Acquired - Episode 26: Marvel

Episode Date: December 5, 2016

Topics covered include: Marvel’s corporate origins as "Timely Publications”, created in 1939 by pulp magazine publisher Martin Goodman in NYC, with the publication of Marvel Comics #1Creation of enduring characters such as Captain America, the Fantastic 4, Spider Man, The X-Men, Iron Man, Thor, The Hulk and moreAdoption in 1961 of the "Marvel Comics” brand, and writer-editor Stan Lee’s transition of the company towards focusing on edgier characters and stories targeted at older audiences Marvel’s first sale in 1968 to the Perfect Film and Chemical Corporation (later Cadence Industries)The company’s “turbulent” corporate history through the 1980’s and associated mergers, acquisitions and lawsuitsMarvel’s reinvention as a film-focused media company in the late 1990’s and early 2000’s with the launch of Marvel StudiosDisney’s ultimate acquisition of the company for $4.2 billion in August 2009, during the depth of the great recession Marvel's—and in particular Marvel Studios’—performance since the acquisition Sponsors:ServiceNow: https://bit.ly/acqsnaiagentsHuntress: https://bit.ly/acqhuntressVanta: https://bit.ly/acquiredvantaFollowups:  People like Spectacles!   Hot Takes: Shoutout to  Hightower & VTS merging  The Carve Out: Ben: WestworldDavid: OverdriveMore Acquired!:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Merch Store!

All right, listeners, to start the show today, we are going to play a little game of two truths and a lie. Today's episode will be covering the Marvel acquisition by Disney, and we are going to throw out the two truths and a lie right now, and we will tell you which one is a lie at the end of Acquisition History and Facts, so get ready to predict. Number one, for a brief stretch ending in an internal Time Warner investigation, the president of DC Comics acquired a large position in Marvel stock. Number two, famed corporate raider and comic book villain Carl Icahn once made a play to gain control of Marvel from bankruptcy. Number three, Marvel owned Fleer, the baseball card company, and was affected in a huge way by the 1994 Major League Baseball strike. say it straight. Another story on the way. Welcome back to episode 26 of Acquired, the podcast about technology acquisitions.

I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Today's episode is Disney's 2009 acquisition of Marvel. It really completes the saga for us here at acquired where our first episode was the disney acquisition of pixar then our sixth episode was disney's acquisition of lucasfilm and all three of these i believe will have pretty similar tech themes and uh and david i think will uh will really be able to kind of understand Disney's strategy and what their portfolio looks like these days. Yeah, this is, I feel like I always say this, but this will be a fun one. Yeah, no kidding. And kind of a fun one here going into the holidays.

It's a nice one to tie up the year. Totally. And speaking of Disney's triumvirate of IP acquisitions, I am pretty excited about Rogue One. Yeah, I thought you'd bring that up. So I rewatched the trailer right before we started recording. Awesome. Awesome. I can't wait. Yeah, me neither.

For listeners who, if you're wondering, I'm not sure if it actually will sound any different, but this is the first time David and I are recording remotely. David's in California right now. In the heart of Silicon Valley. Indeed. Okay, listeners, now is a great time to tell you about longtime friend of the show, ServiceNow. Yes, as you know, ServiceNow is the AI platform for business transformation, and they have some new news to share. ServiceNow is introducing AI agents. So only the ServiceNow platform puts AI agents to work across every corner of your business. Yep. And as you know, from listening to us all year, ServiceNow is pretty remarkable about embracing the latest AI developments and building them into products for

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enterprise. They boost productivity for employees, enrich customer experiences, and make work better for everyone. Yep. So learn how you can put AI agents to work for your people by clicking the link in the show notes or going to servicenow.com slash AI dash agents. All right. Well, we don't really have too much before the show. Do you want to dive right in? Yeah, let's jump in. So this, I can't remember, we've done so many of these episodes now, but this might be the earliest back in time that we're starting our acquisition history and facts. Oh, yeah, I think so. Yeah, I think it is. We are going back to 1939, almost, what is it, almost 80 years ago, when a fellow named Martin Goodman founded a company

that he called Timely Publications in New York City. Very timely. Goodman was a pulp magazine publisher and he wanted to get on the gravy train of the fast burgeoning comic book industry that was starting to take off. And so he started Timely Publications as part of his publishing empire. And the first comic book that Timely published was called Marvel Comics No. 1, which came out in October 1939. And it included The Human Torch and The Sub-Mariner, which would be Marvel comic book heroes for a long time to come and yeah the submariner is a little uh a little bit more of a deep one yeah that's that's that's i see what you're doing there it's it's pretty cool that it's uh that the very first issue was called marvel comics yeah i

think that you know through a uh you know the crazy history they were about to hear of of uh all sorts of different ownership structures and consolidations and unbundling and rebundling keeps the same name yeah well uh interesting though they didn't actually change the name of the company to marvel comics until 1961 so um 22 years later uh but the very first uh comic book that they published was called marvel comics um and apparently it was a big success uh it sold almost a million copies uh which um i think is a lot for a comic book probably especially a lot for a comic book in 1939. Yeah. But the company, Timely, would go on to do quite well, create many of the iconic comic book superheroes

and villains that we all know and think of today. Captain America was the first really big one that they created in 1941, which was, well i guess world war two was going on at that point in time but um the u.s either hadn't entered yet or was just about to enter world war ii um the fantastic four uh spider-man um the x-men iron man thor the whole many many others lots of uh basically uh as a um i love superheroes but not a i'm not a huge comic book aficionado uh so as a like casual comic book fan like everybody i know kind of except superman and batman uh came from marvel

and who got like wonder woman yeah i'm wonder woman too yep that was also dc comics it's pretty much the whole crew yeah it's like dc had you know the big superman batman wonder woman and then everything else is is marvel um and uh so they they go on they create many of these uh many of these characters um and then in 1961 like we said they actually changed the name of the company to marvel comics um also in 1961 uh the editor of marvel uh who was a man named stan lee um who actually started at the company as an office assistant uh he was apparently he was apparently martin goodman's uh wife's cousin and uh started the company in the early days as an office assistant and became um sort of the um the the spiritual head of uh the direction of of marvel and the comics um and very briefly actually the

the president of the studio right yep yep it It's like one or two years in there? Yeah. A towering figure in Marvel history. He decides to kind of push the company in a new direction in 1961. And that was to make comics that were aimed at slightly older audiences. So not just young children. Um, and that was the first of those was the fantastic four, uh,

which they launched in November, 1961. And, um, was the first time that like comic book heroes were sort of, you know, they'd always been like the, the Superman sort of like perfect image of,

uh, uh, you know, masculinity often and, and, uh, um, you know masculinity often and and uh um you know heroism and and the the fantastic four were sort of like they'd squabble with each other and they were kind of you know anti-heroes in a way right more human more much more you know even though they had superhuman powers much more human than the uh superman of the dc uh franchise um and and that really kind of set the tone and and uh marvel became much more um it really sort of expanded the market for what

they were doing and what comic books uh as a whole as an industry was and um that was that was their namesake and so you know spider-Man was sort of like the quintessential, like teenage angsty, um, you know, teenage angsty superhero. Did we ever see that in Spider-Man 2? Oh man. Yeah. The, uh, the Sam Raimi one with, uh, Tobey Maguire. And that was like, I was, I should remember that one scene where he's like emo, he's got

his hair dyed black and it's like over one eye and he's um yeah just it just like almost felt like jumping the shark already even though i didn't really think it jumped the shark till spider-man 3 but yeah um totally he was uh ahead of his time um so uh that's a a big success for marvel and then and then later in the 60s in 1968 the first marvel acquisition uh change of control happens when goodman decides to sell out and he sells the company to the perfect film and chemical corporation which was later renamed cadence industries and marvel then became one of their subsidiaries or underneath one of their subsidiaries

called the Magazine Management Company. Very... Very generic. Yeah, very generic. Honestly, when I was reading through some of this, it felt like a laundry list of incredibly generic conglomerate names. Well, I guess that's the thing when you're looking

at a company that goes back like almost 80 years. Right, right. guess that's the thing when you you're looking at a company that goes back like almost 80 years right um and uh in a in a fun uh twist of of foreshadowing uh in the 1970s when uh when marvel's owned by um by cadence uh they actually strike a licensing deal with lucasfilm and they published the star wars comic books in the 70s and 80s wow that's wild because to me like we've got a trilogy going on here and and pixar was actually owned by lucasfilm in the early days and lucasfilm and marvel had a licensing agreement in the early days it's like it's kind of amazing they all ended up under one roof and had this kind of joint history along the way. Yeah. If only, uh,

if only Steve jobs were somehow involved, that should have been our lie. That's right. Uh, that would have been fun. Um, so listeners, you know that Steve jobs was not involved in Marvel.

Um, and, uh, so in 1986, uh, Marvel changes hands again and cadence, uhence sells the company to New World Entertainment, the media company. And then New World undergoes some struggles and ends up selling it again shortly later

to the billionaire Ronald Perlman in 1989 for $82 a half million. And, uh, and another fun bit of foreshadowing of what's to come. Pearlman, uh, gives a quote at the time. He says it, it being Marvel is a quote, mini Disney in terms of intellectual property. Disney's got much more highly recognized characters and softer characters.

Whereas our characters are termed action heroes, but at Marvel, we are now in the business of the creation and marketing of characters. Boy, does that sound familiar? Sounds super familiar. So Perlman's pretty ambitious, and he shortly thereafter actually ends up taking Marvel public and it becomes a public company. And then he starts expanding. And so he took it public in 1991. And then in 1992, they actually buy the the sports trading card company fleer in 1992 um and then in 1993 uh marvel acquires uh slightly less than half of a company called toy biz which was a toy company um that they also had a licensing

deal with to create uh action figures for um for all the marvel superheroes and villains and that come it's really interesting they keep like vertically integrating and then unbundling and vertically integrating and then unbundling and it's it's interesting how like they kind of fluidly move throughout partnerships and ownership of you know their core asset being the characters and then moving in and out of publishing and distribution and merchandising and all those different things. Adjacent or, in the case of baseball cards, not so adjacent businesses. Yeah, I would love to see the prospectus on that pickup. Yeah, what the rationale.

Well, now we're in the middle of the baseball card bubble, which we will come back to again in one sec. But toy biz also will be important in the future. So they don't buy all of toy biz they just buy a slightly less than than half a share of the company um and so things go along and then a couple years later in kind of 95 96 time frame um things aren't looking so good for marvel so they've expanded a lot um the core comic book business, actually, there was a big bubble in comic books in the mid-90s, which, doing the research for the show, I kind of vaguely remembered. But even more so, in 1994, Major League Baseball went on strike.

And this was a huge thing. People thought this was the death of baseball, and know people thought this was that you know the death of baseball but it and it wasn't uh happily for baseball but it was definitely the beginning of the death of the baseball card industry and absolutely here fleer suffered huge losses um when uh when this happened yeah i mean i remember that that was the so i'm an indians fan grew up in cleveland that was the first uh first year indians fan grew up in cleveland that was the first uh first year jacobs field was open and uh they didn't get a full season in there oh wow i didn't realize that man yeah i remember that strike so vividly and wasn't um i remember

you know and obviously being you know a seattle podcast i was a huge even though i didn't live in seattle at the time huge ken griffey jr fan and uh he I think I remember he was on pace to like shatter the home run record that year and then the strike was uh that's right shortened by the strike yeah I'm pretty sure you're right because I think uh I remember that the Indians were really good too and we were in the World Series the next year and sort of growing up I always thought like well it's weird that like the Indians had this new ballpark in 94 and i think we actually played uh 95 in the alcs or the division series is when we played um the mariners and griffey was obviously instrumental in that but i remember thinking like how did we have a new ballpark

in 94 but get into the world series in 95 and it didn't really occur to me till i was later uh you know like late later in the 90s, duh, there was no playoffs in 94. Yeah. Like, can you, can you imagine like that if that happened with the NFL now? Like, oh yeah, there's no Super Bowl. Yeah, totally. It was, it was terrible. And like, I was such a huge baseball fan growing up and it was, it was, it was really a black mark on the, on the sport.

Yeah. So Marvel's not doing so good. People are speculating, you know, the company's in trouble. Maybe it'll end up filing for bankruptcy. Do you know why there was a comic book bubble? Like what were the, other than the whole like Fleer thing, what were the externalities creating the struggle for Marvel? I don't know. I didn't do enough research on this. I wonder if it was related to just the whole,

you know, the baseball card bubble, which is probably even bigger of a bubble. I mean, I was a huge baseball card collector, as were so many of my friends at that point in time, and still in my parents' basement have boxes and boxes full of baseball cards that are now worthless. That the market just got flooded um and i

wonder if a similar dynamic was playing out in the comic book industry i could see that yeah um so uh there's all this speculation about the future of marvel and uh and comic book villain, as Ben referred to him in the intro, Carl Iken, takes notice. And he and his firm start buying up some of the debt that Marvel had with public companies, even with private companies. If you have debt that often trades, other people, not the people who loaned you the money can then sell the debt to other people. And, uh, folks like Carl Eichen, this was, this was a big part of their playbook is they buy a debt in companies that they think are troubled. And with the hopes that they're hoping that the company ends up filing for bankruptcy. And then in court as debtors, they can end up taking control of the company. Uh, the, um, the, the not so charitable term for this in the industry is loan to own, um,

or comic book villain. Yeah. Or, or being a comic book villain. So, um, this, and this all starts playing out in the press. And, uh, and then at the end of 1996 in december uh marvel does end up filing for bankruptcy and so this all goes to court and in early 1997 the court rules that carl eichen can indeed take control of the company and he does so carl eichen comic book villain is now head of Marvel. It honestly sounds like a Lex Luthor move. It totally does. The only thing that would make this better is if Carl Icahn were also CEO of DC Comics. That's true.

But alas, this is probably a good time to... Our listeners are... I'm sure they figured out by now. Carl Icahn is true. The Fleer thing is true. The CEO of DC owning a large number of shares in Marvel is false. That is false. So Carl Icahn now has control of Marvel, but there's just one problem. Carl Aiken didn't own all the debt. Uh, there are actually big wall street banks that had also loaned Marvel a lot of money and, uh, they still wanted their money back. So the courts, uh, the court case wasn't over and the company still needed to officially reorganize and exit bankruptcy. So this is where toy biz ends up

coming back into the picture. This toy action figure company. And it turns out it was owned by this guy named Isaac Perlmutter, who was an Israeli-American. And he ends up proposing a new plan to the creditors of Marvel that involves Toy Biz putting up money and paying back the creditors and then taking control of the company away from carl eichen uh and the creditors and the courts actually decide to go along with this plan so control of marvel gets wrested away from from the villain it's like it's like the comic book you know happy ending and ending. And the superhero Isaac Perlmutter comes in to save the day. And Isaac actually still to this day is CEO of Marvel. That's a great story.

Even post-acquisition. All right, so what happens to Toy Biz then? How does that... So Toy Biz gets folded into Marvel, I believe, and becomes part of the combined company. So then at this point, Marvel owns the IP to the characters and has a merchandising division to actually sell the toys themselves? Yep.

I believe that's right. But it's still not a Disney you know it's not a disney scale uh consumer products division um so in the meantime something even more important for the future of marvel happens and that's that uh i i believe for a long time they've been making various types of films and movies about the franchises um Um, but, uh, films based on Marvel franchises actually start to kind of catch on with the public and become pretty big movies. Um,

and it actually starts, I did not realize this in 1997 that year when men in black comes out, men in black apparently was a Marvel franchise. I had no idea. Oh, no way. Cause I knew there were comic books but i always assumed it was one of those like after the movie comics no it was a marvel franchise

and wow um and then the god i watched that movie so many times when i was a kid will smith and tommy lee jones was great absolutely heroes um so men in black comes out the first men in black comes out in 1997 and and this was before marvel studios right this was yes so this this was exactly marvel was licensing their ip to big movie studios um you know to fox to sony to uh to time warner um who were making these movies, big budget movies. Blade, 1998. And then the first really big one, X-Men in the year 2000.

Spider-Man in 2002. So again, Marvel's not making these movies themselves, but obviously is noticing that collectively these movies are making billions of dollars. Really starting to take off yeah and it was it's it's interesting to think about like there had been superhero movies for decades right i mean like we had a whole franchise of batman movies it's it's not like man movies that's right yeah oh yeah christopher reeve who can forget it's it's not like we were new to this but you know like in in the world today of like you know the or even 2009 iron man grossed 580 million dollars within marvel studios like it wasn't that scale yet it wasn't like every single blockbuster at the box office is going to be a superhero film so it's interesting to think about like what what changed that that like all of a sudden caused these uh superhero

movies to become more and more of a sure thing for the studios to make. Yeah, I don't know. And it also kind of coincided. Well, I think the Superman and the Batman movies were always, at least I remember kind of growing up thinking about like, oh yeah, I remember the Batman movies when I was a kid. But I think it was just those two were like the big franchises, the DC franchises.

And DC, i believe not always but for certainly through all of these decades was owned by time warner and still is um so they were part of a big major media company and had the resources to make these um you know big budget movies uh whereas marvel i don't think ever did until uh until this era. And so you see these superhero franchises that had been obviously had huge followings, but weren't like the mainstream, you know, um, to the extent that Superman and Batman were, um, now get these big film slates. I think the other thing that was happening is this is sort of the dawn and I don't know how much one led to the other, um, sort of the dawn and i don't know how much one led to the other um sort of the dawn of like sequel-itis in in hollywood um and yeah and superhero movies of course uh franchises lend

themselves so well to sequels yep yep very true i mean as as ever since you know 1939 every single one of these uh these comic book franchises has issue after issue after issue. They're serials. Yep. Um, so it's perfect for, you know, in a world where Hollywood needs dependable franchises to make sequels, you know, what better place to look to than comic books. Yep. Um, so in 2005, after, you know, a few of these huge successful movies based on Marvel IP have come out from other studios, Marvel actually takes a really ambitious step to start Marvel Studios to make movies themselves. 525 million in debt in a credit facility from Merrill Lynch ironically like right before Merrill Lynch went bankrupt in the in the recession

but they get a film financing vehicle from Merrill and create the really the first kind of major independent Hollywood studio since kind of the DreamWorks era. This was a pretty big deal.

Yeah. And it's interesting to think that, you know, that this was something they just sort of started and ultimately became like very quickly the largest part of their business. Absolutely. Yeah. So the, and also interesting, you know, they sort of, when they announced this, uh, this was in 2005, 2006, when they were getting this set up, um, they announced that the plan was that they were going to release individual films of going

to individual franchises, Iron Man and the Hulk, which were the first two movies that they end up releasing, um, create these franchises. And then they were going to tie them all together into a crossover film. So, which obviously they did under the Avengers. Yes, exactly. But, but that was the plan all along.

And interesting that Disney really, you know, has been hands off and let them, let them operate that plan. Yeah. Yeah. And thinking about, so in,

in making this move in starting the studio they'd already licensed out so many of their characters to to other studios for uh to make films and distribute and so when you think about and they're they're really their top tier characters right right so i'll list the um the characters that were no longer eligible for marvel to make their own films around spider-man the fantastic four silver surfer wolverine the rest of the x-men yep deadpool uh yeah there's others but when you think about like wow okay so all those are off limits and what they've got is sort of like the second tier at the time like we don't think of them now because they're huge you know gigantic uh blockbuster wins but like thor hulk iron man yep like that like that's who they're left to work with and then that's what they create the studio around yep uh totally and

um and iron man was really uh that was really the best that they had available and that was the first film uh that they made and it came out in early 2008 and it ended up being every robert tour de force from robert downey jr i remember seeing it in theaters such a great movie the original iron man absolutely and actually the year before i think that was 09 and in 2008 they had the hulk which which uh um was about half of of what that film grows but that was a they actually both came out which, which, uh, um, was about half of, of what that film grows. But that was a, they actually both came out in 2008. Uh, and, uh, they came out like, uh, they, they made them concurrently. Uh, Iron Man actually came out a couple months before Hulk. Um, I believe, uh, at least according to Wikipedia, um, and, uh, which is always right. And yeah, Iron Man made 585 million at the box office,

almost 600 million, which is compared to films like the Avengers and Iron Man 3 and Frozen and other Disney movies. And certainly the Force Awakens that make a billion or even close to 2 billion. That doesn't sound like a lot, but at the time that was a huge amount even though it was only a few years ago that's the beginning of an era beginning really beginning of the superhero blockbuster era that's right and and it sort of signals to like any potential uh buyer of uh of marvel stock like there's a new way to value this company and it's based on these numbers and has nothing to do with any of the other lines of business they're in yep um so as as you mentioned uh the hulk comes out shortly thereafter and isn't the huge success that iron man is but it's it's a pretty pretty successful movie makes uh just under 300 million um and is very successful and kind of proves that audiences are interested in this kind of content

and will come out even for you know non-top tier characters if you can make good movies so the next year in 2009 uh before i believe there were i believe they were intended to be five films on the slate that um that marvel did with merrill lynch uh but before any of the following ones can come out august 31st 2009 blockbuster deal uh bob eiger and walt and walt disney company announced that they're going to acquire marvel for 4.2 billion dollars um which was quite a lot when you think back to um when uh pearlman bought disney granted it was in in the late 80s but it was a bankruptcy corp uh no no pearlman bought it pearlman bought it from in the late 80s from new world entertainment uh it was less than 100 million so. So here we are sort of 20 years later, and we're talking 4.2 billion.

Yep. Yep. And it's interesting that there was not a single new piece of intellectual property that mattered between those years. Yeah. Like all those characters had already been created and it was really all about a new way to leverage that same intellectual property that made it, what, 40 times, 40 plus times more valuable over that span of time. Yeah. Super interesting. I mean, it really was, it really was the films. Yeah.

Yeah. And to place a – for listeners out there, a 29% premium was what was paid for Marvel above what it was currently trading at. So while there was some scrutiny like, oh my god, that's a huge $4.24 billion. That's a huge, ridiculous acquisition. It's not that much more than what the public markets were valuing it at. And it actually is pretty much in line with other public company acquisitions that we've covered on this show. And another thing that's important to think about about this deal that I think other folks who've written about it now and talked about it, it kind of lose context of a little bit. This was in the middle of the recession um and so this was like perfect timing by by eiger and

disney to buy marvel um because people were worried at this point like you know our and we were talking about box office numbers a minute ago they were certainly depressed by the fact that we were in the middle of the recession and like people didn't have nearly as much disposable income as they were used to having earlier in the decade that's right and for even more perspective it was just over half the price that they paid three years before for pixar so if you kind of look at this trend they hadn't yet acquired lucasfilm but let's let's simplify disney to a um a content and distribution. And they're basically out buying content. Um, you know, the, the part, part two of their, uh, the second big pickup that they made here, you know, they signaled that they were going to do this before this was Iger's strategy.

And, uh, it clearly had been working with Pixar. Yeah. And I mean, the, the Pixar, you know, famously, uh, Bob Iger's first board meeting as CEO, which was like his like second day on the job, he proposed to the board that he wanted to buy Pixar. And this was clearly how he kind of set the tone for his tenure as CEO. And he's certainly hard to argue with his execution across the three of these companies. Right, right. And if you're Disney, three of these companies right right and it's it's it's if you're disney and you're looking around and it's you know 2005 like all the valuable content that you don't own that's like some of it's in universal and some of it's like

there's little pieces and pockets elsewhere but the three other big powerhouses are lucasfilm pixar and uh and marvel and yeah you know when and over what how many years uh 2006 to 2012 so over six years rolled them all up well and uh you know also you know in keeping with the theme of the show or half of the theme of the show now in acquisitions um you know eiger took over as ceo of disney uh right after there had been this this this hostile takeover attempt of Disney that actually Comcast right before Iger became CEO launched a hostile takeover attempt to try and buy Disney. And of course, later, you know, five or six years later, they would end up acquiring NBC. But this was like, I have to imagine that living through that, the Disney board and Bob Iger and kind of entering his tenure, thinking about seeing consolidation in the media industry coming and decided very actively deciding to be a consolidator as opposed to a consolidate and looking around to see what they could buy.

Yeah. And you look at the, uh, what that aggressive strategy helped them do. I mean, who was competing with Disney and in 2005 and who's even close to competing with them now. I mean,

I think that, that, that just totally worked. Yeah. Um, and, uh, um,

interestingly, uh, you know, I agree. I actually said in kind of the, the press quote at, uh, at the time of the Marvel deal, um, you know, he said Marvel's brand and its treasure trove of content will now benefit from our extraordinary reach. We paid a price that reflects the value they've created and the value we can create as one company. It's a full price, but a fair price. And absolutely, you know, we talked about this in the Pixar episode

and especially in the Lucasfilm episode. But, you know, Disney's core competency and what they have that the other media companies don't have is that flywheel that, you know, that Walt Disney drew, you know, back in the early days of the company, which is the ability to take great IP franchises like Star Wars, like Pixar, like Marvel, and pump them through the flywheel and realize much more value out of it than they could on their own. That's right. And old school Disney was creating it, but new school Disney has pretty efficiently figured out how to bring in content they don't create into that flywheel too. And I think that the fourth piece

of this stool that we haven't talked about yet, because it wasn't an acquisition, is the tremendous growth of the ESPN business inside of Disney. And I think the four of those businesses together really account for a lot of the growth and the dramatic change in share price between then and today. Yeah. And it's interesting too. I mean, I hadn't thought about ESPN in this context, but you bringing it up and in the context of the flywheel. I guess actually Disney was an acquisition. It was just a long time ago. Or yes. Yeah. ESPN. Yep. It was through a pretty complicated history. That might be a fun show to do sometime. Yeah.

ESPN is a super interesting corporate history. Um, but, uh, the core ESPN business, I think in a lot of ways, I mean, it was totally the golden egg for many, many years for Disney, but, um, I think is much more challenged today than it was a few years ago with cord cutting, um, and, uh, you know, linear television watching being much less of a thing. And obviously sports center is still popular among many people, but I used to watch sports center every day, probably multiple times a day. And I haven't watched it in years now. Um, even though I still watch clips on Snapchat. But you see this strategy, and especially around film with ESPN2 now with 30 for 30 and some of the investments they're making there. I think about the OJ documentary and how great and ambitious that was. You're totally getting into my tech themes.

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could sometimes miss. Huntress is democratizing security, particularly cybersecurity, by taking security techniques that were historically only available to large enterprises and bringing them to businesses with as few as 10, 100, or 1,000 employees at price points that make sense for them. In fact, it's pretty wild. There are over 125,000 businesses now using Huntress, and they rave about it from the hilltops. They were voted by customers in the G2 rankings as the industry leader in endpoint detection and response for the eighth consecutive season and the industry leader in managed detection and response again this summer. Yep. So if you want cutting edge cybersecurity solutions backed by a 24-7 team of experts who monitor, investigate, and respond to threats with unmatched precision, head on over to huntress.com slash acquired or click the link in the show notes. Our huge thanks to Huntress. You want to move on to acquisition category? Yeah, let's do but uh first just to wrap up quickly on uh on the the aftermath of the acquisition so as we mentioned um perlmutter remains the ceo of the

company the company stays in new york um so it's a fully autonomous subsidiary within disney um and like we said basically they've just continued to execute on the plan that they drew up in 2005 when they launched Marvel Studios. And producing dramatically more. Like their scale now, I mean, they had like five or six in the pipeline when they were acquired. But I think you look at the pace of new Marvel movies coming out and new Marvel movies planned through the next few years, like they're not letting up. Yep. And even, you know, so there's much more value to be realized from the company in the future. But even since the acquisition in 2009, the Marvel movies have generated almost $9 billion in revenue, in box office revenue, which is crazy.

Now, that doesn't necessarily equal, certainly doesn't equal profits and profits for movies are harder to get to than pure revenue. We can get that data. Yeah, I think Marvel estimated profit margins, at least in the first eight films released, I actually pulled the stat, under disney were about a 23 profit margin okay so um you know you call roughly sort of two billion ish slightly more than two billion uh in profit so far from the movies so that's half the purchase price right there and that's just the box office uh you know not the not the home video not the merchandising not the theme parks you know all that stuff so totally and i even i grabbed another stat i think this is um

i think this is from yeah fortune article in 2015 one analyst said that by the time it was finished with the avengers iron man 3 and captain america and thor sequels disney probably paid uh for the acquisition of the entire company. So I think it's a pretty quick payback period there. And I think looking at that 22% profit margin, and you look at the price tag of production now on these films, pretty expensive to make these huge blockbusters. Yeah. Well, you need...

200 million, 150 million. Yeah. Well, we should delay some of this discussion until we, until we render our final grade, but, uh, let's, uh, let's jump into a category. So as a reminder, we, um, Pixar, which was our very first episode on this show, we actually, we said it was a business line, uh, and then Lucasfilm, we said it was a product. So what is, what is Marvel? Yeah, so I am going to foreshadow my tech themes and my conclusion a little bit here.

But I think it was two things. One is a business line. They bought the business line of making the films. They were able to scale that. We talked about kind of paying back the acquisition in a shortish amount of time, the studio itself. But ultimately, they have this asset in perpetuity of the characters. And unlike, in my opinion, the reason why we didn't call... Well, we didn't have asset yet in this categorization for Pixar, but Pixar sequels don't hold up yet in this this categorization for for pixar but um pixar sequels don't hold up as well as the serialization that comic book characters lend themselves to

so unlike a lot of sequels which fatigue very often there's there's these like few in the world the james bonds of the world that um that don't get tired because they're able to kind of keep reinventing it or they're the, the stories are okay being formulaic. So you kind of can keep experiencing the same, um, the same type plot line over and over again. Superheroes let themselves do that. And the intellectual property, uh, um, that I'm calling separate from the business line,

the intellectual property that is these characters are, you know, they're a true asset in perpetuity. Yeah, interesting. Foreshadowing one of my tech themes a little bit too, but I was going to be lazy on this one and say, oh yeah, totally a product, just like Lucasfilm and being, you know, I think we called Lucasfilm the sort of juice that gets pumped through the pipeline of the flywheel. And I thought that this is too, and I still think it is, but it's an interesting insight on the serializability of superheroes and the assets of superheroes versus a Pixar, which as great as Pixar is. um, and I'm not excited for another toy story. Yeah, exactly. Like there's, it's kind of a harder business in a lot of ways because you're, you're betting on the capability of the team to keep producing new original great

stuff, right? It's like your assets depreciate faster yeah or yeah well or there is no i mean they do do sequels at pixar but um but that's not the core of what it is it's like you have to keep generating new keep pushing the rock up the hill each time right and actually it's funny if you look at the uh i was i was about to make the point that um um it is more expensive to create a pixar film uh because you don't have the same reusability that you do from the nth superhero film. It actually is the profit margin on Pixar films are higher. So to kind of combat the point I just made, 23% profit margins for Marvel, 27% profit margins for Pixar. And, you know, render farms and illustrators are expensive, but not as expensive as flying helicopters into buildings.

Yeah. And, well, not that Pixar pays actors a lot too for their voice, but I would imagine probably in aggregate in terms of money paid to actors Pixar movies I would have to imagine are less than a Marvel movie. Yeah, I would think. Interesting. Yeah, I like the asset categorization. I mean, I think it is definitely also juice to pump through Disney's flywheel. Totally. But it is a different kind of asset than certainly Pixar. Um, and then I think in a lot of ways, Star Wars too, um, Star Wars is kind of like, or

Star Wars, tellingly, I called it Star Wars, Lucasfilm. Um, but it's, yeah, but it's, it is Star Wars, right? Whereas Marvel, um, is many of these franchises. Right, right, right. Oh yeah. I mean, that's a a that's a great point it's like if you look at the um the four billion dollar price tag for lucasfilm and the 4.2 billion dollar price tag for um for marvel like think how many more characters it's like 800 plus characters

or i think 500 plus at the time of acquisition in the Marvel universe, and maybe 50 of which are recognizable by the American public. And you look at Star Wars, and I don't think Lucasfilm was sort of looking, valuing themselves based on all those deep characters. And what we're seeing with the Disney powerhouses, they're sort of trying to make the Star wars universe more serializable and more um kind of disparate with all these different uh stories that they're trying to tell that aren't with our our favorite characters and i'll be really interested to see not how rogue one does because i think that that's going to be there's so much pent-up demand for star wars that like i want to see how the third

or fourth non-core star wars story does and And if Disney will be successful in kind of creating this sort of serial blockbuster out of Lucasfilm characters the same way they've been able to with Marvel characters. Yeah, it's interesting to think about these three acquisitions, which are obviously all fall within the same, you know, broad theme disney but um on a kind of spectrum from pixar where they're uh it's it's so much about the people and the creative process and creating individual new um new creative works uh to then kind of lucasfilm sort of in the middle where it's about the france the one franchise of star wars um and uh the cadence around that is uh well before the acquisition was very long cycles between any sort of new star wars content that would come out and

it's much faster right right Right, right. Multiple decades. Yep. And Lucasfilm is sort of about the people. I mean, obviously there's George Lucas and some great leadership at Lucasfilm, but also about the franchise. And then you've got Marvel at the other end of the spectrum,

which has had great business leadership especially under isaac um isaac perlmutter but um you know all of the all of the talent that comes into the the making the movies and even the artists of the comic books like it's all it's all third parties you know um right it's not it's not like it's kind of it's very different from pixar yeah great point um all right should we move on to what would have happened otherwise yeah so um i think marvel was gonna get acquired like we were in an era of consolidation where distribution was buying content. Yep.

And I don't know who else it would have been. 20th Century Fox, Sony. Seems like actually there's a lot of places they could have landed. It's kind of shocking to me that with the Pixar pickup in 2006 that someone else didn't see this coming and try to make a play for it sooner did maybe other people other studios or i guess especially the other well i wonder if the other studios maybe um were a little bit lazy in their thinking because they were kind of having their cake and eating it too right in that they that they were getting Marvel movies in Spider-Man and in X-Men without having to actually buy the company. And it was only when Marvel started making movies on their own that it became a really valuable company as itself.

Yeah, that's true. And it really hadn't been long since Marvel Studios was around. The shocking thing is, like, how did no one else... I mean, actually, here's kind of an interesting question. If you're 20th Century Fox, or if you are Sony Pictures, and you see... Let's say you can see the future and know that Disney was going to do this. Do you try to do it sooner? Like did people a not think Disney was going to do it or be not care

that Disney was going to do it? Yeah. Well, here's an interesting thing that we, we haven't talked about yet so far, but, um, on the surface, uh, this actually wasn't the most natural fit with Disney. Um, uh, which actually I think is one of the reasons why Bob Iger and Disney really wanted to do this acquisition. But Disney was always, you know, kind of like princesses and animated movies and then Pixar, which definitely fit into that mold. And, you know, in terms of their strategy with children you know super gender stereotypes here but i think this is the way a lot of at least historically a lot of people at disney have thought about this and in the media industry that disney like owned little girls you

know but they didn't you know and little boys too but like they didn't have as much lesser extent but to a much lesser extent and that this was disney's play for uh for little boys too um i mean what's what's more attractive to little boys than superheroes um in in total you know old school gender stereotyped uh ways speaking as a massive frozen fan myself right right you know i still haven't seen it i uh oh you got to change that it's so good i know i know as a as a uh admitted pixar fan boy i really should um not not that it's pixar but like you know to see how that's entered the rest of the disney umbrella yeah and it's interesting to think too i can't imagine this had that much impact on pearl mutter and marvel because it was they were much more business executives than sort of founder creative types um but eiger and disney have developed this

reputation now with these three acquisitions as like excellent stewards of of franchises they're kind of like the warren buffett's of of creative of creative content and businesses right right um when i think yeah in the in the um pixar animation we or the uh i think it was the pixar uh no in the lucasfilm acquisition we uh compared it to facebook that Disney was really good at leaving their sort of disparate brands that they acquire on their own. Leaving creative direction, yeah. Which again, a little bit was why it didn't, on the surface, it was like, wow, Disney buying Marvel, like Marvel's much edgier than Disney, but they've

let it be totally separate. But this was, you know, in the Lucasfilm acquisition, you know, George Lucas said to Bob Iger before he sold, like, if I'm going to sell it, I would only sell this to, to you and to Disney. Um, and, uh, uh, and, and Steve jobs too, right? Like it's hard to imagine, uh, Pixar and jobs selling to anybody except Disney. Right. Right. Yeah. So two, two other questions here then for you that I would pose one, uh, is there a fourth? Like, will we see Disney make a play for another large piece of content? And I've been sort of racking my brain to think who that could be,

or who is the content that we don't think of as the big content yet as the up-and-comer. And then two, while you're sort of noodling on that, um, I generalize this to, uh, distribution combined, uh, combined distribution content company, buying more content and pumping it through their distribution. Do we see that in other verticals? Like, are we seeing that in tech outside of entertainment or any other forms of content being bought by distribution plus content companies? Interesting questions. Well, on the second, I mean, to a certain extent, I think we see it a little bit with Facebook and Instagram. I mean, it's very different. Like I think Instagram would

have grown hugely on its own. But no question that on the ad sales side of the house, being able to just plug in Facebook ad sales into Instagram was hugely valuable there. Um, on the first question, you know, I'm not close enough to, uh, have a super informed opinion on, on that front, but one thing that just popped into my mind, especially cause the company is struggling a bit now um what about nintendo boy that's like the you're right that that is like the the another huge treasure trove of ip that yeah as we saw with with pokemon go i mean you you you take an existing piece of technology or relatively existing with the niantic um and uh and slap highly valuable ip like nintendo's on top of it you can create something you know that

the world goes crazy for we can have a debate on how lasting that is but yep um but certainly the ip that nintendo has in in mario and zelda uh and so you know even i mean they're in a lot of ways like the parallels to marvel are very similar you know you've got lesser known stuff like kid icarus and um uh you know and then you've got pokemon obviously which is super well known um man what would if if all of that ip were liberated from the challenged business model of like gaming console hardware sales uh right right yeah what what could you do with it and what this is interesting like almost all this probably excluding pixar but at this point pixar is a little kind of an older company too like what ip is super valuable and a major part of the american consciousness and new because

all this is like you know buying the star wars stuff from 77 and buying the marvel stuff from the 40s and 50s and buying nintendo from the 80s like where where is you know like where's 2010's mario and like does that exist in the era of the internet and shortened attention spans and social media where um individuals are their own content creators and content is short-lived yeah well uh maybe it lives on facebook yeah and it's like it's funny like one you know and all the rumors of maybe disney buying twitter yeah um and then that sort of fell through probably because of pricing issues. Uh, like none of these platforms own the IP.

There's like shared licenses between the, the tweet and the, um, and between Twitter and the originator of the content. But like there, it's hard to think of new intellectual property that everyone cares about like everyone cares about their little filter bubble of content i think about or like twitch too right like um right all the big um big entertainment franchises of the last five years. Certainly.

Uh, I think you would, you know, they're, they're apps, right? They're not, they're not IP themselves.

They're platforms. Um, yeah, yeah, exactly. It's like all the, all the major value in the recent stuff is the platform on which, uh,

uh, massively distributed democracy democratized IP is created and distributed, not, not actually being content powerhouse yep other than you know actually we are seeing this with netflix right netflix amazon um they they have the distribution and we're previously licensing the content and now we're creating content in-house and that's a pretty good allegory for sort of question number two there of who else is doing this these days outside of Disney. And I guess Netflix isn't necessarily buying up other companies that have content, but we are seeing heavy investment by the people that have the pipes in creating their own content. Yep.

Well, actually, you know, there are plenty of IP franchises out there being created and great ones. I should have thought of this. Jenny and I, with my parents over Thanksgiving weekend, went to see Fantastic Beasts and Where to Find Them. Oh, Harry Potter. We loved. But yeah, Harry Potter, of course. Another. Yeah, totally.

And that's the last couple of decades or decade and a half. Or at least younger than some of these other franchises that right that disney's been buying yeah yeah maybe that's not a fair but also you know that was really created um not pre-social internet but certainly pre-social media and um you know the first harry potter uh i don't think jk rowling or harry could, you know, peered into the future and seen the world that we live in today. Yeah, absolutely not.

In fact, you know, Ben and I both got iPhone 7s recently. And one of the, I don't use it a ton, but just one of the sort of delightful features on it that I've enjoyed is the live photos you know the harry potter photos yeah right it's kind of uh for those of us who are on the off cycle i guess the on cycle and didn't have the six i i i just discovered live photos too and you're like whoa these are uh these are weird when i send them to people and they can get too much context yeah totally yeah totally. Yeah. All right. Should we move into tech themes? Yeah, totally. So the one,

I've got one that's based on a stat. So of the top 10 grossing films in 1981, seven of them were original content. Raiders of the Lost Ark, Arthur, Stripes, Cannonball Run, Chariots of Fire, Four Seasons, Time Bandits.

You've got one that's an adaptation on Golden Pond, and then you have two sequels, Superman 2 and For Your Eyes Only. Fast forward to 2011, so three decades later. I'll read you the top ten grossing films harry potter 8 transformers 3 twilight saga 4 hangover part 2 pirates of the caribbean 4 fast 5 cars 2 rise of the planet of

the apes thor captain america so that is eight sequels two adaptations and zero original pieces of content all of them franchises yeah and it's fascinating to see the shift of uh the the playground that is the movie studio the movie theater the the the whole, all of Hollywood as a feature film production, the creativity and originality is, is, um, it's not happening there anymore. It's happening elsewhere. And we're in this era right now, simultaneously of, of a great TV Renaissance. There's every, every season there's like brilliant dramas on with, you know, uh, Hollywood acclaimed actors and, and best in class writing. And, um, uh, you know hollywood acclaimed actors and and best in class writing and um uh you know there was mad men there was the sopranos like we're leading up to this and i'll

i'll say if there's one i'm watching that's my car about that i don't want to mention yet but like all of the experimentation has moved to cheaper things um tv or you know or YouTube or social media. Hollywood is the way to go and make a billion dollars off of sure things because if you're going to go pour a couple hundred million in, you want to get big, big money out and you're not willing to take a chance. Yeah. It's interesting. I think that the question for me that that begs that I've been thinking about, even starting to do the research and as we've been doing the episode, for all the

justifiable admiration, deserved admiration that I think we're keeping on Marvel and Disney here, I think there is one really key existential risk. And that's, you know, if and when the pushback to this dynamic comes from the public, you know, how many sequel and people have been asking this for years. And so maybe it'll never come. But how many sequels can we take you know how long are superhero movies going to be in vogue um you know is this just a very extended fad cycle that we've been living like in in 10 20 30 years will we look back on this and be like man that was like leisure suits like remember the superhero movie days you know yeah and uh i just wonder you know like i don't know i don't have a good answer to it well yeah and if it's i guess it's interesting to like if uh if this is like a permanent thing what changed in the world that um like what piece of technology

or what societal norm shift or something changed that made it so that um we were well maybe it's this maybe it's we're actually capable of of creating something that resonates so strongly with with uh people's nostalgia and we're actually capable of creating multiple billions of dollars of revenue on a single film therefore we're going to spend all the money to produce that thing therefore we're not going to take chances yeah and producing those films costs hundreds of millions of dollars right so it's like maybe the technology got good enough both in distribution and production where it was possible to spend that much money on making a film and it was possible to spend um to or to earn that much from instant global distribution

that um you know we actually we actually are seeing it come to fruition and it was only technology limited before yeah and and the flywheel like disney of you know consumer products and theme parks and yeah you know when you're investing in an ip as something as an entity like disney like um that is a huge investment you really can't uh and and they do take risks and you know have failed on stuff like um what was that one they had a couple live action movies that were total flops like right around the time that they bought marvel um tomorrowland uh they're taking big risks but they're flopping yeah right right um but but you can't afford to have too many of those flops right and i wonder if like you you know you get a few of those that are big risks that are flopping and then you just

get scared away from doing it yeah and you and you start pushing all your your uh you're effectively prototyping down into cheaper, cheaper distribution mediums. Yeah, it's interesting, though. I mean, like, where, you know, as you said, so much, there's so much innovation and a renaissance going on in the television format right now. Is there or will there be something similar in the, you know, film format? I mean, obviously, there's independent film, and there's lots of innovation going on, but not at the kind of mass audience scale that something like Netflix and Amazon

has allowed risk to be taken in television and still have the ability to a channel to distribute that to a mass audience. Yeah, it's interesting. I think sort of the same thing has happened with music where there's like a psychological thing where we love the things that other people love and we all love having the same darling and the same heroes and like the same sort of music feels good to us that feels good to the other people around us. And with global distribution happening so quickly and so cheaply, you have the ability to achieve much more sameness and have much more people agree on what the best thing is. And we like to think that we have independent taste, but a lot of the time we're sort of just like looking to hear from people like oh what's the best you know who's the taylor swift right now

and that's why we're getting so many fewer it's like there didn't except for like the beatles like there was never like the beyonce the taylor swift they were much more distributed and there were many more um people that could make it big and now there's like this echelon of people that you can count on the on one hand who are like these super phenomenon phenomenas and uh i think the same thing's sort of happening in movies yep well and this uh this uh this totally bleeds uh leads super well into my tech theme which is um something I've been thinking about. I've been reading this great book. It came out last year, I think, or a couple of years ago, called Sapiens by this guy Yuval Noah Harari. And it's a great book. And it's sort of a biological time history of Homo sapiens and how, you know, our species came to genus Homo, Neanderthals and many others.

But Homo sapiens sort of quote unquote won. And you could argue now we're destroying the planet, but certainly have taken over the planet. What like actually differentiates us from other Homo species and from the rest of the animal kingdom. And he argues that the, the primary thing is our ability to, uh, believe in, create and believe in fictions. Um, he calls them, which are like, um, you know, uh, a reality is like, there is a lion over there run, you know, but a fiction is like, there is a company and, uh, there is a and um you know this uh um we are you know the internet is a fiction right but like it's not that it's not real it's very real um but it's not something that any other uh species could comprehend uh and so that that kind of makes me

think about like ip and uh exactly what we were just talking about. As the internet has spread communication instantly and globally, are we seeing these major blockbuster franchises just continue to consolidate because of the power of these fictions? Yeah. Yeah, yeah. That's a great point heady stuff for marvel i highly recommend the book not my carve out for the week but uh because i'm not done with it yet but great book cool cool you want to grade it let's do it so an interesting stat that i found when i was looking through all this uh if you look at the first eight films from Marvel post-acquisition and the first eight from Pixar post-acquisition, Marvel made about $6 billion. Gross.

Pixar made about four and a half. Costs of creating them are fairly similar. The box office profit from Marvel is about $1.2 billion versus $600 million. So there's this interesting thing where Marvel does phenomenally better at the box office. But over the long term, Marvel's home video sales are about $400 million, and Pixar's are $1.6 billion. And there's an interesting thing that happens where with Pixar films, people get attached

to that one character and that one storyline, and they just continue to watch and buy that film forever and when you look at the marvel movies like even just me thinking about like what would i rather watch toy story 3 which like even though that's a sequel like that has its own storyline that i can remember and i'm emotionally attached to like, do I care about owning or even like, you know, buying and watching again on, uh, on a streaming service or from Amazon,

like Iron Man two. And you can sort of see like that, that the serialization, uh, uh, films don't have lasting value or, or nearly as much as, as,

as the Pixar ones do. And so I went back and listened and, you know, I have, and I have an A, not an A+, for Pixar. And I think that it's fair for me to say Disney, great acquisition, almost a necessary one. We'd be sitting here saying, like, you are fools not to buy Marvel. But it's an A- to me. It's not as good as the Pixar acquisition. And I think the characters are brilliant IP for a long time. I think they've basically already recouped the cost of that $4 billion outlay. And we'll see what they can do with the character intellectual property. Because unlike Pixar, those already created assets on a shelf

will just keep creating value for them with the assets that they have from Marvel, from these characters and this intellectual property, they're going to have to keep pouring cash in to get cash out. Yep. I think we found that same infographic that I had it copied in my notes

and i was looking at it too um yeah it's interesting too to think about uh our grading uh benchmark throughout this uh throughout the life of this show what you mean instagram yeah well we start well we well no i was gonna not particularly the evolution of our benchmark oh yeah you know i think instagram is still of, if not the top on the benchmark. But I keep thinking about to next. And, you know, I don't think you can argue that that's not the greatest acquisition of all time. You know, when you create a trillion dollars of value, it's hard to top that. at um but uh also makes me think a little bit about like the as cool as as much as we love you know ip in these fictions and what we're what i was just talking about in in media and movies

and these franchises the value that you can create in technology is so much more like the leverage is so much higher than yeah you can get from the media industry or really any other industry. This is why technology companies are so valuable. 13 people at Instagram can create many, many billions of value. You can't make Iron Man 3 with 13 people or the Iron Man theme park. And reiterating something we talked about last episode, last quarter, Facebook's operating margin went from 32% to 45% on the incredibly large revenues that they have as a mature company, like technology. That is why technology companies are worth so much. And you just can't pull a lever to make the 23% profit margin from these Marvel films into something you know 1.5x that yep yep um and of course there's a dark side to that too as we also talked about on the facebook you know episode

like um you know you don't create nearly as many jobs when you're pulling that technology lever but anyway we're getting off track here um i agree on A-minus. And I think about it in terms of lasting impact to Disney and sustainable value creation within Disney. And thinking about these three companies that they acquired, Pixar you know marvel lucasfilm um i think in a lot of ways there is the most risks to the future value of marvel um and it's it's in you know will superhero because it's a portfolio of superhero franchises will superhero franchises continue to be as popular you know i think so they've been popular for 100 years, but how popular will they be? You're totally indexed to that. Lucasfilm is all about Star Wars, you know, and Star Wars, you could argue you have even more risk indexed to that. However, you could probably also argue it is one of, if not the single most, uh, uh, beloved franchise in the entire world of all time.

Um, so they were buying something very specific there. Um, but then Pixar really was, you know, they were buying a, a process and, uh, a, um, you know, both a people and a process, uh, that they've applied to their whole film and creative business um so i think for uh both the reasons you said ben and and those reasons i think pixar needs to be rated higher than um than marvel in this disney trilogy um so i'm gonna go i'm gonna go A- for Marvel. Cool. Cool, cool. All right. Follow-ups? Follow-ups.

One real quick follow-up. Spectacles have launched, and people think they're cool. People do. Snap Inc. We'd love, if any listeners have them, we'd love to hear your comments in Slack or email us at acquiredfm at gmail.com. We haven't made it to a vending machine yet.

No, no. And my God, Evan Spiegel is a product marketing genius. I think launching them, what, in a custom vending machine in LA and then that going away and of course selling out immediately and having a huge line and then popping one up uh where was the one in the kind of like Great Plains area like uh Tulsa I think and then on the Grand Canyon and then once people are saying where is it going to be next then having a store in Nework city that just has the vending machine in the back of the store and like i just wonder what's next and i maybe we'll maybe there's even something before this uh this show goes live but um spectacles in space yeah like doing doing everything right like you could totally see other companies being like okay we have to work with retailers to make sure there's enough enough of these things available and it's it's totally just like demand generation uh at its

finest and brand building and also the fact that like from all accounts the product is right and has like a good use case and people like enjoy using it and say it's good like talk about controlling the message and really giving people confidence that that they're on to something when they're about to go on this ipo road show yeah um super cool i can't wait to try them um all right hot takes uh this is less of a hot take and more of a uh more of a congratulation to friends but Hightower announced very very recently if not

today as we're recording this which is a startup in New York with lots of Seattle roots that they are merging with

VTS in a deal valued at 300 million yeah huge congratulations to to Donald DeSantis and that that whole

team really like really cool story. Startup weekend guys, uh, got together actually to gel as a team at a startup weekend, um, moved to New York when it was very clear that, um, to be in commercial real estate, they should be in New York, really just nailed product market fit quickly, built a great team. And, uh, um, you know, this is not the end. It's, it's a reported estimated $300 million merger with,

um, their competitor and the, the, the wall street journal article that we'll link to likens it kind of to, um, to, uh, the Zillow truly a merger. Yeah.

But awesome. Awesome. Awesome. Awesome to see, uh, see it happen for that company. Yeah. And,

um, great to have a, uh, a startup see it happen for that company. Yeah, and great to have Startup Weekend alums. Startup Weekend's played, as an organization and events, such a huge role and been in my lives and careers. And whether it's Rover.com getting started at Startup Weekend or Ben leading indirectly to us meeting and our careers in PSL and Madrona. I've got a really gushing blog post about how awesome Startup Weekend is on my blog at some point, if anybody actually wants to check that out. Should we move on to carve-outs?

All right, carve outs? All right. Carve outs. Cool. So there's going to be some people who are like, I knew this is what he was going to say earlier on when I was hinting at this. But I am so into Westworld. It's a HBO show based on a Michael Crichton book, which then got turned into a movie in the 70s with Yul Brynner as a cowboy. And I don't want to say too much about it now, but if you like the concept of where is AI and robotics going

and you like really high production value entertainment, it's created by J.J. Abrams and Jonathan Nolan, who, of course, worked on all the the recent batman films and um the prestige and uh uh yeah a bunch of great films um you gotta watch it it's so good and um i just signed up for hbo now and it's like trivially cheap and you get a month free so um highly recommend it technology technology and superheroes all in one yep um my carve out for the week, uh, real quick. Uh, I, I don't think I've done this before, uh, on this show. Um, but I should have, because I love it. Um, super cool app called overdrive, which is, uh, which is a way to

digitally, um, through an app and through your Kindle, connect with your local library and borrow e-books and audio books from your local library. And then read them on your Kindle or on your smartphone and listen to the audio books for free with your library membership. And I actually had started using this a few years ago, kind of forgot about it and picked it up again earlier this year. And it's just like removing that little bit of friction to, you know, not that eBooks are very expensive, but audio books are. Yeah.

I'm reading like four or five times as many books as I used to because of it. So highly recommend it. Go sign up at your local library, support your libraries and use overdrive. True that. 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, i.e. spend your time and resources only on what's actually going to move the needle for your product and your customers and outsource everything else that doesn't. Every company needs compliance and trust with their vendors and customers. It plays a major role in enabling revenue because

customers and partners demand it, but yet it adds zero flavor to your actual product. Vanta takes care of all of it for you. No more spreadsheets, no fragmented tools, no manual reviews to cobble together your security and compliance requirements. It is one single software pane of glass that connects to all of your services via APIs and eliminates countless hours of work for your organization. There are now AI capabilities to make this even more powerful, and they even integrate with over 300 external tools. Plus, they let customers build private integrations with their internal systems. And perhaps most importantly, your security reviews are now real-time instead of static, so you can monitor and share with your customers and partners to give them added confidence. So whether you're a startup or a large enterprise, and your company is ready to automate compliance

and streamline security reviews like Vanta's 7,000 customers around the globe, and go back to making your beer taste better, head on over to vanta.com slash acquired and just tell them that Ben and David sent you. And thanks to friend of the show, Christina, Vanta's CEO, all acquired listeners get $1,000 of free credit. Vanta.com slash acquired. All right, that's all we've got. If you weren't subscribed and you want to hear more, you can subscribe from your favorite podcast client now. If you're a longtime listener or even if you've just picked us up and you really like us, we don't ask for much. But we would really, really love if you'd share about us on Twitter, share about us on Facebook, leave a review. It's how we grow the show and it's how we can reach more people and do more things. So thank you so much for being a listener and we will hear 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?