Acquired - Acquired Episode 15: ExactTarget (acquired by Salesforce) with Scott Dorsey

Episode Date: July 5, 2016

Ben and David return to make their first foray into enterprise software, covering Salesforce’s $2.5B acquisition of ExactTarget in 2013 with the help of special guest and ExactTarget cofounder & CEO, Scott Dorsey.   Technical note: due to an issue we didn’t catch during recording, audio quality is significantly lower than usual for this episode (especially David’s voice). We apologize but hope you’ll give it a chance anyway— Scott offers great wisdom & insights, and the ExactTarget success story is a inspiring one underdog entrepreneurs, especially (but not limited to!) anyone located in the Midwest or elsewhere outside of traditional "Silicon Valley-style” tech hubs. Sponsors:ServiceNow: https://bit.ly/acqsnaiagentsHuntress: https://bit.ly/acqhuntressVanta: https://bit.ly/acquiredvantaMore Acquired!:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Merch Store!Topics covered include: The decision to start ExactTarget post-internet bubble and in Indianapolis, with zero software experience between Scott and cofounders Chris Baggott & Peter McCormickRaising initial money from friends & family, followed by early investment and mentoring from Indianapolis venture pioneer Bob ComptonBuilding and scaling a great sales organization within a technology companyThe importance of focusing early on a clearly defined target market (SMBs in the case of ExactTarget), and then “stair-stepping” up as the product and business scale grow over timeExactTarget’s unsuccessful first IPO filing during the financial crisisBuilding a "capital-efficient” early stage company, and the value of raising growth capital at the right time to step on the acceleratorThe value of “secondary” investments allowing founders, employees & early investors to “stay hungry” by achieving some liquidity along the wayWhen and how to expand internationally and the importance of strategic resellersExactTarget’s second successful IPO filing and life as a public company with quarterly financial reporting to Wall StreetHow the acquisition process played out with Salesforce and other bidders (including reference to ExactTarget’s incredible SEC filing detailing the entire negotiation—scroll down to "Background and Reasons for the ExactTarget Board’s Recommendation”, starting at the bottom of page 13)Approaching the difficult task of integrating a major acquisition involving thousands of peopleThe fun story of ExactTarget’s winning Microsoft as a large customer—including actual sledgehammersScott’s new Indianapolis-based venture studio, High AlphaPlus as always the "hard hitting" analysis across acquisition category, what would have happened otherwise, tech themes—and final grading  The Carve Out Ben: The Talk Show live at WWDC 2016 with Phil Schiller & Craig FederighiDavid: The Score Takes Care of Itself by legendary 49ers coach Bill Walsh, originally recommended by Jack Dorsey [no relation to Scott :) ] at YC Startup School '13Scott: 2016 Scipps National Spelling Bee, including one of the finalists’ favorite words: indefatigable  Followups: Instagram’s incredible user numbers announcement: 500M monthly active users / 300M daily active users

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great episode. This is gonna be awesome. Yeah. I think administrivia might only be asking for reviews. Should we keep doing that? Does it sound needy? Welcome to episode 15 of Acquired, the podcast where we talk about technology acquisitions. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. We'll be talking about the 2013 Salesforce acquisition of ExactTarget. We have with us today Scott Dorsey. Scott was the founder and CEO of ExactTarget, and I actually interned at ExactTarget for a summer when I was in college. And probably worth mentioning,

Scott is also my cousin. So super, super excited to have family on the show. And welcome, Scott. Hey, thanks, Ben. Really appreciate it. And David, a delight to be on the show and proud to watch how your career's developed, Ben. And glad that you had a little stint at ExactTarget along the way. That's pretty neat. Super, super fun. I met a lot of great people there. So wouldn't be here today without it. No, no, it's true. I think normally we talk about the acquisition history and facts. And David sort of reviews that. But I thought a really cool way of diving into the show today would be to kind of have David do a little bit of review of facts, but kind of go into a Q&A with Scott. Yeah, that's the plan since we're lucky enough to have the primary source here sitting with us. So for folks who don't know, ExactTarget was founded by Scott and your co-founders Chris Baggett and Peter McCormick in Indianapolis in December of 2000.

So Scott, December of 2000, how'd you guys decide to start a tech company? The bubble had just burst. You weren't in Silicon Valley. What was going through your minds? Exactly, David. It's a great question. And we're a classic, kind of didn't know any better against long odds story in that we started ExactTarget in December of 2000 under the toughest conditions. The internet bubble had burst, you know, VC funding had really dried up and we were three first-time software entrepreneurs, you know, starting a tech company in Indianapolis. And actually none of us had a technical background. So we were against long odds for sure, but we had a real clear vision

around what we were trying to accomplish. And it was actually my co-founder, Chris Baggett. And while we're kind of unpacking some family stories here, Chris is actually my brother-in-law. So we both married into this great family from Indianapolis. He's from Pittsburgh and I'm from Chicago. And I had just finished my MBA at Kellogg over at Northwestern and really studied entrepreneurship and internet business models and had just come back from our capstone course, which was studying really the Silicon Valley ecosystem and figuring out how to apply that to Chicago and how to apply that to the Midwest. And Chris had this big idea around database marketing and how to apply database marketing principles to the internet. And Chris is one of these just incredible visionaries and evangelists. And he's now done it multiple times, even post ExactTarget by founding a company called Compendium in the blogging software space. And now he's very deep into food tech and agriculture. But Chris had a real sense that the Internet was going to transform marketing

and that email marketing in particular and permission-based email was going to be a very powerful way for small businesses to get to know their customers better and be able to build these kind of personalized relationships and be able to deliver relevant content that drove business. And he was right. So he was so passionate about the idea that he really convinced me to kind of quit my day job. I was working for an internet incubator in Chicago

called Divine. And we sold the house and had two little ones and put the family in the car and drove to Indianapolis and said, let's give this a shot. Wow. That's a pretty crazy. Did you guys try and raise money from Silicon Valley VCs at that point? I know you raised some money from friends and family and a few local individuals. Bob Compton, I believe, was your lead investor. But I got to imagine in December of 2000, not many VCs are making any investments, let alone first-time tech entrepreneurs in Indianapolis. No, that's exactly right, David. We spun our wheels talking to a lot of different VCs in Indianapolis, Minneapolis. We really didn't head back to the Valley in a meaningful way, but we certainly talked to a lot of VCs in the Midwest with absolutely no luck. And then started talking to angel investors who were also kind of slow to move. So our first round of financing was just a classic friends and family round. We raised about $200,000 from those that loved us and trusted us. And that early investor roster was my parents and my

brother and my father-in-law, and then pretty much all of Chris's neighbors. Chris has just this infectious enthusiasm and it's not much of an exaggeration to say he went door to door with the PPM in his neighborhood and collected $5,000 checks. And we were so careful, especially with Chris and I being family, we only wanted to raise small amounts of money from family members that if it didn't work out, there'd be no hard feelings and we wouldn't have any discomfort around the Thanksgiving dinner table. So we scooped up a lot of $5,000 and $10,000 checks and cobbled together the first couple hundred thousand dollars in the business. And a really cool story is that for those investors that put $5,000 into that seed round and went the distance, and actually a handful of them did. They held the stock all the way through the Salesforce acquisition.

That $5,000 became well north of a million dollars. Lots of pools and home renovation projects started popping up in Chris's neighborhood. We had a lot of happy family members. That was really our first move. We were a bootstrap startup. The three of us worked without taking a salary for the first six months of the business. And then we were really fortunate to find Bob Compton. And Bob was a very accomplished venture capitalist and tech entrepreneur in his own right.

Bob had invested in a company called Software Artistry, which was the first really Indiana software company to go public and then later was acquired by IBM. And then he was a venture capitalist at CID Equity and then actually ran one of their investments, Sophomore Danik. And Sophomore Danik sold to Medtronic. It was a big exit. So Bob was a very accomplished investor and tech entrepreneur. And he became our lead angel investor and really became my mentor. He was chairman for the first seven or eight years of the business. And once Bob put money into the business, then raising capital got a lot easier. We had that stamp of credibility that we really needed. And with only 200,000 raised, I mean,

this was the era before cloud computing. How did you invest that to build the business? It's a great question, Ben. And it's so different. AWS didn't exist. So we were buying servers. We were racking servers. We were buying networking equipment. We really had to build the infrastructure. And ironically, our first $10,000 went to Liris, which later turned out to be an email marketing competitor, but Liris had a server-based solution for sending email at volume, and that was one of our early licensing purchases. And then this was interesting. You always have to leverage your timing and your unique assets. And one of our unique assets and an element of the era was that we had a lot of awesome friends and colleagues that were looking for what was next. And a good number of them were with dot coms that didn't work out. And we ended up hiring our first sales team as kind of independent contractors where we'd convince a friend that we had a big vision, this was a neat opportunity, and they would sell for us. And we gave them

equity in the company, and they would sell for us really as an independent contractor, no salary, commission only, and they had to do it all. They had to find the lead, put the pitch deck together, sell the deal, collect the deal, implement the customer, and if they made it all the way through, we paid them a commission. So we actually built this really kind of seasoned sales team early, just on the back of the fact that we had a lot of really good friends that were kind of looking for something that was next in their career. And then once we got funded, they became real employees and we were able to provide benefits

and all that good stuff. But we built a very scalable sales organization before we really could afford to. How much do you think that sort of original DNA of totally giving pure commission-based sales to those early sales folks, do you think kind of helped shape the way that that organization was built? Great question, Ben. A huge influence. We, from day one, were're a very sales driven, customer

driven, you know, organization. And, you know, just the nature of the three founders, all sales, marketing leaders, you know, kind of general management background, you know, everybody sold, everybody spent time with customers. And early on, we would describe ourselves as marketers building software for marketers. You know, we had a very, very keen sense for what problem we were solving and what we wanted the product to look like and how we wanted it to function. So that was product management V1 was really all driven by the founders. But we created a sales culture early on where the three of us were very aggressive in selling and working with customers. And

it's perhaps my very favorite element of software as a service is that if you are a good listener and you work closely with customers, they will and your prospects in the marketplace. And if you can distill that feedback in the right way and take action upon it, you can build an amazing solution that clients really want. So that was one of our, you know, I think one of our real strong suits was being very close to the customer and being great listeners and really helping them shape our product. But we were incredibly sales driven. And because of that kind of independent network of sales representatives that we built, we were very sales heavy early on. Actually, I look back. I did a history of ExactTarget chat a few months ago, and I look back at one of our early decks. This was even staggering to me.

But at the moment where we had 44 employees, we actually had 26 in sales. Wow. That's heavy. That's heavy. So we were very in sales. Wow. That's heavy. That's heavy. So we were very sales driven. And then we also unlocked a channel far earlier than most software companies. We realized that digital agencies could be great partners of ours. They were building websites, they were writing copy and content, but they really didn't have tools for email marketing specifically. And we

built a big channel program that allowed these agencies to leverage our tech platform, rebrand it or white label it where they needed to, and build these reoccurring revenue streams that were advantageous for them. And that allowed us to start reaching into big Fortune 500 companies like General Mills and Home Depot became clients of ours through their trusted agency at a time when we were still a small and scrappy company. So it helped us kind of punch way above our weight class early on. And that was a big drive of our early success. On that front, we should say for our listeners too, this is, I think, really our first or one of our first pure enterprise technology companies that we've

covered. Actually, I'd be curious on Scott's take on saying that. Well, but I want to come back to that because, you know, and I say that because, you know, as VCs, there's sort of this like trope when you're looking at, you know, investments in the enterprise that like there's this matrix of, you know, what your target customer is when you're an enterprise software company and who you sell to. And it's like a test. You need to have that nailed. It's like, are you enterprise or are you mid-market or are you SMB? Do you sell direct? Do you sell via the channel? And typically, you need to have very clear answers to those. But it sounds like from the get-go, you guys were like, yes, to all of those. Was that deliberate? How did you think about that?

No, great question, David. We were very small business focused, very small business focused. In fact, our first wave of customers were literally restaurants, dry cleaners, pizza shops. We were very SMB and very retail oriented. And the original problem we were trying to solve was that when the retailer turns the lights on and opens their door in the morning, they often have little visibility into who's walking in the door and who their customers are and how to build deeper relationships. And that was part of the background that Chris brought to the business. So early on, we were $1,000 a year subscription and very small business focused.

And actually, a good number of the reasons why those early VCs said no is they just couldn't picture that this could become a large business. Then over time through, I think, being crafty and agile and very sales and customer oriented, we started to realize, actually our first wave of expansion was to grab lots of small businesses at one time, you need to start selling to franchise organizations. So we started evolving to franchise organizations where the franchisor cared a great deal about centralized branding and content, but they wanted to give autonomy and authorship down to the franchisee. So we started to build kind of this parent-child relationship and this kind of enterprise architecture to serve franchise orgs.

And that gave us a big boost. Then we started realizing that really every organization in the world is going to need to use email and digital marketing to communicate with their customers, whether you were a nonprofit or Microsoft on the enterprise side, there really were a common set of needs. And we just built more and more sophisticated technology. And then ironically, we were a Salesforce customer from the inception of our business. So we were students of Salesforce. We really watched how Salesforce built and scaled their business. And we admired that they were a multi-tenant SaaS platform that served small businesses all the way up to large enterprises.

And I just fell in love with the idea that you could essentially build software once and sell and deploy it over and over again, and that you could build features that, you know, could be every feature we ever built, you know, had a switchboard. We had a, you know, an on-off button where we could deploy the software and package it in a really flexible way that was very simple for the small business, or we could turn on all the advanced capabilities for the more sophisticated enterprise and to have essentially one code base where we have clients paying $1,000 a year and clients. We had a lot of seven-figure clients and even some eight-figure clients essentially using the same platform. That's just a remarkable level of scale and flexibility. And there's a lot of tension that

applies to the organization around segmentation. Who are you building products for? How do you build your services org? What are your support models? These are all the things VCs are afraid of, right? Oh, yeah, yeah, absolutely. So we started small, and then we really disrupted the incumbents by kind of inching our way up market. And I think they often underestimated us. But it was that flexibility that was strong. And I wanted to be a part of that democratization of software. I wanted to deliver compelling software to small businesses in an affordable way.

And I always felt that our market opportunity would be a lot bigger if we could continue to serve SMB to enterprise. And then the really neat thing is small businesses become big businesses and marketers leave small companies and go to big companies. So we had a lot of pull through. Actually, one of our largest customers over time was Groupon. And Groupon came into our small business inside sales team when they were barely just getting started. And they were able to scale with us nearly every step of the way. So there are a lot of neat success stories where that SMB to enterprise range was a big differentiator for us.

Yeah. So I'm curious. So you have a few years of bootstrapping. You start really small, dry cleaners, pizza shops, as you're saying. And then things go well. A couple of years, well, four years later, 2004, you end up raising ten and a half million from Insight. By 2006, you raise anotheres to up to, I would assume by the time you're doing 40-ish million in revenue, you're probably already at the enterprise or starting to hit the enterprise at that point. Were there specific breakpoints along the way?

I'm thinking perhaps Microsoft is one of your biggest customers. How did that conversation start? How did they come into the fold? Yeah, that's a great question, David. And maybe I'll first start with just kind of going back to that timeframe. So in December of 07, we actually filed to go public. We were 48 million in revenue. We were profitable, and we were just starting to kind revenue. We were profitable. And we were just starting to kind of reach the enterprise space. And we were extraordinarily capital efficient. So the fundraising that you referenced is all accurate, but actually can be a little deceiving because each of those rounds was a mix of primary and secondary capital. So we often had a secondary component to our fundraising to provide founders, employees,

and early investors an opportunity to take a little bit of money off the table along the way. And I was so grateful we did that actually, especially because of how we bootstrapped the business and how our three co-founders worked for a very long period of time without paying ourselves. Having an opportunity to take a little bit of money off the table along the way was powerful because it just allowed us to sleep well at night knowing that we had some level of financial security for our family and we'd be able to send our kids to college and all those good things. But then it just got us hungry to really want to take the business a distance and make sure we didn't prematurely sell the business.

So what was interesting is when we filed in December of 07, we had only raised 6 million in primary capital and we had nearly as much on a balance sheet. So we had been extraordinary capital efficient up to that point. So we filed to go public in December of 07. The public equity market just fell apart in early 08. And we actually stayed on file all of 08 and ultimately decided to pull the IPO in early 09. And that's a whole nother story I'd be happy to jump into. But I would say it was that timeframe where we started reaching up into the enterprise and the nature of our business was shifting. We started building more professional services capability. And the

fundamentals of the business started shifting. And in addition to the equity markets not being very favorable, it actually was a huge blessing for us because it gave us a chance to stay private, bring more capital in the business and, you know, kind of recalibrate toward the enterprise. And it was much easier to do that as a private company. Yeah. And that's where I wanted to go next here, kind of leading up to. So you finally go public in December of 2007. And this was the days before the JOBS Act, which, you know, hard to imagine now that, well, easy because we all lived through it. But, you know, your prospectus was out there in the public domain from December of 2007, you know, well, still to this day, but until May

of 2009, you were on file and all your competitors could come read your S1 and, you know, see all your financials. And then you ultimately didn't go public then, I assume because of the financial crisis in large part, you know, there were no IPOs happening then. What was that like? It was so difficult. It was so difficult. You're exactly right, Dan. All the press, I'm sure, could read everything about you. You're still a private company, but you have none of the benefits of being a public company, but all the downsides. That's exactly right. I would commonly say we had all the burden and cost and pressure of being a public company with none of the benefits,

zero. Because you're exactly right. This was pre-Jobs Act. And we had to report every quarter just as if we were a public company. So the silver lining is we had a great training ground of how to set quarterly expectations, how to work with the street, how to work with analysts. We had to do quarterly earnings calls with the analysts that would be covering our stock. But it was very, very difficult and a testament to the strength of our team and our company culture that we kept everybody focused. We kept everybody very positive. And 08 was just a difficult year for running the business in general, given the economic crisis. Our churn numbers went up because a lot of our small business customers were going out of business. Renewals got tougher. Upsells got tougher. New business, there was a lot of price pressure.

So we had a good year in 2008, but it was a very different year from the prior years of our business. But it was a great learning and growth opportunity for us. And in early 2009, it just became evident we were not going to get out. We certainly didn't want to, we didn't need the capital. We didn't want to go public unless we were very confident it was going to be a successful IPO. And then to my earlier comment, the business really started shifting more to the enterprise. And I also learned a valuable lesson. We were profitable at that time. And the public markets really want to see margin expansion. And it became really evident that if we were to go public, we were going to have to show margin expansion, both gross margin and operating income. And it was going to make it very difficult for us to make the strategic

investments in the business that we wanted. We were very passionate about moving beyond email into a pure digital marketing platform. We were ready for international expansion. We were ready to start a couple of our acquisitions. And all of that became a lot easier as a private company. So we pulled our IPO in early 2009 in conjunction with a large round of capital led by battery and scale. And then later, TCV came on board as well. And our internal tagline was better than an IPO. And we really outlined for our employees. Between that and then a later round you did in 2011,

I think you raised more money than in the private markets than you ultimately did in your IPO. Yeah, we raised $145 million in 2009. And once again, there was a large secondary component, but it gave us a war chest to really get aggressive in expanding the business. And we created a vision we called Accelerate 2013, where we became very specific around the company, what we wanted to look like in 2013.

We started with the end in mind and then worked our way back and very counterintuitive. This was the time where Sequoia sent out their favorite, kind of famous deck around kind of the- Good times. Yes, yes. Good times are over. Almost mandating 20% headcount reduction across all their portfolio companies. And as all of our competitors were pulling back, we hit the accelerator. We got very aggressive in investing in R&D development, building big sales capacity. Ultimately, we built a sales organization that was three or four times larger than our nearest competitors. So we kind of hyper-invested in the business in 2009 and 2010, counting on the fact that when the

economy came rolling back, we were going to be the best position to take advantage of it. And that happened. And then we actually rolled into our IPO, which was March of 2012, with just huge momentum. We had accelerating growth rates. We had grown in that 2008 timeframe, 2008, 2009, around 30%. And then we moved up to the forties and then we were mid fifties as we kind of rolled into the public markets in early 12. So that, that hyper investment and that decision to stay, stay private, uh, paid big dividends for us. Yeah. And then talking about accelerating growth. One of the things that always struck me as, as, um, really unique about ET was how deliberately you expanded the business internationally and using channel partners as the way to grow.

I think we haven't really talked about international expansion at all on the show, and it would be really interesting to kind of hear how you thought about that. I'd be happy to, and you're exactly right, Ben. This was kind of a derivative of our channel and agency program in that we knew we could get reach into markets that we likely wouldn't be able to address directly through channel partners. And we did the same thing internationally. So we found a partner in the UK and they spun up essentially an exact target reseller. And we did the same in Australia.

And as those great teams and later became friends, they built their business and really scaled it around the exact target platform. When they started to reach some critical mass of customers and employees, we then acquired the business. So it was kind of a low cost, low risk way for us to expand internationally before we would have been able to do otherwise, you know, as it's kind of a small capital efficient company. And we really validated with these partners that there was a market for our software and our services outside the United States. And then we started working with multinationals like Nike and Expedia and Microsoft. And it became imperative if we're going to grow

those relationships that we had an international presence. So three years in a row, we actually acquired every August. First, we acquired our reseller in the UK and used that as a beachhead to expand through Europe. And then the next August, we acquired our reseller in Australia. And then the next August, we acquired a reseller in Sao Paulo, Brazil and gave us a great reach into that marketplace. So we did six acquisitions over the course of ExactTarget history and and three were product expansion and three were geo-expansion. Cool. So you go through this period from a dead IPO that wasn't going to happen. You pull back. You raise a bunch of money at a time when nobody could raise money. You accelerate the business. Come out and you go public in March of 2012.

And then it's just a little over a year later that the acquisition happens. Obviously, the topic of our show, we want to, and we'll get to category and tech themes and everything else in a minute, but I want to spend a little bit of time, we were talking with Scott before the show, one of the things we love to do on Acquired is dig into these legal court cases and SEC documents and all sorts of stuff. And luckily, in ExactTarget's case, I don't think there were any major court cases. But one of the things that happens when a public company is acquired is you're required, and this will be coming out for LinkedIn soon, I can't wait to dive in, you're required to

disclose to the SEC the play-by-play of exactly how the acquisition happened. And so we'll link to it in the show notes. It's this amazing document about how the exact target acquisition happened. And I'd love to just ask you to talk a little bit about that process of how it started. And again, all of it's documented publicly. There were three other bidders that we can't talk about their identities. They're referred to as party A, party B, and party C in the document. But multiple offers going back and forth. I mean, that must have been such a stressful time for you. How did you navigate through it? It was incredible. It was an incredible learning experience and exhilarating and nerve-wracking at the same time, for sure. So we had been a public company for five quarters and life was good. We actually had a great time. Our IPO was super successful. We came out of the New York Stock Exchange at

north of a billion dollar valuation and our IPO was heavily oversubscribed and we felt like we had all the right investors supporting us from day one. And all that learning that happened in 2008 and 2009, we're able to really apply to the S1 and filing process and IPO and how to pick the right banks and the right analysts. And we just had an amazing time going public and really loved it. And then five quarters of the public company, more of the same. We kind of met and exceeded plan every quarter. We were really embraced by Wall Street and had a great investor base. We had completed two acquisitions, one called iGo Digital in the predictive analytics space

and a second, Pardot, in the B2B marketing automation. And life was great. We were very happy as an independent public company, and we were growing north of 40% year over year. What started to really happen across the software ecosystem is that marketing cloud solutions started really garnering more attention. And I would say really the largest probably five or six software companies in the world were really all shifting to the cloud and publicly stating an intent to go a lot deeper into marketing. So that started happening in a big way.

And for us at ExactTarget, a big part of our strategy had been to build a very open platform, robust APIs, and lots of integrated partnerships. So our premise was that marketers need one place to store all the data they have on their customers and then to use that data to drive more personalized and relevant communications and relationships. So even literally before the AppExchange even existed, we integrated into Salesforce and we integrated into Microsoft Dynamics and we had great relationships with Adobe and Omniture and kind of many others across the industry. So it was very logical that we were attending shows and conferences and co-selling and co-marketing kind of with all these companies. But Salesforce, we've had this really rich relationship with

from being a customer to being an integrated partner to doing lots of things together in the market. And we got to know Mark and the team. And Salesforce had made a big push into marketing with the Radiant 6 and Buddy Media acquisitions and really had a social first strategy. And over time, it just became apparent that their customers wanted more, that social was an important channel, but they really wanted a multi-channel platform. They wanted greater data capabilities and they wanted a platform that was not only oriented for B2B customers, but also B2C. So we, you know, we always had a close

relationship with Salesforce and would always kind of share product roadmaps and vision and direction. And it, it just became apparent they were going to make a bigger investment in marketing and knocked on our door and said, Hey, we'd like to, we'd like to collaborate and take a closer look at the kind of joining forces. And, and you're absolutely right, David, when you're, collaborate and take a closer look at kind of joining forces. And you're absolutely right, David. When you're a public company and you get that kind of inbound inquiry, the level of governance and process is at a very different level. Yeah. And I'm curious, and really for our listeners, we'll link to this document. You should read it. It's like a legalized version of like high drama of like Shakespearean drama. But did somebody hand you a playbook and be like, okay, you know, here's what you do in this situation?

Or were you guys, you know, figuring it out as you went along? Clearly, it was a first time experience for me. But fortunately, we did we had an excellent, you know, set of advisors and board members that had quite a bit of experience, you know, in this area to make sure that we really followed the right process and, and did what was ultimately in the best interest of our shareholders, you know, and for me as, you know, as founder and CEO, it certainly can be, you know, kind of an emotional and even a bittersweet process. And I, I had, I had hoped that, I had hoped that the, the premium we were offered would be, you know, so substantial that it was really an excellent outcome, you know, for our shareholders and for our employees. And then I'd really hope that we ended up with an acquirer that

was very strategic and would continue to invest in the business. And Salesforce became that, you know, and a whole lot more. So the process was amazing. It was fast and exhilarating and certainly had a lot of pressure associated with it. But I was very, very comfortable that this was the best decision for our shareholders and for our employees and all of our constituents. And now that we're able to see what's transpired over the last three years, I have 100% confidence that this was a huge win for Salesforce and for ExactTarget and everybody involved with the company along the way. Yeah, I'm really curious. You guys sold for about a 50% premium over what you had been trading at

publicly. There's got to be a bunch of offers sort of coming in from investment bankers or perhaps even CEOs calling you and saying, hey, I think this might work out. What number do you start actually paying attention and listening? When do you form the subcommittee? We should say, too, the acquisition happened in June of 2013, $2.5 billion, $33.75 a share. And your IPO price, I believe, was $19 just over a year before. And I think trading at $22 or so the day before. Yeah, that's about right.

That's about right. Our IPO price was $19. We came out at $23 and a nickel, and then largely traded in the 20s, and we're kind of in the low 20s when Salesforce first put their first offer of $26 a share in front of us. And I'll tell you, Ben, it was less about even coming up with a number that was interesting. We were really just focused on making sure that when you get that first level of inbound interest that we take it seriously and really handle the process in a way that's above reproach and that we're kind of following every step you need to as a public

company and let the process run and then ultimately let the subcommittee and the board make the best decision at the end of the process. And it helps too, I think you guys during the negotiation process released, you beat Q1 earnings and upped guidance. And that's always a good thing to do. As you were saying, too, about when you pulled the IPO the first time and then went out, raised all the money and then went out afterwards with the accelerating growth. Great acquisitions happen when companies get bought, not sold. When you had a bright future ahead of you and things were going great and didn't need anybody. That's exactly right. You maximize value

when you are operating from a position of strength and you have multiple parties that are really interested in either making a venture investment or ultimately acquiring the company. Fortunately, we had that in a big way. We just fit so beautifully into Salesforce. They had a big vision around the marketing cloud. We were a perfect complement to the two acquisitions they had already made. And we really brought this data architecture that was very consumer-oriented to the table. So we give Salesforce a big entree into the B2C side of the industry. We brought this multi-channel marketing platform where by that time we'd expanded beyond email into

mobile and social and web analytics. We had a really broad kind of digital multi-channel platform. We were the largest and the fastest growing marketing software company really in the world. And we were able to fill a big gap for them. And then silver lining was that we had recently acquired Pardot. And Pardot was this just gem of a company in Atlanta that we acquired for right around $100 million. And they were a B2B marketing automation player tightly integrated into Salesforce. So Salesforce, you know, not only was able to get all the benefits that exact target brought to the table,

but Pardot was a was a great snap in that put Salesforce in a position where they could compete with Eloqua and and Marketo and other players in that kind of that slice of the industry as well. Cool. All right, listeners, our next sponsor is a new friend of the show, Huntress. Huntress is one of the fastest growing and most loved cybersecurity companies today. It's purpose built for small to midsize businesses and provides enterprise grade security with the technology, services and expertise needed to protect you. They offer a revolutionary approach to manage cybersecurity that isn't only about tech, it's about real people providing real defense around the clock. So how does it work? Well, you probably already know this, but it has become pretty trivial for an entry-level

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Well, I think it's about time we move to our next section of acquisition category. And what we'll kind of do is Dave and I will kind of make our picks between people, technology, product, business line, or other. And then Scott would love to get your take. We all are encompassing other. Yeah. We think of extra twice. Yeah, it's always kind of cheap when we do.

Well, I think, I mean, I think for me, Scott, obviously your word is most important here, but clearly this is a business line acquisition for Salesforce, you know, going from, and it's interesting, this is going to go into my tech theme in a minute, but you know, having been selling into the sales organization for so long and developed these huge accounts and big scale business that Salesforce had to pick up exact target. And as you were mentioning Pardot and everything else along with it to now be able to sell into the CMO and the marketing side

was clearly a business line and a great one for them. Yeah, I mean, I have nothing to disagree with there. I mean, ExactTarget clearly had, it was not just a product, but a suite of products. I think when I was finishing up my tenure there, we were launching the digital marketing hub, and that included SMS and email marketing, micro-sites. We had social with CodeTweet,

and it became clear that there was their own exact target head channel to a lot of different customers that then Salesforce could expand into, but really a whole suite of products to add to Salesforce's repertoire too. And if it weren't more clear that this is a business line, Salesforce actually still calls this the Salesforce Marketing Cloud business line. And Scott, you ran it when you came there, right? Correct. Correct.

I would absolutely agree, guys. There's no question that we brought a tremendous group of people and talent and culture to Salesforce and a lot of really unique and proprietary technology. But I would agree, if you had to classify the acquisition into a category, I would call it business line because we just fit so beautifully into their marketing cloud strategy and brought a sizable amount of recurring revenue. We were $300 million in recurring revenue moving to $400 million. And for Salesforce, their size and their growth velocity,

and now you see it with demandware, they have to make large acquisitions that are meaningful, that are actually relevant and can contribute to that top-line growth. And we were able to do that in a big way. And it's made me really proud that Mark, on a number of occasions, with Jim Cramer on Mad Money and other places, has said that ExactTarget's been the most successful acquisition that Salesforce has ever completed. And I believe that to be true. It's just gone remarkably well.

And the leaders that were on my team that are now leading kind of big functional areas within Salesforce in the marketing cloud, they're happy and having a tremendous amount of success and really growing the business in a big way and committing to Indianapolis, which is really, really cool. Salesforce just recently announced that in addition to the 1,400 employees they have in downtown Indy, they're going to add 800 new positions over the next few years. And then I don't know if you've heard this, Ben, but the tallest building in Indiana is the Chase Tower. Salesforce is going to consolidate and move employees into that tower and it's actually going to be renamed the Salesforce Tower. That's the thing about towers too. Oh yes, absolutely. Mark likes his towers. Mark and the team, they love their towers.

But it's going to be so fantastic for our tech community that the tallest building in the city and the state is actually a tech building. So it's going to be so fantastic for our tech community that the tallest building in the city and the state is actually a tech building. So it's going to be a big boost and accelerate our tech community, which I'm very happy about. And I always remember, too, there's so many unique things about ExactTarget for the region. There's this big drumbeat from, I think, maybe your first or second office that it was about being an urban company and that people needed to, you know, we were in Monument Circle, which was like this incredibly cool, historic, like center of downtown, big statue, ExactTarget had a building with this cool roof deck that looked out over it. And I remember thinking, well, I never want to work in an office park again.

And I think that like a lot of ExactTarget employees got super spoiled in that way. No, that's exactly right, Ben. Our real estate strategy was to really build around this urban core and build a campus and a work environment that was super appealing really to the millennial over the last decade. You know, downtown Indianapolis has had this huge resurgence of housing and amazing restaurants and, you know, kind of a lot of arts and culture and sports. And Exact Target, you know, has been a part of that fabric of downtown Indianapolis, we had to be in the urban core to really take advantage of just the energy, the vitality, the ability to recruit, you know, top-notch people from all over the country. And then even to bring in, you know, partners and VCs and customers that could fly into Indianapolis and, you know, take a 15, 20-minute cab ride to downtown Indy and then be able to just enjoy all the benefits that that downtown setting has.

And that's been neat. And I'll tell you, one of the neat legacy elements of ExactTarget is for years we've worked on getting a nonstop flight in place from Indianapolis to San Francisco and not having, it's been a real barrier. Our West Coast investors have to jump through lots of hoops to make it into Indy for a board meeting. And it makes just fundraising for all companies here in Indy more difficult. And right around the time of the acquisition, we actually got it done with United Airlines and have had a nonstop flight back and forth to San Francisco, which might seem trivial, but it's actually been a game changer for our tech community and Salesforce has appreciated it as well. No, I totally believe it. I think a lot of credence is paid to Seattle's proximity to San Francisco as a competitive advantage in fundraising and starting a company in general. And now you've got almost a dozen, I would say,

kind of unicorn level valuations. And so much of that is Salt Lake and Park City are kind of a wonderful place to be, but it's such a short hop away from Silicon Valley that you're able to raise capital and get those investors really engaged in the business. Yeah. Moving to the next section, what would have happened otherwise is sort of two alternate futures here, and I kind of want to pose both questions to you. One is, do you think ExactTarget would have made sense with any other acquirer? And then two, ExactTarget competed against Responsys and many other companies that started as email marketing solutions for a long time. Do you think there was anyone besides ExactTarget that could have made sense at Salesforce? I think yes to both questions. We certainly could have

fit in well with a number of the other largest software companies in the world that have been focused on going a lot deeper into marketing tech and saw it as a big growth area. And there's no question that Salesforce looked at lots of different players, you know, over the course of time to potentially acquire. And, you know, one element that's interesting when you go through that evaluation process as a public company and really try to make the best decision for your shareholders is you really have to do a lot of financial modeling and a lot of thinking about what does life as an independent company look like and we ultimately did come to the conclusion that being a part of Salesforce

was a better outcome, higher probability outcome for our employees for our shareholders. But there are a number of different ways that our future could have played out but I was very, very happy the way it played out. And I'll tell you the other interesting dimension is as a public company we would get an enormous amount of pressure around email. When is the end of email coming and these new channels are going to cannibalize email? Oh, my gosh. It's kind of like if I had a nickel for every time I answered that question.

But it was just a heavy theme and even sometimes I'd say a cloud over our company where we were thought of as such an email centric company that even as we expanded around the world and expanded into all these other adjacent technologies that you referenced, Ben, we were still thought of as an email company. And I think often didn't get credit for being a broad multi-channel omni-channel platform, but email was such a powerhouse for marketers that that line of business just kept booming. And our other lines were growing, but they could never even get close to the email side of the business because it's just the most powerful tool that a marketer has. And as e-commerce has exploded with growth, emails become even more relevant.

Yeah. I'm curious, when you're forecasting, what does life look like as an independent company? I mean, let's say you could continue to grow 40% year over year indefinitely, or at least to some, the top of some S curve. Easy to say on paper, hard to do in practice. That's right. That's right. That's right. Gets tougher with a lot of big numbers. Yeah. Yeah. So at what point do you, one, factor in the top of the S-curve, and then two, how many years out, what do you look at as sort of the payback period of that premium? And say, well, they're giving us 50% premium, and we don't think that we will reach that market cap for 20 years, and we're only looking at a 10-year time horizon or something like that. Yeah, I'll tell you, that's really where the bankers and advisors

and kind of independent committee come in because they had a lot of expertise in how to build those financial models and what time horizon makes the most sense in order to kind of predict your independent path versus joining forces with another. So I probably can't provide a lot more detail than that, but you're exactly right, Ben. That's exactly the process that you go through. That's right. Yeah. I'm curious, before we move on from this, and this also bleeds into my tech theme, you don't have to say whether you considered it or not, but do you think looking back, most of the big data-driven marketing companies of that generation,

ExactTarget being one of, if not the leader, got really big. We're growing really fast on a great trajectory, but then they all got swallowed up by other big enterprise companies, whether it's Oracle and Eloqua or ExactTarget and Salesforce. Do you think there was any way that maybe there had been consolidation among the companies into could there have been a giant – there are so few giant enterprise software companies. Could one have been built in the marketing category? Yeah, that's a great question.

I think why it didn't happen is overlapping functionality. That when you take a look at, and there were certainly a lot of conversations that ensued along the way, could you stack together some of these kind of large marketing tech companies to become something bigger and something more meaningful? And where it starts to run afoul or kind of collapse is that you just have a lot of duplication of functionality. So when Omniture got kind of pulled into Adobe early, there certainly could have been a fit between, let's say, email and digital marketing channels and analytics. That would have been a logical connection point, but they kind of got pulled into Adobe early. But when you looked at us and Responsys and some of the B2B marketing automation companies, you often had kind of a lot of redundant functionality. But we were headed down that path ourselves, and that's really why the Pardot acquisition made sense. And we kind of kept moving deeper into data and analytics and the web and really trying to build out that robust platform to make all these channels work together. And what's really interesting is the big product

we built that stitched it all together is a product called Journey Builder. And Salesforce has really embraced that Journey Builder platform and is applying it even across different clouds within Salesforce and using it in lots of unique ways. Cool. Cool, cool. David, do you have anything before we go into tech trends? No, I don't think so. The only comment, Scott, on what you were saying is it's interesting you're seeing so many startups now um that are emerging that are you know next generation marketing automation but they're all taking the approach that you said of marrying it up with data and analytics you know i'm thinking you know anything from from mix panel and you know segment is part of this ecosystem in a different

way but um you know so many you know customer.io and Cortland, Intercom. It's funny, they're taking exactly the approach that you're saying, Scott. It's fun to see it evolve. One other topic that you asked me about, David, but I think I jumped into another category, but it's kind of a fun story I'd love to tell you about. It's just the nature of our Microsoft relationship. Do you mind if I just touch on that real quick? Yeah, I would love that. Yes, that was a really fun story. So we really became the largest cloud company running on Microsoft technology. We were early users of SQL and.NET, and really everything we built was on the Microsoft framework. And we pushed Microsoft technology, I think, to the edge as we were

building a super transactionally intensive multi-tenant platform. But through that, we really built this wonderful relationship. And then we started integrating into Microsoft Dynamics and had a really nice relationship there. And then ultimately, Microsoft became a customer. And it's a really fun story. Microsoft had an internal platform, an internal email platform called Pens, that really kind of powered marketing automation and email marketing specifically for Microsoft business units and the internal solution was was not well liked across Microsoft so when we were we were

fortunate to land Microsoft and really go through our adoption we built like an 18 to 24 month implementation period where we would be onboarding different business units of Microsoft onto ExactTarget and offboarding them on the internal system of PENS. And we set a joint goal. It's hard to do. It was an acronym for personalized email something something notification system. You had to beat it if you're competing against PENS. That's right.

That's right.'s right exactly exactly so we actually set a goal with the uh with the microsoft implementation team and they were incredible to work with that when we got to the end of the implementation and we're literally able to turn the lights off on pens you know retire this internal system that was uh was not well liked across enterprise, that we'd have a celebration, we'd have a party. And we did. We actually, on the Microsoft campus, had a huge tent that was erected in an event that was just catered to the fullest. I mean, beautiful wine, beer, food. And the Microsoft team, they had to get fire marshal approval, but they actually pulled the servers that were running pens out of Microsoft data centers and brought the seriously brought them to the party. And we

sledgehammered them. We, we, we all we all strapped on goggles and just beat the tar out of these servers. It was office space. It seriously was it was total office space. It was just like a spectacular way to retire their internal system. It was it blast. Wow. That couldn't be a better segue into what technology themes does this illustrate for you. And that's like a very physical, visceral manifestation of the one that I want to touch on. And that's businesses using software as a service to outsource anything that's not their core competency. This keeps coming up in episodes over and over again where businesses now, with the advent of cloud computing and the general cost of starting a company going down, companies operate using tens of other companies' infrastructure

and software, often even starting at a free tier or on some kind of freemium pricing structure. And it's different at that sort of scale where they're actually migrating from something they built in-house. But I kind of wanted to open it up to you since what you do at High Alpha is start these new software as a service companies. How do you identify where are the sort of holes where we can take something that a whole bunch of companies are doing and do it on one platform and they can all just pay us to use our platform? It's an exciting part of High Alpha. So High Alpha, we're a venture studio. We started a year ago and we're a venture studio focused on starting new cloud companies. And we actually have two sides to High Alpha. High Alpha Studio is our startup studio,

and we've signed up to start eight to 10 new companies over the next three to four years. And then High Alpha Capital is our kind of second arm, and that's a venture fund that is utilized to fund our own companies when they're ready to reach scale, and then also fund other great SaaS entrepreneurs around the country. So you're right, Ben, we spend a lot of time

on just ideation, looking for unmet needs within the enterprise cloud space. And we do that through our own ideas. We do that through entrepreneurs that approach us. We spend a lot of time with corporate innovation groups and universities and just tech vision know, have a sense for where the market's going. And this whole notion that every employer is a buyer of software is something radically different. You know, you kind of think back to, you know, the client server days pre-cloud and, you know, tech spending and buying was tightly controlled, you know, tightly, tightly controlled by the CIO and the IT department. And then, you know, with the advent of cloud, it starts to kind of open up to different business unit or business line owners can make decisions within a framework.

And now we're in an era where every employee is a buyer. With freemium and an employee credit card, you can spin up Slack channels and lots of other solutions. And it's creating lots of opportunity, but it's also creating quite a few unintended consequences. So you'll get a kick out of this. We actually have started a new business. We haven't announced it yet. That essentially is a SaaS platform for managing SaaS applications. It really is. And it's targeted at the chaos and kind of the overcrowding of SaaS spend. It's a huge problem. And our MVP is about ready to go live with our first group of pilot customers. But it brings together SaaS spend, SaaS utilization,

and then user sentiment, user feedback. So it brings those three variables into one platform. So organizations can, at a minimum, actually understand what they're using. What have they paid for? What's being utilized across the enterprise? What have maybe they paid for but isn't being utilized? Where do they have overlapping products and platforms? Where's there maybe something cool happening? Where's there innovation happening within one group or department that should be thought about across that organization? That's kind of a cool company that we're excited about to help organizations get their arms around how their business is using SaaS and use it in the most optimized way.

So the tech theme that I've been referencing a bunch, and this is another perfect lead-in, is there's been this sort of historically in the enterprise space, which again, we haven't talked as much about on the show. There's been, there kind of been sort of four-ish giants, right? Like there's Microsoft, there's SAP, there's Oracle, and then there's Salesforce, which has emerged as sort of the most recently as one of these giants. And there's this concept of like account control and like there are lots of startups in the space, but ultimately those four companies are by far the biggest. And they have the account control with the CIOs and increasingly CMOs one of their first forays into a new product, sending through their their guerrilla channel or guerrilla sized channel. Do you think that's you know, how do you how do you react to that?

And or one of the main theses, I think, of SaaS enterprise investors is that with SaaS, that's changing. People can buy stuff freemium, like individual employees and account control is being eroded. I don't know. How do you think about that being on both sides now? I definitely see both sides of it. And you're totally spot on, David. One of the big reasons why the ExactTarget acquisition has been successful is that Salesforce just has these amazing executive level relationships with the biggest companies around the world.

They know Salesforce. They trust them. They want to buy more products. They want to buy more products that are tightly integrated. When you look at the Salesforce marketing cloud numbers, they're booming. And they're really booming because they have all those trusted CEO and CIO relationships. And then the marketing team, they're just incredible innovators and amazing at executing, scaling the business. So that's real. There's no question about that.

However, there's still plenty of opportunity for new innovation and new entrants and the innovators dilemma of companies coming up with new ideas and new concepts and software that's lighter and more flexible and more mobile friendly and more consumer-like. There's no shortage of room, I think, for innovation and for new companies to find their groove. And that you don't need your CIO to approve to buy it. You don't. You don't. That's exactly right.

That's exactly right. Which, honestly, you're talking about ideation and getting ideas for new companies and getting your first customer, obviously something near and dear to my heart at Pioneer Square Labs. And as someone that is often going out and transitioning from the customer development to getting your first customer and taking the people that you were talking to about what are your needs and saying, cool, we built this, will you pay for it? It's become extremely easy to do that when you have an advocate in the organization who for, you know, like you're going to charge less than $1,000 for your product. So they just can use their credit card and you don't have to go through the CIO.

So it's opened this whole new wave for us of the ability to land your first customer in a much faster time frame. Absolutely. No, that's exactly right. And then all these great cloud platforms where you can really quickly build technology, build MVPs, get it to market and really see if you've got product market fit and you've got something that can be viable. And that's what's so fun, I think, Ben, about what we're both doing in coming up with new ideas and launching new companies is you can go from idea to MVP and proof of concept really, really quickly.

Yeah, yeah. All right, we're going to move on to what was formerly the last part of our show. I think we have a couple of cool sections after, but grading the acquisition. And Scott, you can choose to participate in this or not. I feel like you a couple of cool sections after, but grading the acquisition. And Scott, you can choose to participate in this or not. I feel like you might be a little bit biased, but this is obviously an incredibly successful acquisition. I mean, you hear Mark preach it

to the world time and time again, and some of the biggest stages he's ever on, obviously a success. We've given A's to things that have like ridiculous multiples. I mean, you look at what Instagram did at Facebook, or you look at Pixar's sort of reverse integration or reverse acquisition of Disney pictures, Disney animation. Those are our A's. So I guess where I'm going to land on this is an A- for ExactTarget. I think similar.

You know, we've talked about all the reasons why this is a great outcome. One thing that we actually didn't quote, it's funny, we're not super quantitative on this show, even though we're about acquisitions. talk once about your revenue, but some numbers I want to throw out. When the exact target in 2012, which was the final year, a full year of being a standalone company, I believe you had about $294 million in revenue. And in Salesforce's fiscal 2016, which ended January 31st, 2016. So essentially the calendar year 2015, the marketing cloud division did 654 million in revenue. So over twice as much in less than three years. So that's a pretty great outcome. I think it speaks to the power of this. There are many product things that I'm sure that Salesforce has done with the acquisition and bolted on many things, but also just the power of these enterprise relationships that they have. So I think this was a great deal. I'm also going to, when I think about Instagram, it, you know, it went from a billion dollar

acquisition price to $3 billion in revenue in, in like three years. And that's all right. I'm also a minus, but I'm on the fence here. Scott, any, any, any comments? You guys are tough graders. You're really, you guys are really, really, really, you'd be like that professor. That's really difficult. and incredibly stingy, incredibly stingy about giving away an A. Well, it's not fair. I know, I know, I know. Instagram is the bar. That's a high bar.

Yeah, there's no question I'm biased, but I think I'd give you a really fair grade, and I definitely give a full A, no minus. I'd go with a full A. No minus. I'd go with the full A. And I'll tell you the reason is that this was an extraordinary outcome for ExactTarget. You think about three first-time software entrepreneurs starting a software company in Indianapolis with very humble expectations. Nobody thought this was going to happen. Inconceivable. You guys are the definition of underdeveloped. Inconceivable that we would ultimately sell the business for $2.5 billion. And what I'm so grateful for is that every employee who was a part of ExactTarget had equity in the company. And this was really a

meaningful outcome for our employees, not only just the kind of experience of a lifetime and being a part of this powerful culture we called Orange, but there was a financial outcome that was meaningful. And the neat thing is that at $33.75 a share, every person who ever invested in ExactTarget, from friends and family to venture rounds to public investors, made money. So I smile from ear to ear just thinking about what an incredible outcome this was for everyone at ExactTarget. And then the neat thing, and David, I'm glad you referenced the numbers, is that, you know, integration is remarkably difficult. It is so difficult to acquire companies, integrate them effectively. And when you look at Salesforce, this was the

largest acquisition they had done. First time they had ever acquired a public company and to see the kind of results that had been produced. And I just know how delighted Mark and the team have been about the performance of the business. I give it an A on both sides, the Salesforce side and the exact target side. As an entrepreneur, you have to love your company, right? Like if you don't, who else would? Oh, absolutely. Absolutely. That's right. Well, let's move on to some fun we have at the end of the episode. It's a section called The Carve Out. And this is where we talk about something that's in pop culture or media that

we read or watched or stumbled upon or a product that we love, really anything that really tickled our fancy in the last couple of weeks. And I'll start with mine. I'm a big fan of The Talk Show. It is a podcast done by John Gruber of Daring Fireball that mostly covers Apple. And John does a live show every year at WWDC, the biggest Apple conference. And this year, his guests, you know, his guests are normally friends of his or other people sort of in the Apple journalism space. And Outwalks, you know, Craig Federici and Phil Schiller, the senior VP of marketing and the senior VP of software or just engineering all up. Anyway, just like an unbelievable, candid interview with two guys that have great personalities

on stage. And you normally only see these people in, you know, the extremely rehearsed, very, very perfectly timed and executed Apple keynotes and getting them off the cuff like that. It's just so fun if you're a fan of Apple or just like a fan of technology and how these businesses run in general to get that sort of candid look at these guys. Mine is a great book that I'm almost done reading, but I've been enjoying immensely. This was recommended. I saw this as a recommendation.

I went to Y Combinator Startup School in 2013, I believe, either 2012 or 2013. And Jack Dorsey spoke there and he recommended it as a book. And it's been on my list, you know, ever since. And I just finally got around to reading it. It a book called the score takes care of itself um and it's by bill walsh who was the legendary uh unfortunately late uh coach of the 49ers during their amazing dynasty uh in the um in the 90s and which i remember you know growing up and watching you know joe montana and jerry rice and ste, and, um, but the book is just, it's about his, you know, kind of philosophy and lessons on leadership. And he's such a, um, he's such an amazing guy. Like he's not the, you

know, you think of like a football coach in that era and it's like, you know, super, you know, hard and yelling and screaming. Like that's not his style at all. It's just like, it's just this commitment to excellence. And like, you know, that's all that matters and all the other stuff is just show and but anyway there's lots of good gems in the book we'll link to it in the show notes i'll have to check it out that's very fun i love the carve out feature here guys this is kind of fun thanks and david i should clarify jack dorsey is no no relation i mean although i've got lots of family connections here on the on the show jack uh Jack and I are not related to one another, although that'd be kind of fun. So my carve out was a month ago.

I was flipping channels trying to find, I think, probably an NBA playoff game and flipped over to ESPN and caught the end of the National Spelling Bee, the Scripps National Spelling Bee. And it was phenomenal. The two finalists were an 11-year-old and a 13-year-old who were just extraordinary at their ability, obviously, to spell very difficult words and handle a tremendous amount of pressure. And they ultimately tied in the end. And the 13-year-old had had an older sibling that had won previously. And the 11-year-old was a fifth grader who was the youngest kind of finalist and champion ever. And watching those two operate was incredible. And to me, I'll tell you two little stories. One, it's just quite exceptional, I think, how young people are developing so quickly.

And when we look across our businesses at interns or contributions new college graduates can make, they are able to contribute to businesses in a way today that never existed in the past. And watching these two kind of young students compete was really incredible. And then one of my favorite parts is that each of the finalists had to share their favorite word, which I would definitely have a difficult time spelling any of them, probably even pronouncing one of them. But one of them that stuck with me was indefatigable. And for whatever great word, which really means tireless persistence to be indefatigable. Great word. Great word, which really means tireless persistence

to be indefatigable. And as I'm working with all these early stage startups, to me, that's like the number one characteristic for a CEO or a founding team is that they have this tireless persistence and they have such a burning fire inside them to succeed and to solve a big problem and make a difference in the world that you just know they're going to be successful. That's great. Totally agree. David, do you want to table followups until next time?

We're, we're running a little long here. Yeah. Well, maybe I'll do, I'll just do one real quick, which is because we've mentioned it a few times on this show. Uh,

Instagram reported, uh, latest user numbers this week, or Facebook reported Instagram's latest user numbers this week. Pretty incredible. Um, they passed 500 million registered users, 300 million daily active users.

Think about that ratio. Three out of five registered users on Instagram use it every single day. Wow, that's impressive. That's engagement. You know, Instagram was one of our very first shows. And like I said, it's our canonical A. But especially with Snapchat and everything

going on, there's all these existential questions and that business just continues to perform at an amazing level. Indeed. Thank you, Scott. We want to thank our longtime friend of the show, Vanta, the leading trust management platform. Vanta, of course, automates your security reviews and compliance efforts. So frameworks like SOC 2, ISO 27001, GDPR, and HIPAA compliance and monitoring. Vanta takes care of these otherwise incredibly time and resource draining efforts for your organization and makes them fast and simple. Yep. Vanta is the perfect example of the quote that we talk about all the time here on Acquired. Jeff Bezos, his idea that a company should only focus on what actually makes your beer taste better,

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And thanks to friend of the show, Christina, Vanta's CEO, all acquired listeners get $1,000 of free credit. Vanta.com slash acquired. Yeah. Hey, just to kind of close down the show, anyone listening out there, thanks so much. Tell your friends, review us on iTunes, share it on Twitter, Facebook, whatever you'd like to do. Snap about us if that's your thing. And Scott, how can our audience find you? At Scott Dorsey on Twitter and then highalpha.com you can learn more about

the new venture that we're building here in Indianapolis awesome well thank you so much yeah thanks so much guys really enjoyed it thanks Ben thanks David Who got the truth now?