me for a hundred million dollars I guess I'll earn out but you'll rest invest yeah I will rest invest yes I mean Mark if you're listening but what does get me super excited I'm really passionate about is this completely new arena of possibilities and I think new jobs that are made possible by the internet and actually whether it's I actually am in general favorable towards Meta is I think they're an essential component in the broader ecosystem of niche businesses because if the entire world is your audience how does the world find out about you I'm lucky because I produce content that people want to talk about and so they share it for free on Twitter right if someone makes like a really cool new piece of clothing or accessory like people are gonna talk about that on Twitter like you need a way to advertise and I think that's what Facebook advertising has always been the best at and I think it's really valuable and so I am in general a big defender of that because it actually is in line with what I am personally very passionate about which are the economic opportunities made possible by the internet what the internet does do in industry after industry and the supplies to creative talent as much as anything else is number one there's always a barbell effect you're either very large you're very small you're very large you get scale you get aggregation effects and then you can make massive investments or acquisitions no you can immediately feed that to hundreds of millions or billions of people and get a payoff or you take advantage of the internet and opens our software or whatever might be or different platforms and your cost structures are basically zero and you only need a thousand true fans like the thousand fans was 100% true that was my guiding vision and it up being the case and so if you're stuck in the middle which all the old publications were stuck in the middle they weren't big enough to get aggregation effects their cost structures were way too large to handle a fraction audience they were all in trouble and got a lot of traction about saying they were doomed and then they were doomed right like you're saying about that's why they hate social media but if you're on the low end of the barbell like that's like you love social media no that's right it's an amazing asset so that's number one the internet has this effects number two the internet has winner take all effects in specific markets so it's going to be hard for someone to be a generalist tech and media analyst and do what I do it's possible I mean there's people that are very good but just because I got there first but that doesn't mean there's only one analyst role available there's a guy Neil cyber and I think it's like an equity research department in a bank yeah he writes about Apple and he very much mimics his business after me he was pretty early too so he actually did a lot of stuff himself he's done a really great job he's been an independent Apple analyst for eight years or something like that which is fine he writes about Apple every single day believe me there are people that want to hear about Apple every single day and so that's an example where it seems like we're doing the same thing but we're in different markets this is the internet makes possible is the key to success on the internet is you want to be the biggest fish in the pond but the success metric is not competing with other fish it's finding your own pond the opportunity is broad it's not deep like in each pond there's probably only one or two fishes that survive right but there's an infinite number of potential ponds you can define your pond in very specific parameters I'm still surprised there's not someone that writes about Amazon every day like it's a massive sprawling business there's so many things to write about I think you'd probably make it say in the old Google Casey Newton basically writes about social media every single day we get to be Christmas for him over there because the Twitter stuff but that's fine I feel guilty right about Twitter too often it's very exhausting I cover lots of other stuff there's other things to talk about and so I'm writing about it more than I want to particularly yesterday I really don't want to know Twitter obviously Twitter take on Apple is going to be everyone's been anticipating it right it's the Super Bowl of Bentom's and fans I kind of have to write about it right right but Casey like that's the expectation is that he write about social media so he's written about Twitter every single day for like a month and that's exactly what people want and I'm glad he exists from my perspective hey if you want Twitter coverage every single day go read Casey that's a great thing from my perspective and I think that sort of defines this market and so number one I'm really proud that this business model for newsletters exists I think it should exist for podcasts and I think part of that is just figuring out the mechanics of it like how do you market how do you grow stuff I haven't done a good job marketing my paid podcasts I would say other than leveraging checkery but that's the thing number one I want to work on obviously there needs to be should be some video stuff like there should be you know what's the ratio of free stuff to clips to snippets things on those lines we're actually experimenting that more with start trying to interrupt tech where even if you're on the free feed you're getting more clips and snippets also I think that the technological aspect is important it's funny even free podcasts it's like oh we're gonna have a guest on go us to his podcast go to your podcast player search for xyz and it's like offloading this huge number of steps to the user hoping they follow through and do it whereas we've built something where go to your show notes click the link boom it's your podcast player like I think that's something that's going to be important to sort of you know the sharing stuff is really tricky because people don't share podcasts naturally so I want to figure that stuff out and it's gratifying again not just because it's fun and new and different than my day job but also that is my passion my passion is the sort of businesses the internet not just destroying old business models but making new ones possible and not just the big guys but like for individuals as well and so I'm very grateful and feel very fortunate that I sort of get to do both yeah I want to switch gears and ask you about aggregation theory there's a multi-pronged question here so the business that you're running is far far far superior to a thing that I'm sure you've been asked a zillion times about why don't you write a book you make a hundred and fifty dollars a year per subscription at least that's what I pay for the full bundle I think no you had a refund in a discount 120 all right then I pay a hundred and twenty dollars a year yeah did the ring is now wrapped into a spectacular subscription so yes I should be clear for no one listening you got a credit on your subscription we did not issue refunds but you did get a credit but that is to say I have no idea what I'm paying and there's some segment of your listeners that are so wildly price and sensitive about what you do that it doesn't matter so it's probably hard to price discriminate on them yeah no one should look to me for pricing strategies because I know it's not off to all but anyway my quick math was if you did a hundred and fifty dollars a year and I know it's 120 and you assume some five year lifetime on customers and you compare that to like what you would make selling somebody a book once which is what twenty dollars times seven percent goes to the author it's literally five hundred times more revenue to you to do what you do versus writing a book and on the other hand there's something that you've become known for an aggregation theory and some other topics around the edges of it that sort of deserve a canonical work it's sort of the modern porters five forces it deserves a canonical notion rather than something that's been edited and revised and attached and rethought through so have you thought about what form canonical bentoms and topics would take yeah aeration theories the obvious one I think the time to have written that book would probably be twenty seventeen I mean I was writing about the ideas of aeration theory from the very beginning it's hard to imagine but back in 2013 again like back then people thought Apple is doomed people thought the internet was inherently decentralizing oh it was not long after the Facebook IPO and it was a disaster yeah Facebook was stupid well then back off is the other thing I was able to come out of the gate with really four takes that were provide doesn't count that was number one apples not doomed they're actually going to be doing very well number two the internet is centralizing it's not decentralizing everyone's understanding the dynamics are completely wrong again today everyone understands that but it was believe it or not very controversial decade ago number three this is what microsoft should do like there actually is a queer path forward they're not doomed to your relevance and then number four Facebook is way more dominant and valuable than anyone thinks and so that was a good idea I said I watch a little hanging fruit to sort of think well it's easier being self-deficient here obviously but I think a big part of the reason this is behind Ben's question to you of you know it deserves canonical work the reason these are accepted truths and realities now is in large part due to your work it is a bit of humbling to be a writer because I think people would understand all those things had I not written it I think at best they understand that maybe a few months or at best a year or two before it becomes common knowledge and that's just the reality of the game the edge you can provide is usually measured in sort of months or years or a very low number of years I do the irrigation theory should be a book it was probably again more pertinent at the height of all these sorts of things maybe it's so pertinent now but number one now there's just a logistical issue I write every day into your point I make way more money every day than I would writing a book so that's the one number two there's a fear factor which is people think I'm very productive but I in reality have daily deadlines that spurred that productivity in the absence of those daily deadlines would terrify me in terms of a book and number three there's a second fear factor which is a book is frozen in time and if I were to have written an aggregation theory book a couple years ago I probably would have centered on Netflix and that ended up being wrong it was wrong in another way that I wrote about where content is super important that's how you break away from aggregators is having high diversion content and I had the balance wrong between Netflix's aggregation effects versus the power of content and so I'm very fortunate I didn't write that book whereas now I was still wrong but I have the medium and ability to come back say well I was wrong this is where I was wrong what does this mean for discovery time Warner was this mean for Disney what does this mean for the other platforms so that is a fear factor and then number four I think there's an aspect yeah maybe deserves a treatment but should I agree very much of the internet and I think a nature of the internet is it's transient it's not permanent again another thing people got wrong I think actually when the biggest mistakes Twitter made and it's understandable no one could have seen at the time but Twitter should have had disappearing tweets from day one it should have always been a just in the moment sort of social network I think it would be a much better product honestly I think they still do it now people experience it and think of it as a in the moment product and then are stuck with this archive that induces fear induces ruin and it reduces the façade of what it's like to be on Twitter that's a big reason why Twitter's not what it used to be because now people are scared well to the aggregation theory point I think I've heard you make this argument before but articulating it the way you have over the years and revising it on Stratacary is actually a better product than if you were to like have written a book five years I so disagree David it makes it really difficult to explain what it is to people I'm like okay if I'm on the board of a company and I'm trying to like explain to them that they need to reframe their thinking and think about aggregation theory if someone's like what's that I'm like I actually don't know what to send you like read these things in this order to watch this guy contradict himself and say what he got wrong and then sort of take away what you think the modern interpretation is I think you're both right there should be a set in stone trees honestly there's just a matter of priority I mean I think again it would be good to share and point you this thing and go read this to be clear I'm in the middle of massive self-resilization right now for explaining why this is the case so take everything I'm saying with a grain of salt and the other thing is I'm just having more fun and more interested in building software and figuring out podcasts and I would like to think oh a book is just really about my ego and putting it out there so I'm not that sort of person I just want to give back to the creator community that's I said I'm definitely in rationalization mode you're definitely rationalizing but no I should write a book I just haven't I don't know if I ever will but I agree that I should have by now written a book but alas one last quick question on aggregation theory obviously you were building up towards it even as you said at the time I think was it one or two years you were doing Stratécray before you wrote the first post this is actually an example of the power of branding I wrote articles that were basically aggregation theory well before I wrote aggregation theory but giving it a term and coining it is what made it stick and actually some of those articles that I wrote before there's one I think it was called economic power in the age of abundance doesn't have the same ring to it I think it's a better articulation of our aggregation theory and matter specs I wrote it in 2014 I think and yeah number one does have a good ring to it number two is one of my least read articles up to that date just no one got it or understood I was talking about and it's a weird thing as a writer like there's things that I'm thinking about now or that I know I will write about but it's not the right time and that's something you just learn over time where you can be too early as a writer to this kind of goes back to like I didn't know how to communicate right like I remember I was in there's some media Microsoft and we walked out and my managers like Ben you're the only person in the room that actually understood the issue and what we should do and absolutely everyone no one understands we are talking about it and people are kind of annoyed you and he's like the problem is we want to get to H but everyone that room is on a and you cannot talk about H you have to talk about B and then C and D it is J are yes and it's funny because that applies to writing online to number one sometimes I'm wrong so it's good to wait or to be sort of sure but number two there's an aspect where there's just the right time in place for things there's always stuff I'm sort of thinking about and one thing I've warned is it's definitely better to write about something a current event which is bad from a book perspective because I'll write an article that actually has some key insights but it's talking about some event that happened like 2015 which no one remembers or cares about but in the nature of my business that is actually much better for helping people grok it get it spread it share it those sorts of things so there isn't a bit where the incentives of my business do work against time was pieces in a certain respect okay so when you hit published though on aggregation theory did you think it could be what it became I did know you know I thought about the name obviously I was inspired by Clay christian sand disruption theory that was sort of one of the things but I had written a number of articles going up to that that we're clearly building to that point so there's one about Airbnb there's one about Netflix there's one about just websites and publications and then our ancient theory was sort of short and sweet because it was basically distilling what was in those previous articles into one thing I felt very confident I had a thing and I wanted to have a definitive piece that was doing what it was needed to have a name so that's what that was for our last sponsor this episode we are thinking are good friends at tiny tiny as you know is the Berkshire Hathaway of the internet and has built and acquired the world's premier collection of truly wonderful internet businesses by now you all know their story and Wilkinson started the really premier design agency in the entire world metal lab from his home in Victoria British Columbia beautiful Victoria British Columbia and they built the UIs for slack coin base Tinder headspace patreon you name it the best of the best and then he and his partners became completely obsessed just like us with Berkshire Hathaway and Warren and Charlie and they realized wait a minute there are a whole bunch of companies out there that are internet companies who would be perfect Berkshire type companies but Warren and Charlie aren't going to buy them because as we spent 10 hours talking about they don't get the internet but tiny again so they went out they bought companies like dribble pixel union creative market 80 20 girl boss arrow press among others businesses doing 5 million or more in recurring revenue with 30 to 40% operating margins but that otherwise were sort of stranded assets in the technology industry because they either couldn't raise venture capital or even worse they did raise venture capital and then it turned out that there weren't M&A buyers for them and they couldn't get to a scale required for an IPO yeah we're definitely in a situation now that the market has shifted were 90% of businesses already shouldn't raise venture capital but 90% of the businesses that raised venture capital probably shouldn't have either so what do you do from here well tiny has realized they can fix this situation for everybody if you sell the company to them the VCs can get their money back or whatever the appropriate amount of their money back is founders can get to take control back and set up an incentive structure with tiny that makes sense to keep growing the business to keep pouring their energy into their life's work and still have enough control over it with the right capital structure that actually makes sense for the type of business that they're in they've done this with a bunch of businesses already this year venture back companies doing over 5 million revenue 30 to 40% operating margins or the potential for that to quickly become the case and the most important thing is it removes the immense pressure on the business to get to an exit an exit doesn't matter anymore tiny is happy to own these businesses in perpetuity and man I can tell you in my previous life as a professional venture capitalist and board member of many VC backed companies there are a lot of companies in VC portfolios that fit this bill and it's just heart wrenching what to do with these companies because they're making real products they have customers they have employees but they're just not going to get to an outcome that makes sense for a venture capital firm and so having an off ramp like this is a godsend well if you're the founder of one of these businesses if you're the VC board member of one of these businesses don't let sunk cost fallacy get the better of everyone recognize what the business potential actually is now that you have seen it if it could be a profitable going concern shoot a note to high at tell them Ben and David sent you and thanks so much to our friends at tiny well Ben I have one more section that I want to do which is you do all this analysis on companies and you have this very enviable position of getting to comment on and critique their strategies after they announce them or an event after they do them and I want to play a game where I give you a company and I'm curious either if you were the CEO or you were giving advice to the CEO what would you do strategically and I think an interesting place to start to talk about on a bunch on this episode is meta you are the new CEO of meta what do you do over the next five years well I think meta is actually doing a fair number of things that they should now the apple changes were very devastating and they're structurally devastating and so they deserve to see if they can haircut other valuation because of that but I also think they were moat enhancing in the long run where I question whether any other companies ever going to build a top of the funnel advertising product that will be competitive with meta assuming they can keep their audience it appears that they've done a good job limiting the sort of the TikTok threat TikTok's growth is sort of flattened out over the last few years so I think they're actually in good shape what I do worry about is this is a company that's always been growing it's really hard for those companies to shift to more of a scarcity mindset I mean they wait off 11,000 people which only brings them back like nine months they probably need to be a lot smaller but it's also very destructive to company culture and morale do they still have the people that they need to pull that off those are probably some of the bigger questions and obviously any aggregator is dependent on having that audience but I do think that the network effects of their products are still underrated I mean everyone has their head that they're shrinking and actually every product they have is still growing which I think is under appreciated so number one I think they're kind of broadly on the right track number two I would acquire Shopify and I would take the FDC just started to court when they soon stop it I think they need to close the loop on e-commerce and advertising and again I think that'd probably be bad generally but I think it'd be very good for meadow so I would do that as far as the metaverse stuff I think it's a bad idea it's very hard to talk about the metaverse because it's like where the prospects versus is it you know xyz I do think that it's not just a bad idea because it's taking so many resources and attention I think from Mark Zuckerberg but also I just don't think innovation is necessarily born of mass expenditures in large companies we sort of skipped over a period of experimentation and ecosystem building that in the long run perhaps would be consolidated into a couple companies but instead it's just one model with sort of trying to brute force this sort of bit and the reality is his Facebook is a services company it's a social network and everything about their strategy works against that to succeed they not only need to sell headsets the initial headsets at sufficient scale and into friend networks such that people can social network on the headsets and so their place of winning is even further away than I think people think and so I don't think strategically it's the best thing for them to be doing and I've been pretty anti them doing from day one they bought Oculus I said it was bad and again it's very hard to distinguish between well what are the prospects of this versus zooming out should they even be doing this but I think the market is overly down on meta in part because the branding was too successful this is still a powerhouse in social media advertising and the bout of buddy they're spending on the bediverse is all things considered not that much they're still you have a five billion dollar profit a quarter so yeah I would double down on what they are and I would consolidate not a requires Shopify and spend three years fighting out in court because I think the panel would be worth it all right second one rather than going with another big American tech company I want to go with one that's an acquired fan favorite and one that's very close to home for you TSMC any change to what TSMC is doing now if you became CEO tomorrow not really it's a very complicated situation to say the least for lots of reasons I'm not just political but technological I think probably doing what they're doing broadly it makes sense yeah I don't know I'm ever in a ton about them and where they are and you could talk about maybe some of the pricing stuff they were pretty slow to raise prices even in the face of shortages they've been much more aggressive about that over the last little bit which seems reasonable to me it is opening the door for win and if competitor comes along to undercut them in that regard I think they're probably blessed by the weakness of their competition but the wonk term risk is obviously number one just the geopolitical risk the reality is is TSMC a core to their model essentially the model of being so flexible being so adaptive of incorporating new equipment of accommodating hundreds and hundreds or thousands of customers is all their engineering is in one place and that place is Taiwan and that has geoblical risk and from TSMC's perspective I think that's just a reality you can't really hedge against that and so if anything yes they're building these fabs in the US I think larger for political reasons and sure do that if you know the Taiwanese government feels that's what needs to be done to keep the US on board he'll be as happy build the couple in Japan because Japan is a future ally but I think you do have to sort of double down into Taiwan and roll the dice that nothing happens I don't think it's a hedgeable risk the China risk the other risk is the you know Moore's loss or running out I mean UV has another five six years and then it's not super clear what's after that how can you get smaller than one Ben you just have one nanometer in this there is visibility to under one but isn't like two molecules wide or two as two atoms it's very small I'm not sure if it's quite that small but it's ridiculously small so obviously I would imagine they're investing heavily in they've been doing this like advanced packaging like multiple chips on the chiplet sort of approach AMD's doing that Intel's not doing that and getting really good at that stuff is going to be super important I mean I actually one thing I do like about the Japan investment is they're trailing edge I think they're 28-nm fabs which is really where China is making a lot of progress because there's no real economic reason to build trailing edge fabs the whole idea is you build it once it's long since depreciated and you're still making money selling cheap chips out of that fab but I don't know maybe there's something in the trailing edge more things need chips and they don't all need the leading edge that's right the economics of it are very difficult I mean the reality is that's why China is filling the gap because that's all they can really make economically you don't just jump to the leading edge you have to sort of build your way up and so China has a motivation and an economic rationale and a lot of the chips that they're manufacturing go right into products that are already made in China and so they're filling in that gap you know that's something that would be beneficial but I think the other day TSMC is Taiwan and that's going to always be the biggest risk and I'm not sure there's really much they can do about that okay last one Amazon David and I did seven hours of Amazon calm and then a big AWS episode and are I mean at least my big takeaway was it is day two and day two is about becoming a profitable company where the big sell story of tomorrow is realized today and you got to lean into that and that means lots of changes in how they organize how they innovate and what markets they choose to enter and I'm sort of curious for your take on is Amazon a day two company and then the same question if you were to become CEO what would you do I think there's an analogy to like real life when you're young you're like I'm never going to become an old foggy like those old people and then you get old like me and the people around you that are trying to still be young are just kind of pathetic and actually being old is kind of great my kids are fairly independent they can take care of themselves I can going out with friends you know obviously have more means than I did when I was younger and I'm a big advocate of just in general living in the present and embracing who you are and where you are your life stage and I think that's good personally and I think you're spot on that's also true from a company perspective you can't be a startup forever and it's bad to I wrote about from day two to one day or something about Amazon when Bezos sort of like reasserted control for years goes like no we're gonna do one day delivery and there's been too much time spent trying to squeeze our suppliers for profits and margins and no we need to get back to this and in retrospect that was the seed of Amazon's kind of disastrous last few years which was they dramatically over invested in their logistics network their cost structure got completely out of control they over hired and it's probably a good example and maybe it was a precursor of what we saw Jeff Bezos personally of sort of losing track of where you are in life and what actually makes sense and trying to be young forever so I agree with you broadly with that bit about Amazon do you think that applies to AWS to or is that different realistically the challenge for AWS is number one what's going to happen with the real dry up in startup formation and easy money in that space a lot of which went to Amazon there to sort of the default choice for startups number two you know Microsoft sort of bread and butter has been look you've been working us for a long time we're going to package it at like suddenly you're not just paying for on-premise windows it also includes Azure credits and we're going to be able to contribute that to our numbers and now you can sort of move pieces over and we'll help you do it what I think is exactly what they should do it's been a very smart strategy but I think that the issue in any market is it's like me all the initial easy stuff is like there's lots of low-hanging fruit but then the largest part of the market is still the part of the market that's sort of always been there and isn't necessarily fast moving and and Microsoft is just really cleaned up in that market where the known entity we can help you move over and I think from Amazon building up the support capabilities and rationalizing their offerings I mean it's weird because Amazon benefits because they have so many features right AWS is the Microsoft word of cloud providers in that they have an absolute absurd number of features and the interface is pretty terrible but every single customer is completely dependent on one of those features and if that features not there then they get go away and that actually ends up being their modes we were researching the episode and we were talking to longtime AWS veterans to sort of understand the mental framework to talk about them today and that became very clear that AWS doesn't deprecate features Amazon kill stuff kill a fire phone kill local delivery for food they'll call all kinds of stuff but an AWS land if a customer is depending on something AWS's long-term enterprise value is determined by customers believing that Amazon will continue to support them forever they don't deprecate services even when those services end up flipping upside down on the unit economics and they have to like maintain a costly service that they never figured out how to optimize right and every time a customer does something custom for AWS it's blocking right I mean everyone fantasizes about this world where you know like every time it comes up whether it be you know containers or you have all these you know IBM's was like talking about doing this when they acquired Red Hat we're gonna make it so you can be cloud agnostic right right and then it just turns out that well cloud agnostic but this one little piece of me would be better than this is that service right and then you wake up and you know of course I wanted passports to be cloud agnostic well passports not moving off AWS like I can eat I can promise you that and so yeah it's the Microsoft strategy Amazon has a lot of old Microsoft people in it a ton it's really interesting to consider like the different cultures between Seattle and San Francisco Seattle just is a platform town like Microsoft was the originator Microsoft's always been the best platform administrator all that backwards compatibility that you want to make fun of from a user perspective is essential to building this foundation that people trust and that locks them in and they're happy to be locked in because they don't want to go change it anyway right and Amazon does is the WS obviously Microsoft is doing that with Azure and the Silicon Valley companies are just very very bad at that right like no one trust Google right no one trust Facebook Silicon Valley is much more consumer focused even the SaaS companies those are consumerized enterprise technology the whole idea is don't worry you never need to pay for an upgrade we're upgrading on the back of ourself but that means like they will remove stuff because it's one thing to remove an API that a piece of software depends on versus removing a feature that you may or customers are annoyed but it's not actually breaking like what they operate on and it's just pretty interesting to see those differences which I do think there's a geographic aspect to it I mean geographies what save Microsoft because when Microsoft was in the dumps if they were in Silicon Valley all their best talent would have left and not a work for other companies but all their best talent had kids that families they didn't want to work for Amazon people are maniacs and so they stayed up Microsoft they were miserable and they bitched and they wrote snarky blog posts about the company but then when Nadella came in and sort of refocus the company they had this foundation of talent that the HP's of the world the Yahoo's of the world had long since lost well Ben this has been awesome thank you for joining us and celebrating the almost 10 year anniversary of Stratécurie with us what is the easiest path for everyone who right now is listening to this in a variety of podcasts players you got Spotify and overcast and Apple podcasts what is the easiest way for them to opt into the Stratécurie universe well I mean if you go to Stratécurie you can click any of the podcasts are on the side you subscribe I mean it's funny like the how does the funnels work right do you just go as Stratécurie and read and follow and I'll I'll where you in well you go direct maybe we'll put a link in the show notes yeah yeah we use the show note link $12 a month $120 a year you not only get Stratécurie but you also get the update you get Stratécurie interviews we didn't talk about interviews that's actually been an interesting evolution of Stratécurie yeah you're a primary source now what's going on well that was a challenge right because I started out I had no access I didn't know anyone and in some respects I missed those days I still remember the first time I had a company very angry at me and called me in and it was Twitter actually because I had teased out of their results that their direct response program was failing I mean this was like years ago and they got super mad in my next update I'm like well it's possible this and I kind of like walked back a little bit and the next quarter came out and they're like yeah we're gonna need to I don't think to write down but there was a big thing and they said like it's not working out and I was totally right and I was so mad that I kind of walked back a little bit but I'm glad it happened because when I start out no one cared no one paid any attention now people care and to sort of pay attention and so I'm glad I was right on that one is it sort of gave me courage going forward but what is interesting about feedback from companies is everyone like from COO down or VP down they always push back and they're like no you have this wrong you understand I was he I never get pushed back from CEOs even when I'm wrong and what I've come to realize is CEOs are surrounded by people telling them what they want to hear that's their incentives right the reason why the VP is attacking me is because he's worried I'm gonna make the VP look bad in front of the CEO right that's the concern where is the CEOs like they're so thirsty for any sort of feedback that's outside of that rotten incentive structure that's just inherent in corporation and so sometimes they know they have more information that I do they're aware that there's things that I don't know but they're grateful to have sort of a different point of view and so over time I transfer having no access to having total access right I can reach out to basically anyone and just for people who haven't let's just go through the lineup you've had this year Mark Zuckerberg on you've had Jensen from a video you've had I'm trying to think of some of your early big ones you rich Barton on from Zillow and I think he credited to you with you convince us to start buying houses you convince us in the open door so it's trying to figure out like what do I do with this access I didn't want to become a reporter and I thought it was just important to me personally from my own pride that my takes are my takes I'm not getting fed them from someone else and so what I ended up going with was interviews and part of this was a product bit I had now you could list the checker via podcast so if I had an interview there's a good reason to try the product out to get it so there's a product angle but also I'm like my whole take is I'm not exclusive I don't have exclusive information what I'm selling is my personal analysis and so if I'm talking to a CEO I don't want the sense to be Ben's just parodying what a CEO says so if a CEO wants to talk to me it has to be on the record and it's going to be the full transcript and the full interview is going to be available to my subscribers and I want my subscribers to have all the same information I do and so when I write it's me it's coming out of my brain it's sort of unique to me and I think it's worked out pretty well it's a change like instead of be writing four days a week I'm basically writing three days a week plus an interview it's not just CEOs I think actually often the better interviews are with like other analysts or people in different spaces this also solved the how do I cover startups because part of not being a reporter and being independent is public companies have to disclose a lot of data and and they have earnings calls and they have presentations and things on those lines with a startup you don't have access to very much of that and you don't know how much is bullying smoke how much is not so now I am doing like interviewing founders where I say up front look this is completely subjective I'm not going to verify what they say I'm not going to XYZ it's their chance to tell their story what their business is going to be XYZ and so that's a way to sort of cover that space given the limitations in the way secretary operates and so that's one of the products it's not a standalone thing which I think is better it's still part is to secretary I thought about should be a standalone product but I think there's an aspect of I don't want there to ever be any sense that that's a driver of my bottom line I want to be able to say that I think the metaverse is probably a bad idea that's really tricky right like I mean the bar sucker brick one obviously it's a huge get I think that his interviews with me are I'm biased but I think are what years better than he does anywhere else you and Eli had the best interviews with him of this whole last cycle right it's he thinks I'm fair whereas he thinks a lot of other journalists aren't but what's the line between that and being like you favor Facebook because that's not the case at all number one it doesn't drive descriptions I always make them free to be queer like no one's going to have to pay to get access to that because you shouldn't subscribe to secretary because you want to read Marcia Crabberg that's not a reason but then it was really annoying because Facebook had that bad earnings call and they're stock with down and I like crack I'm gonna need to write article about why do this reactions unwarranted they're actually fine it's gonna be like three weeks after I just had a Marcia Crabber gone it's gonna be a relatively positive article but that's like where you build up your reputation over years right and sometimes you can't always be depositing sometimes you do a withdrawal me writing metamiths was a withdrawal on my reputation yes it didn't look great that I just got an interview with Marcia Crabberg and that I wrote a positive article a contrarian positive article about met up three weeks later but I hope I built up enough sort of credibility with my audience over the last nine years that they believe that no that I would have written that article with or without that interview you're also unabashed about your incentives you're like look everyone my incentives are to have as many people subscribe for as long as possible my incentive is not I think I'm gonna be Mark Zuckerberg's best friend so I'm really hoping that he invites me on his PJ and we get to hang out yeah well it's tough because like I said I'm super positive on metas advertising products because that's a line with my passion so I do find that Zuckerberg ones the most challenging just because I generally have a contrarian opinion about metta overall and it's generally positive so I'm super wary about that I also feel like I get more interesting stuff out of him than most other interviewers so I want to do that and sure it's a feather in my cap to interview him but I definitely don't want that to ever be perceived as the real reason interviews don't drive subscriptions and so I do it because again I want to push the tech product I want people to use my podcast product and then it's a different kind of work as you guys know preparing for interviews is a lot of work it's also different than necessarily like writing an article oh for sure we could not be writers yeah you can't stay the same forever you can't be like the startup forever right I can't be the guy on the outside forever which I was when I started like with my chip on my shoulder and I'm just some dude in Taiwan giving his opinions about apple that worked for me and I'm not that person anymore and it'd be sort of dishonest to pretend that I am the reality is I probably have the best access of anyone in tech I can literally contact basically anyone and get access to them and it's more honest to my product and what I do to lean into that I think then to pretend it's not the case all right so listeners click the link in the show notes go experience the Stratekri cinematic universe not just a guy in Taiwan giving his opinion on apple or coming hopefully with that thank you to fund rise pilot and tiny after you finish this episode come hang out in the slack with 13,000 other smart kind clever curious members of the acquired community slash slack get some sweet acquired merch we now officially have live the acqt we've got market size unconstrained with the original AWS logo we got to do a collab with Ben on acquired Stratekri t-shirt for the merch store oh that's a good point I have a Stratekri t-shirt I almost wore it for recording this episode I also have a framed aggregation theory I don't want a fanboy in front of Ben but on my desk I have a framed aggregation theory illustration so I don't know check out Ben's merch store too we'll put a link to that in the show notes but the other great acquired merch that dropped a couple of weeks ago is the benchmark t that in the benchmark style of course says there's always room at the top if you want to listen to the acquired LP show and get more acquired crammed in before the holiday season got some good stuff search acquired LP show in the podcast player of your choice and with that listeners we hope you have a wonderful holiday season I believe we still have one more episode coming after this no yeah we've got something special coming we got a little fun holiday acquired present for everybody yes and with that listeners we'll see you next time we'll see you next time who got the truth is it you is it you is it you who got the truth now