This Week in Startups - Full breakdown of Microsoft acquiring Activision-Blizzard for ~$70B+ | E1363

Episode Date: January 19, 2022

Microsoft has announced its intention to make the largest tech acquisition ever by buying Activision-Blizzard for ~$75B ($68.7 when you net out Activision's cash). This is Microsoft's 3rd major gaming acquisition as it attempts to build the “Netflix for Gaming" with its Game Pass service.  We cover the details of the deal: what the combined company will look like, how this fits into Microsoft's metaverse strategy, Microsoft's commitment to change the Activision-Blizzard culture, the $3B “breakup fee” that Activision is on the hook for if deal falls through, the potential challenge from the FTC and more! (00:00) Jason & Molly introduce the show (01:48) The terms of the Activision-Blizzard acquisition (03:17) Satya Nadella's Metaverse strategy (04:52) Microsoft's growing gaming universe and subscription offering (07:05) Key titles across Activision-Blizzard's gaming units (08:34) Vanta - Get get $1,000 off automating your SOC 2 at https://vanta.com/twist (09:56) Game Pass metrics (10:44) Activision Blizzard's recent history of sexual harassment scandals (11:40) Will the FTC allow the acquisition to go through? (13:41) The unique $3B breakup fee that was worked into this deal (15:45) Why the breakup fee may be linked to the harassment investigations (17:55) Dataiku - Create transparent, repeatable, and scalable AI and analytics programs. Visit https://dataiku.com to learn more. (18:53) Why Jason doesn't think this deal will be struck down for antitrust (21:45) How Lena Khan may approach this differently than previous FTC chairs (22:45) Could regulation sabotage American competitiveness? (26:52) Should American companies be prized if they are actively avoiding taxes? (28:42) Ourcrowd - Check out the deal of the week at https://ourcrowd.com/twist (29:45) Molly and Jason play "Armchair Corporate Development" (37:54) Jason and Molly take an audience question - Can there be another Google? FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Hey, everybody, hey everybody. It's going to be a great full news show. Molly is back from her coronavirus vacation. I lived. You survived. You're back. You lasted eight days. You felt terrible.

You know, on the ninth day, already calling in sick in the second week. I really like that. Unbelievable. That's all that matters. Right up top. The big news story of 2022. I mean, this makes. remain the biggest tech story of the year?

It certainly... On January 18th, we started the year for the bang. For crying out loud. Microsoft announced that it's buying the troubled and yet historic game studio Activision Blizzard for $69 billion. We think it's like $75 billion all in that it'll end up being the biggest tech acquisition of all time if federal regulators let it go through. We'll talk about that as well.

Stick with us. It's going to be a great show. This week in startups is brought to you by Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. Data IQ allows companies to leverage one central solution to design, deploy and manage AI and analytic applications.

Visit Data IQ to learn more. And Our Crowd helps you invest early in pre-IPO companies alongside professional VCs. If you're interested in investing, you can join Our Crowd for free at OUR-C-O-W-D.com slash twist. Okay, Microsoft has announced they would be acquiring Activision Blizzard in an all-cash deal for $75 billion. dollars. This would be Microsoft's largest acquisition ever right after LinkedIn, which I think was right around the $29 to $30 million mark. Another incredible, incredible acquisition for Microsoft. GeekWired, in fact, gave us this beautiful chart here to show just how meaningful this acquisition is. If you took the next couple of acquisitions and combined them, it wouldn't be as long as that blue bar for this pending acquisition nuance, which is the language company, Skype. We remember, you know, You know, that getting bought, GitHub, Nokia, other things they bought over the years, Yammer, David Sachs's company. This is the equivalent of 75 Yamers. It's the equivalent of a half dozen Skype's, right?

It's a very big. So why are they doing this? I think Microsoft would like to become Netflix for games. CEO Satya Nadel said that back in January of 2019. Right now, the world has three billion gamers. I think that's out of seven billion people on the planet. and Microsoft expects 1.5 billion more to be gaming in 2030. In other words, the majority of humans enjoy gaming.

And that's 4.5 billion gamers, according to Microsoft. Let's throw to this 57 second clip. And it's a lot of word salad, but after this 57 second clip, I'd like to get your thoughts, Molly. Our vision is for a river of entertainment where the content and commerce flow freely, driving a Renaissance across the entire industry to make games more inclusive and accessible to all. And together with Activision Blizzard, that's what we will be able to deliver.

Removing these barriers will only become more important as the digital and physical worlds come together and the Meroverse platform develops. When we think about our vision for what a METAWERS can be, we believe there won't be a single centralized METAWRWRs. And there shouldn't be. be. We need to support many MetaWords platforms as well as a robust ecosystem of content, commerce, and applications. In gaming, we see the Metaverse as a collection of communities

and individual identities anchored in strong content franchises accessible on every device. A river. A river. Okay. I'm assuming, was that Satya? Nadella. Nadella. Yeah. Sorry. What are your thoughts on this acquisition? Why now? What's the background here? Let's start there. Yeah, I mean, this is like, I don't want to state the obvious here, but this is big. It is a big deal. It's not just a big deal because it's a big crap ton of money. I would actually really be curious to know little like real time assignment for our producers. What is the biggest tech acquisition ever and where this sits in that stack? Because this is a very big amount of money. I think that we tend to forget how quietly dominant Microsoft has been making itself in gaming over the years. Like, Minecraft seemed like a big acquisition at the time, and we sort of had no idea. And Microsoft has been very quietly gobbling up game studios for the last few years and making more and more titles exclusive to Xbox.

Like, at some point, this company clearly said, Xbox is not a hobby for us. You know, it had been kind of a side business, and they went like, this is a way to keep, and they launched Game Pass. They've put everything into this subscription model that just keeps recurring revenue over and over and over. There it is. Consumer SaaS. Subscriptions are magical, whether it's Netflix or Spotify or Com, one of our investments, Steezy for Dance. And that's why we're obsessed with it as well. And people are obsessed with SaaS like Slack. 100%. This would be the largest tech acquisition, I believe ever. If you remember, DelBot, EMC, which was more like a merger and that was $67 billion. Yeah. What are the games here? And how does this change gaming? Because you have, you know, the Microsoft platform, which is the default for desktop gaming.

You have Xbox, which I believe is the largest console. And, you know, they don't have a foothold on casual gaming on Android and mobile and iOS. But what are the names here? And, you know, because you have Activision and Blizzard. We know Blizzard had like Diablo and some of those like... And World of Warcraft. And World of Warcraft.

A lot of subscription stuff there, right? World of Warcraft, one of these original subscription. And also Overwatch, which was like huge for just a hot minute, you know? Yeah. Is Cole of Duty in this cohort? But yes, exactly. That's what I'm getting to. The big gorilla here is freaking Call of Duty.

With this acquisition, Microsoft has Halo and Call of Duty in the same. I mean, if they put Call of Duty on Game Pass to use, to steal the phrase directly from my brother, that at RIP PlayStation. Like, done. This is just massive for people who are into first-person shooters. Hardcore gamers have something to love here, big time, because Call of Duty, I think, might be the biggest game in the world. That's bananas.

And then they also get Activision Blizzard bot King. I'm like so worked up because I can't believe they have Halo Angold. Oh, King is mobile. You're right. I forgot about that. So all of a sudden. That's Clash of Clans and Candy Crush. And Candy Crush.

And Clash of Clash of Clans was the thing that they were doing over there. they're a king? That's a Scandinavian country. Yeah. They also get Starcraft, which is a, you know, was one of my favorites. Big East sports. So that could be very powerful if they launch. I think the last StarCraft to come out was StarCraft too.

Like, I don't understand how they could have a franchise like StarCraft, Blizzard, and not release another one. That is like real-time strategy bonanza. And there was that, what was that game that came out that's real-time strategy that I think people got obsessed with that kind of replaced it it'll come to me in a minute or maybe one of the Notties will remember.

Probably. Anyway, I mean, honestly, I think for hardcore gamers, this is all about Call of Duty, 100% and bringing those into the same fold and putting it all on that on game pass and the question of what will they make exclusive and what won't they?

How big is Game Pass? And then let's talk about exclusives after that because this reminds me of Disney Plus if I was going to build it analogy. Disney was selling their content, if you remember, to Netflix. That's why we had Daredevil and, you know, was it Jessica Jones and all these different, you know, um, IP was licensed to Netflix, but then Disney came out with their own.

So this feels analogous. Sock two compliance is critically important. Why? If you don't have sock too tight and tight is right, you can't close major customers. It's really that simple, folks. And guess what? Vanta's going to give you one. thousand dollars off your SOC2. Vanta's compliant software makes it really easy to get and renew your

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Vanta.com slash twist. That's vanta.com slash twist, V-A-N-T-A-com slash twist for $1,000 off. GamePast has 25 million subscribers. What? That's its subscription, yeah. I mean, again, these are the things you just don't think about, right?

You're like, huh, is Microsoft big in gaming? I don't really know. Hmm. Yeah, turns out. 25 million subscribers globally, and those numbers are as of today via GameSpot. And that's $10 a month, I think?

Something like that. I mean, I'm a subscriber. It's basically the replacement for Xbox gold, but now you get game downloads instead of spending $60 bucks a pop. So they obviously just pulled in a ton more excited subscribers.

And then there's just the part, I mean, the part I find really interesting, aside from just the sheer, oh my godness of it, right? The dominance. I mean, this is like such an alpha play. I almost can't even believe it. But they also get Activision Blizzard at a time when its stock is down 30% because the, you know, it's been kind of a shit show, right?

They've had all of these. Oh, they had all the scandals. So was the stock depressed because of the scandals? Was that the headwin on the stock? I think that was a big part of it. Yeah. I mean, they were sued by the state of California in June over this culture of, quote, constant sexual harassment. The California Department of Fair Employment and Housing said, you know, essentially,

it's awful. There have been questions about whether the CEO was going to leave. And the thing that I was actually waiting for as this news sort of unfolded throughout the day was what is going to happen. And according to the Wall Street Journal, sources close to the deal said that Bobby Kotick, Activision's longtime CEO, is expected to leave after the deal closes, which is expected, by the way, in Q1, 2023, which leads to the other interesting part of this, which is like, really, though? Do we really think the FTC and the DOJ, which just made an announcement today about how they're going to get a lot more hardcore at looking at big acquisitions, are going to let this go through easy, easy? What do you think? I think they'll let this one go through because it is tiny when compared to Microsoft's overall revenue and the other players in the space. I don't know that this one, you know, kills competition in gaming. It might kill PlayStation. I don't know, man. Well, it depends on whether they make these...

Not America's problem. So, you know, here's one of the things with the thumb on the scale. Yeah. What presidents who appoint people to do antitrust, right? This is a very political thing. You know, Netflix didn't see... And Netflix and Google under Obama didn't seem to have any problems, right? And Apple and Google didn't have many problems under Trump.

Yep. And this is where it gets very complex. Do you want Microsoft to beat Sony? Well, America wants Microsoft to beat Sony. And that would then, you know, if we are not, we have no control over what Sony buys, unless it was an American company, I suppose. But we have little control. But do we really want to ankle? Do we really want to put sandbags and slow down Microsoft?

Great American company in competing with global companies outside of our borders? We don't. I can answer that question. And you don't want to be the president or the administration that is anchoring American dominance and American exceptionalism globally in the face of other places like China, which have their finger on the scale and a dogged fight on a global basis. We need to win. America needs to win. And so this would be an example of just letting America win. If I had to make a bet, because I think there is concern about it.

Twitter user Tane Jipria pointed out the Microsoft deal, who I think is a journalist, pointed out that the Microsoft deal to purchase Activision for $69 billion has a breakup fee of about $3 billion. Which I'm guessing is related to Activision. So that's usually the other way around. So why is Activision doing $3 billion breakup? Why is Activision have to pay it? Generally. That's a good question, actually.

I'm looking. Usually it's the other way around. That would indicate that there are some risk factors on Blizzard side. A breakup fee or termination on Microsoft. Yeah, is paid by the seller if the deal does not go through for whatever reason. So in this case, Activision is the seller. Like if Microsoft was going to buy your small company, if it doesn't go through. So this means the balance of power was with Microsoft,

that Microsoft got to extract this from Blizzard. So that means Blizzard is trying to sell. And I would indicate to me on game theory. Go ahead. What's your game theory? Well, my theory is that that's related to either a huge settlement related to sexual harassment, which would not be a shock, or a regulatory headwind. And if I had to guess, what I would imagine is that the FTC, I think you're totally right. They don't want to necessarily block this. The gaming sector is very vibrant. Just because they're really only two dominant consoles doesn't mean that it would, you know, be a massive monopoly that killed gaming, especially because PC gaming exists, which is massive.

I do think they might make Microsoft give up some exclusivity. Like they might say, you can't have COD be a GamePass exclusive. So if you're doing COD on Xbox, you might be able to do an exclusive for three months or six months, but you can't ban Call of Duty from PlayStation. And are those, I wonder which titles, like, if they do own Halo, Halo is exclusive? Halo is exclusive. See, if you want to play Halo, you got to have Xbox or a PC.

You can't do it on a Mac. You can't do it on PlayStation. Yeah. Or Nintendo. Yeah. So it's interesting. I think that, yeah, I agree with you.

I think they need to get a big ticket, a big penalty for the, like, unbelievable track record, horrible track record. Like, with the harassment. Like,

that seems to be systematic and going on forever and that they condone. See, this is one of the problems with old school companies. Old school companies use the HR department to kind of just very quickly settle things.

But if you settle things and you allow the perpetrators to stay at the company, which it seems like Activision Blizzard did, then you never change the culture. Yeah. And in fact, what you're doing is reinforcing the culture

because the bad actors stay and the speeding tickets are so low, imagine if like a speeding ticket of 90 miles an hour was $9. Everybody would go 90 miles an hour. So that's one of the problems in corporate America is that the penalties need to be, your career at this company is over. Maybe not career forever, but, you know, we got to think about those things too. Like when does?

I can't believe. And I, if I worked for Activision, especially if I were a woman or a person of color or anybody from an underrepresented group, I would be overjoyed at this. Yeah, Microsoft's a great company, yeah. Microsoft's a great company. So far the board had been standing behind the CEO. And if you go and read, you know,

Nick just posted this in our Slack, if you go read the lawsuit that was filed in California, it makes your stomach turn. It is. And I mean, I've been around the tech industry for a long time. Like a lot of bad crap happens. It is appalling. So I'm thrilled, actually.

that Microsoft is buying Activision Blizzard for lots of reasons, not least of which is I'm a GamePass subscriber. Yeah. But also, I hope they just firebom that executive level. That will clearly happen. There's just no way those people make it over to the other side. They all just get, yeah. Yeah.

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It is designed to protect against consumer harm. So when Disney decides, hey, we're going to buy Star Wars, Pixar, Lucas art, Star Wars, Marvel, everything. Does that harm consumers? What's the harm, right? I'm getting all of those for not seven bucks a month on Disney Plus, there's no harm. And if they were to buy three or four more franchise,

if they bought James Bond, they got the whole franchise, whatever they buy, there's no harm. And then you look at- As we define harm. Like we define harm in terms of prices, exactly, specifically that very narrow lens

versus what the hell happens to game developers, as Beardscript pointed out, with this acquisition. Right. And so that's where you have to think like maybe, second order effects are where you could start to see. Well, in the future, there'll never be an Xbox competitor.

Is there ever going to be another console if? Exactly. You know, and can there be another streaming platform to compete with Disney? Or can there be another theme park? It's kind of hard, right? Can you imagine going up as a streamer? And so we have this three horse race we've talked about before, HBO, Disney, Netflix, and here we go.

But now you're going to get Call of Duty as part of your $10. a month. You're going to get Diablo. You're going to get Candy Crush. You're going to get StarCraft 2. If you're like a nutcase like me and you still like to buy a game from 15 years ago or 10 years ago, hasn't been updated. It's kind of rad when you think about it. It's just like when we go to Amazon and then I'll hand it off to you. I'm looking at Amazon and I was, we were talking about that house brand from India that people are obsessed with. What's it called? Salimino something. There's some house brand that's from, India where you can get teeth whitening trips or vitamins or wipes. So L-I-M-O. And it's like, okay, is Amazon basic cables and So-L-L-L-O-M-O better for consumers? Of course it is. Lower prices, you know, is better. Until you can't have second order. Go ahead. Until you can't, exactly, until you can't get anything else, right? Until you're on Call of Duty 19 and a new game hasn't come out in six years and all. all the movies that exist in America are Avengers movies.

And you may not have noticed that like Amazon Prime, those prices are going up. And maybe the price of Game Pass will go up over time because eventually there will be. But it's such a hard argument. This is the bind that Lena Con and the FTC are in and that she's been arguing for years, even as a law student, which is, do we need to think differently about how we approach antitrust? and how do you define, how do you prove a negative? How do you prove what you missed out on? Yes. Because there were only three streamers

and because there was really only one viable, you know, future competition is a really hard thing, you know, to kind of, like it's an abstract concept, who will show up in the future. It's like, well, Facebook had Instagram, TikTok, WhatsApp, you know, Twitter. Countless other competitors show up. But that doesn't mean there won't be,

it's not getting harder and harder for the next Snapchat or TikTok to take hold. It is going to get harder. But yet, like you said, it's a counterfactual and like, yeah, it's really hard to figure out. But I kind of like the idea of letting American companies run because the bigger issue for us right now

is can America remain dominant and have a balance sheet and a currency that is still the world currency for Ray Dalio's book? we still become the world, we still maintain our power in the world. And if we seed power, we all know who we're seeding power too. And that's what I would encourage Americans to think about. And it dovetails with discussions of human rights and democracy. If America doesn't win, maybe the dictators win and pick your poison.

What do we mean, even though I really want to talk about Brian Chesky, what do we mean when we let American companies run? Because if we mean, we only let six of them run and we, I mean, small businesses are the middle class of the United States, right? Small businesses are the backbone, the part that's shrinking and shrinking and shrinking. There's huge and there's like micro, like creators, and there are small businesses struggling to hang on, but that's always been where the strength and the power is. And they're the ones who need room to run, but if they run right into Amazon or they run right into Walmart or they run right into Apple. Yeah. You know. I mean, I think what you'd have to say is entrepreneurs are always going to come up with something better.

You know, they're always going to come up with some new market. And if you're fighting over, you know, owning a deli or a five-and-dime store or a grocery store, like maybe that's not the battle to have right now. Like, fighting to compete against Walmart or fighting to compete against Amazon basics. Like maybe that's not worth fighting for. Maybe there's other places innovators can go to innovate and do other great things in the world. But it is a tough question. But it is a tough question.

their delis? I mean, listen, you could have a great, well, let me, let me rephrase that. See, even the camera was like, no, bro. You want to think through that one again. I wanted to talk about bagels and I lost my cameras.

The world is so unfair. FML. Okay, listen, delis, I was probably out of line saying, here's the way to look at it. Yeah, some great Amazon basic bagels could take over. And when they do, that generic bagel cannot compete with

some new local brand in Berkeley, Boychick Bagels, whatever it is, that makes something absolutely refined and delightful. So it creates another opportunity, which is, I'm not the generic cable. It's some unique cable in the world that does something different, right?

And the innovation cycle starts again. But, you know, winning as a country and letting these companies run means, I think, allowing them to continue to grow, making them pay taxes, making them pay great wages, right?

So there are things we can do, which is the one thing I would argue Bernie Sanders and Elizabeth Warren have done well, which is the pressure they put over sustained period of time on all corporations or the country to raise minimum wage was heard loud and clear by the people who were running hard. They heard it and they were like, huh, these people will keep complaining about us. AOC is complaining this. Okay. What are they complaining about? Oh, how much we pay people? could somebody just run a number here? What if we added four?

What if we raised at 30%? Would they shut up? It's like, yeah, they got no choice but to shut up because they asked for $12, $14, $15 minimum wage. Okay, pay everybody $18 and shut them up. Oh, would they want to pay for community college? How much will that cost this? Oh, only one out of 20 people are going to do

and it's going to cost $8,000? Well, F and do it. And that's actually, like, I think what we're looking at, Molly, I think is a functional democracy, and capitalistic society. People are complaining over here. People are taking action over here. That's a vibrant debate and democracy at work.

Or how awareness drives change. So as much as I complain about Senator Karen, I do give her credit for creating a dialogue around minimum wage, creating a dialogue around taxes. And you know what? We've seen people sell some shares and pay a lot of taxes.

Record taxes have been getting paid the last couple years. And let's talk about like corporate taxes. Like the fact that corporations do not have a minimum and they can play shell games, is unacceptable. It's insane. It's insane.

Like, just come up with a minimum tax. And I'm sorry. And no more loopholes. For every time you want to say let American companies run, and then there's an American company who's not paying taxes, that's un-American. It's un-American. It's un-American to hide your revenue and not.

You know, like, we're, we've taken the reins off. Like, our companies are largely unregulated compared to everybody, everywhere else in the world. Yeah, that's why we're winning. And then what do you do? You turn around and you don't invest in the schools and the human beings and the people in the streets and they're like, double barrel. Yeah, we'll know this whole concept that they're like, listen, God love, you know, my home country of Ireland. But they're like, yeah, just set up a company here.

Put Google and Facebook's IP in Ireland. Yeah. Then the company in Ireland licenses that technology and patents back to Google America. Like, I mean, come on. It's so lame. It's lame. Just pay your taxes, everybody. It's just pay.

We have all the money that we need in America. Like I know now I'm delving into the other podcast, but we have enough money. We just need the people to pay. I think the tax gap in the United States is like $70 billion a year. That's the gap between what is owed and what is paid or what would be owed. We don't need a wealth tax. We don't need to like, we have the money. I mean, and also like really, Apple doesn't know what to do and Google does not.

need to know what to do with their money. I literally remember a conversation with the founders of Google where I kid you not, one of them said in a small dinner, what should we do with the money? Yeah. Like literally, they did not,

and this is when they only had $10 billion in the bank. They were looking for ideas on what to do with the money because the money printing machine was going and they're like, what should we do? Literally, that was a question to me. Our crowd is an investment platform that analyzes companies across the global market.

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counting the seconds until Apple buys Sony. Like, Apple's just buy PlayStation now. Why isn't Apple more serious about gaming? But when you talk about companies who are sitting on crap tons of money, Microsoft was sitting on $165 billion in cash. So I'm sure they did the same thing. They were like, well, we'll look around, think about what to buy, and it'll be like, not even half.

Yeah, and Apple doesn't know what to do with their money. Apple does not know what to do. They're just like... Yeah. Because they don't want to buy things. They like to build everything themselves. So they buy back their shares. The money keeps piling in.

And they're out of ideas. And they're absolutely trapped in the iPhone. They have a couple of ideas. I think, honestly, I bet there are so many ideas in the house. I am coming around to Google ski goggles. Google ski goggles. I was skiing today. Yeah.

And I was just thinking about those Google, because they look like ski goggles. and I was looking at the mountain and I was watching people ski down the mountain and I keep track of my speed in an app called slopes and I'm like I'm getting good now I'm back on diamonds

I did 45.5 miles an hour on a run which is pretty fast and don't get hurt I just got here yeah I won't be safe not fun we gotta keep this guy on the game I'm just the mom

anyway I was just thinking with those goggles I'm like trying to find this I was trying to find a run for my daughters the other day and I couldn't find this run and I was like if I had the goggles on

when I'm looking at the mountain I would have seen the run because I would have just looked up with the mountain and we were like, it's over here, dummy. But I'm like trying to find out the map. There's a thousand runs.

And then I could see my daughter's speed when they're going down the mountain and I could also see, because I'm teaching them to do S turns in parallel. I could actually see tips and I could literally, I mean, think about this. If I was wearing those apple goggles,

it could show me my daughters doing pizza slice or parallel skiing or S turns and say, tell them to lift the back leg, tell them to put their feet flat down, whatever it is. and this is the speed they're going. You may want to slow them down.

This is where they're at. I mean, it is going to be mind-blowing augmented reality. I think it's going to blow away the iPhone. I think the iPhone is toast when it comes to these things. And that's why they're never going to do it. No, they're doing it. The only reason that we don't have this is because these are from companies that make all their money somewhere else. No, no.

It's coming because it's going to be $3,000 in that first dev kit. And then I think people will pay sustained 50% more for these goggles than they will for an iPhone. and I think they'll keep their iPhone. So I think what's going to happen is you're going to buy both. Because think about it, the Apple stores pack, Apple comes out with the watch,

and people give up their phones? No, they come out with AirPods, people give up at it, nope, this is all accretive. I think the goggles people will use when they're skiing, they'll still have their phone in their pocket for the next 20 years.

I think they'll want both. I mean, it's going to be a creative, not replacing. Until they can make absolutely sure that people are not going to not buy iPhones, right? They have, what they're trying to figure out

is how do we still make that? Because, like, you're a businessman. If you have a businessman, If you have a thing that makes all the money. I'm not a businessman. I'm a businessman. Pretty soon. Right.

Actually, good point. You're the opposite of the person that I'm thinking of. Because if you're Tim Cook and you're publicly traded company and you are a cash machine and you have one. You got to be careful with that franchise getting replaced. Yeah. And you have one thing. And you become fundamentally risk averse.

And I think the reason like, I don't think that there aren't good ideas inside Apple. I think there are probably a million good ideas a day inside Apple. And then somebody says, how does that sell iPhones? And then it dies. idea? You want to know my best idea? Yeah. Oakley buys. I'm sorry, Apple buys Oakley and Smith. That's my best idea. I just came up with that idea. Or a producer did in the chat room, and I'm taking

credit for it. But I mean, can you imagine Oakley or Smith in an Apple store? Just buy those companies. Do it now. I want this so bad. I don't know. I want to skip the goggles. I want the chip. Just put the chip in my eyeball. Absolutely. I want it all. Like, and I would buy the goggles and I don't know if we're going to make it there, my feet. I don't think you're getting the glass. I don't think you're getting the chip. I'm going to have to get Google Life Extension to live long enough to get the chip. Yeah, maybe

we'll be like 80 years old doing this podcast and then still have that on. And they'll have the chip. This week in Geatrix. Can we do one question for Mar? We got one question from the NOTES. The NOTES feel a little neglected. I got some back channel. Aw.

Well, because I used to always take two or three questions and we've had so much show. We just always have to remember to take one great question. We get one great question. Because Walton Dormish is here. You know, John Galt is here. O.G. Bob G. is here.

I know. I mean, we got some great notice here. Beard scripts, Zen profit. Give a, this one doesn't even have to be in the show. Anybody can give us just a question, like, about our personal one. Without that question. I love Yogesh, who is sort of like our friend, but also like Poki. He's like, he apparently at some point was calling us communist, communist communists.

Comminists. Do you mean us? How are we commies? I just said let the companies run. What are you talking about? Why hasn't Apple bought Sonos yet, actually? That is the other question that I have. That's an antitrust one.

That's an antitrust one. It is. Sonos is so tiny. I think so because it's the only hardware company that makes a competing product. It's just so tiny. It's not worth it for them. Yeah. But I love my Sonos, even though Sonos has screwed me.

I'm like, I am absolutely upset at Sonos for this like Sonos 2 app and then breaking my system. And I can only use my Sonos Romes if I'm on Sonos 2. and it's like so clujy and they're like, oh, you bought new equipment from us? Guess what? You're screwed. Because now you've got to upgrade everything else. It's the worst execution I've ever seen for a tech company. That's kind of why I want Apple to buy them

because they would have a proper UI. Although I am obsessed with, because I'm a frugal girl, I'm a normal compared to your normal friends. The IKEA line of Sonos speakers. Oh, yes. I don't know what you're talking about. Sonos is now in bed.

I know, because you don't go there. But no, Sonos technology. Does that mean it in Italy and it's nine months to come to your house? No, Sonos technology is now embedded in a line of IKEA speakers. Oh, yes. There's like a lamp that has a son-o-phor-is-is-S. How do you pronounce this stuff? Symphonisks.

S-Y-M-F-O-N-I-S-K. Symphonisk. Simphonisk. The symphonisk is the shi-st. Stop. It's the Shute-Gur-Gun. I've got like four of them, and then you can swap out some covers. It's a shelf.

You can get a shelf one. You can get, you can mount them on the wall. They have a lamp. Now you're just effing with me now. I love it. Sonos is effing with me now. They have more than one. Your camera got all excited and died again.

Oh, God. We think it must be overheating. Oh, my God. They have a ton of these. They have a ton of them. And they're the best. I didn't know there was a Sonos IKEA collab. That's going to get me to go to Sonos and eat those meatballs again.

Dude, seriously. Go to IKEA. I'm going to go to IKEA. Get some meatballs and get a bunch of speakers because they're amazing. And they totally work with the app and you can tie them all together. And then they play everything. everywhere and then mine falls out the window all the time because I'm always like jamming in the windows. This is how my wife fell in love with me.

When we were dating, I went to. Ikea love. I went to IKEA with her. She bought whatever she wanted and I put it together for you. This is just, if you want to have somebody fall in love with you, get on your hands and knees and give up your weekend trying to put this together. And literally you're sitting there with pegs and wrenches and you're trying to, trying to put the stuff together, and I figured out how to do it.

I bought additional, like, L hooks and S hooks and other things to reinforce how that stuff is made. So I would put these little braces on them that made it more stable. If you buy extra braces and then you also mount it to the walls with extra braces, so you build an IKEA shelf and it falls over and it's like wobbly and it's not perfect, just buy these little Ls and put them on the inside and then buy other hooks and mount it to your wall. All of a sudden, she said, you can get married,

you can make a couple babies. All of a sudden, she says yes. She says yes. Or he or she or they. Oh, you know, but that's IKEA love for you. That's, that's my testimonial. All right, Patrick asks, I wouldn't have a job if it wasn't for this pod, J. Cal,

I'm graduating college this spring, and I'll be working for a New York City startup founder. You interviewed. You're a legend. Thank you. Amazing testimonial from Patrick. All right, thanks, Patrick.

Well, you're going to get some equity in this company, and it's 7% of your equity you just shipped to J-Cal. So that's fine. Give us one question. Come on, guys.

You got one question. Can you have the next? I'm denying Bob G. This one here, so let's go at this point. I like this question, basically you're changing the rules. Like having Shaquille O.G.

Bob G. G. is like having Shaquille O. O.G. It's like too dominant. Go ahead, Molly. You read the question. Can we have? Boguerre Ayyub says,

can we have the next Google or is it too late? I think this is related to our question of size of monopoly. Like what can compete? The answer is yes. Yes.

There are new search engines coming and getting steam that will be subscription and not have ads in it and that don't track you. So you have duck, dot go slowly been growing, but there's a new one called,

I think, yes or you? I can't remember the name of it. It might be you. com. But I saw, there's a, Yeah, it's you.

The private search engine that summarizes the web for you, you can add it to Chrome. I think they might be using Bing's, you know, interface or something. You know, they have like an API. But I do think it's possible for a search to come out in 2022. That removes ads. Because right now you do a flight search.

You do a product search on Google. The first 20 links are all ads. So it will be, it's not going to be easy. That's going to be one of the harder ones to despise, but it is possible. What do you think, Molly? I mean, oceans rise, empire, fall, right? The thing you don't, the thing you fail to understand about companies is that the bigger they get, the more unwieldy they get. The more tied they get to legacy systems, the more they get trapped in a cycle of how do we sell iPhones. Eventually, things get so big that they topple over or they get so big that things are uncovered about them that we hate. For example, the, you know, targeted advertising ecosystem. And so that gives someone an opportunity to sneak in and build something better that you didn't even realize you need.

Or you'd stop needing Google at all because you get the implant, the chip, and your eyeball. And it just gives you all the information as you think it. Perfect. There it is. All right, everybody. It's been another amazing episode of This Week in Startups. We'll see you next time. Bye-bye. Bye.