Full Transcript for Seinfeld

So David, I bought a DVD player for research for this episode. No way. Did you buy the box set? Because there is some stuff, like facts about the pilot, that are only available in the DVD commentary and don't exist anywhere online. So I had to go on eBay, buy a copy of the Seinfeld DVDs, and buy a brand new DVD player here in 2026 to view it.

Do they even sell those on Amazon anymore? They do. Sony makes them. They're like, I don't know, a hundred bucks or something. Sony, there you go. Appropriately. Distributors of Seinfeld. That's right. All right. Should we do it? Let's do it. Who got the truth?

Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth? Welcome to the fall 2026 season of Acquired, the podcast about great companies. Well, usually companies, anyway. Usually. The podcast about great business assets. And the stories and playbooks behind them.

I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Today, listeners, we are taking a giant left turn. David and I were staring at each other, pouring over our usual topic list, and we decided that we only wanted one criteria for selecting this one. What episode would we have the absolute most fun making? And can we do something different and fresh for Acquired? And we found something we are very pumped about.

The business of Seinfeld. The show Seinfeld. We both had just read this astonishing stat that Seinfeld in the first six months of this year, in 2026, has been watched by 60 million Americans. Which is about 20% of the entire U .S. population. This show went off the air almost 30 years ago. So I reached out to Nielsen to verify this. Not only is it true, they said that if you update it through the end of August, that number is up from 60 million to 72 million Americans.

Wow. That's almost the same audience size as the Seinfeld finale when it aired. This is a show that finished making new episodes nearly three decades ago, and yet we are all still watching it. So why? Netflix's 2019 deal for Seinfeld, which was reported at well more than $500 million over five years, was the largest sum that a streamer has ever paid an outside studio to license a series that's no longer in production.

A hundred million dollars plus per year, decades after they are done making new episodes and everything. The way the economics break down, the way that it is owned and structured is essentially a complete accident of history. Seinfeld managed to be one of the last shows of the old world where everyone watched the same thing at the same time, while at the same time also having a foot in the new world just as the internet was taking off.

And the story is really an entrepreneurial one of obsession, of craft, of a team that created the number one show in America by doing everything completely different than the way it had ever been done before and defying all conventional wisdom. It is one of the best examples we have ever studied on Acquired where the creators, Jerry Seinfeld and Larry David, were such big believers that their product was excellent that they didn't care what anyone else thought or what the numbers looked like at first.

And how a small, passionate, early fan base with a slow burn went on to become their greatest asset. Today, listeners, we do an experiment here on Acquired, the business of Seinfeld. Let's do it. So listeners, as always, you can find the visuals, charts and illustrations of key concepts from this episode in our companion PDF at library .acquired .fm.

You can join the email list at acquired .fm slash email. That's where we will send all the behind the scenes photos that we found in research, past episode corrections and vote on future episode topics. Acquired .fm slash email. Come talk about this with us in the whole community in Slack after you listen at acquired .fm slash Slack. And before we dive in, we want to thank our brand new presenting partner, Sierra.

Yes, Sierra helps the great companies of the world build better customer experiences and drive stronger business outcomes with AI. That's S -I -E -R -R -A, Sierra. So with that, this show is not investment advice. David and I may have investments in the companies that we discuss. And this show is for informational and entertainment purposes only.

David, where do we begin? Well, naturally, even though this is an episode about Seinfeld, the show, not Jerry Seinfeld, the person, we have to start with Jerry himself. Yes. So Jerry is born in 1954 in Brooklyn to a Jewish family. And when he's young, the family moves out to a small town on Long Island named Massapequa. I actually spent a fair amount of time in my childhood in Massapequa.

It's definitely suburban Long Island. Not a lot of interesting culture going on there. Great. But Jerry's father, Cal Seinfeld, was known in the family and amongst his friends for just always being a funny guy. Always telling great jokes, as Jerry would talk about it later. He had the funny gene and Jerry definitely did, too. Jerry insists that comedy is a gene, right? Yes.

Yeah. Yeah. He thinks his kids have it. He knows his dad had it. And that it can't be taught. Yeah. Obviously, you can work really hard and hone in and develop more material. But the instinct is actually genetic. Yeah. Yeah. He's always making his friends and family laugh. And right around the same time, when he's about 12 years old, he falls in love with an album, with a record.

Not a music album. Not one of the great bands there at the time of the 60s, 70s. But with Bill Cosby's stand -up comedy album, why is there air? This used to be a big thing. These comedy records. Yeah, this was a big thing. Stand -up albums on vinyl. It's funny. Today, we all tune in to Netflix to watch the big stand -up special that just dropped.

Albums were doing that same thing 50 -plus years ago. Yep. Totally. Totally. So after high school, Jerry goes to Queens College in New York, actual New York City, where he majors in communications and theater. And he sets up for himself. He's really into comedy. He sets up an independent study where he studies stand -up comedy like his heroes.

So he goes out to the comedy clubs in New York. He writes papers for college, analyzing various comedians' sets. And then ultimately, he himself goes on stage as part of his college studies to get experience, try out being a stand -up comic. And it's just like what he's born to do. And it seems like from every interview he's given, and Jerry has given a lot of interviews.

We'll get into why Jerry has given a lot of interviews later in the episode. Yes. He basically said I had one goal. I mean, since middle school, high school, become a successful stand -up comedian. That's it. I didn't have specific goals around other things I wanted to do, some sort of career progression, something I wanted to rise toward, family, hobbies.

I had no goals around anything other than become a successful stand -up comedian. Yep. So at age 22, after Jerry graduates from Queens College, he goes into his career. He makes his stand -up comedy debut at the famous Catch a Rising Star Comedy Club on the Upper East Side in Manhattan in 1976. And just like he did in college in his independent study, he does the same thing.

He tapes himself. He analyzes his own performances. He's performing night after night after night. I mean, this is a level of obsession that is necessary for Jerry to become who he is. But it's also not that uncommon in the stand -up industry. Like, this is what you do. If you are going to dedicate yourself to the craft, you are every night performing, analyzing, just meticulously refining every word, every syllable, every movement that comes out of your mouth and your body.

And stand -up is this thing that is unique among any sort of performance, be it entertainment, music, sports, where you get a real -time scorecard from the audience on something that is entirely within your control. And you might have just come up with it that morning. Let's say you're singing and you manage to write a song and perform it.

This is sort of a long process. Usually it involves other people arranging the music or other musicians playing with you. So in stand -up, it's you and your material delivered through your instrument with a real -time, brutally honest feedback from the audience, whether they're laughing or not. It is as raw as it comes. Yeah, it is a solo act.

He compares it to being a solo athlete, but it's like the most extreme feedback and spotlight version of an athletic performance. Yep. So this is what Jerry does night after night after night. Pretty quickly, Jerry becomes a success as a stand -up. And that leads him to other opportunities in comedy and specifically in television. So in 1979, three years after he begins his comedic career, he gets a call from Hollywood.

They want him to come out to L .A. and join a sitcom, a show named Benson, which I'm sure none of you listening remember. So he's going to get this recurring role on this sitcom. You know, Gray's going to make a lot more money than just playing in the clubs. It's going to be steady work, etc., etc. Well, he's in three episodes and then his character gets dropped from the show.

Doesn't work out exactly as he planned. Which is the common experience in television. Yep. But this becomes very, very important to Jerry and to the eventual show Seinfeld because despite this disappointment with Benson, during that first brief stint that Jerry has in L .A., he performs in local comedy clubs, perform stand -up on the nights and weekends around L .A.

Where one night he gets spotted by the legendary talent manager, George Shapiro, who, along with Shapiro's partner, Howard West, were like the most legendary comedian talent managers slash agents in the business. They had gotten Andy Kaufman, the recurring role on Taxi. That sitcom, that was a huge hit. They were placing their comics on The Tonight Show, which was filming out there in L .A.

at the time with Johnny Carson, getting them exposure nationally. It was all this flywheel between stand -up and TV that was happening. And what Jerry is watching here is, oh, that's how you become successful as a comic to make money. And it's kind of like the next rung in the ladder. But it's not like what he wants is to be in sitcoms. His calling is stand -up and sitcoms are the thing that the industry sort of has for you.

Well, it also becomes a self -reinforcing flywheel for your stand -up act because once you're on TV, whether it's sitcoms or like a regular spot on The Tonight Show, you get national exposure. Then you can tour with your stand -up receiving. And people in cities all across America will know you. They'll buy tickets to your shows. Like that's the way you hit it big in stand -up.

So once Jerry is signed with Shapiro and West, they get him the big break, a spot on The Tonight Show with Johnny Carson. So Jerry talks about this. He trains like he's training for the Olympics to go on for, I think it was five minutes, a five -minute set. And he always talks about how you're taking most of the best material out of your 40 -minute set to create that idealized six minutes to just put your absolute best foot forward.

Yep. So he goes around to clubs and he'll do like the five -minute set as he's practicing for months just to get it down. To go on stage for five minutes, he does it like 200 times in clubs, come off, get the next guy on. He starts jogging to get in shape. He's playing the Superman theme on his Walkman. So in 1981, the appearance happens and it's a hit.

Johnny loves him. Famously, while Jerry is performing, Johnny flashes him an OK sign from the desk so everybody knows it's going well. And that leads to regular bookings on The Tonight Show. And then that leads to Letterman wanting to book Jerry and other variety shows and all sorts of opportunities. And this is where Jerry learns discipline.

Because if you spend five years creating your 40 -minute act and then you get six minutes on Carson, you do your six minutes. Then you get invited back pretty quick. The next six minutes in your act, they're not your best six minutes. They're your second best. Then you're third. Then you're fourth. And he said he remembers watching other comedians just kind of churn out.

Once they got through their material, they stopped being invited back on the show. And so he picked up this discipline of writing for hours a day, keeping steno pads or these yellow legal pads where he would write everything all the time, everything he was observing in the world, so that he could avoid that horrible fate of irrelevancy, of stop being invited back.

If you always are developing material and you kind of always do need to be on this treadmill of developing material, then you keep getting the opportunity. And you can see how this leads into Seinfeld eventually. But yeah, this is the big difference between stand -up comics and musical acts. We're all happy to go to a concert and hear Taylor Swift shake it off again and again and again every tour.

That's exactly what the fans want is to play the hits. You don't want to go see stand -up and see them tell the same joke again. You kind of get it once and then it's over. So eventually this leads to Jerry getting another sitcom opportunity. He gets considered for the lead in a pilot show for ABC called Past Imperfect. Yep. And there's a new production company.

It's a hot ticket. Things are looking promising for this show. Ultimately, the production company decides to go with somebody else because Jerry doesn't have enough sitcom acting experience. Just acting experience, period. Being a stand -up is not at all the same thing as being a great actor on a sitcom. These are two very different skill sets, even though the same people are doing it a lot at this point in time.

But losing the show doesn't matter that much to Jerry because his stand -up act is killing it thanks to all this exposure he's getting on the late night shows. So he's touring basically every week. And he was so popular that he was making on average about $25 ,000 a week from the clubs that he was playing across the country. So call it like a million dollars a year that Jerry is making just from his stand -up touring here in the mid -80s.

I didn't realize that before the show. Because the life of a stand -up, when you're playing in comedy clubs, you get paid in stage time. They're like, you should be grateful to get an audience to test your material. When you go on Carson, I don't think you get paid, at least not anything material. Not significant. And so it's this like building a brand around yourself using the clubs and then using TV shows and then using the late night shows so that you can tour.

That's the first time you're like actually getting paid doing this form of art. And there's not that many people at any given time who are touring headlined artists, comedians making a living. No, Jerry is in rare air here. And this is going to become super important because this is why he has leverage with NBC, which is going to come up here in just a sec.

So Shapiro and West, his managers, are like, okay, Jerry's a big star. He's making tons of money. We're making tons of money as his agent. But like he can do more. They start going to NBC. In fact, George Shapiro starts writing letters, starts a letter writing campaign to Brandon Tartikoff, who is the president of NBC Entertainment at the time, saying, you've got this guy, Jerry, this comic.

He's regularly coming on The Tonight Show. He's doing great. Don't you think he needs a show of his own? Jerry actually has a great quote on this. He says, imagine you have this kid who's been on The Tonight Show like 30 times and on Letterman 30 times. He's on your network all the time. Presentable fellow, seems to do well. Nobody ever thought, why don't we talk to this young man? Maybe we can do some business, do a show.

So finally, in November of 1988, Shapiro succeeds in convincing Brandon Tartikoff and the powers that be at NBC that, okay, maybe we should consider this Jerry guy. So they schedule a meeting to discuss it, but it's not with NBC's comedy department. So the comedy department at NBC means sitcoms. They control the sitcoms. They're not thinking of Jerry as sitcom material.

They're thinking of him as late night material where he's obviously already doing great. Can he do specials for us, which is the direction this ends up going? And, you know, I think probably in the back of their minds, they're also thinking like, hey, can this guy be a host? You know, Johnny Carson's getting older. It would be a few years later that Johnny would retire.

And then there's the whole, you know, Jay Leno, David Letterman drama and the succession. But like this is a couple of years away. You know, maybe Jerry Seinfeld deserves to be in this mix. You mentioned specials. There were network comedy specials. Like Bob Hope would get these specials where he would go and do these routines. So it wasn't like, hey, we're going to pitch you a whole new format called Jerry Seinfeld does stand up on TV.

That was a thing. Yep. So on November 2nd, 1988, at 515 p .m. Local time in Los Angeles, NBC finally takes the meeting. And Jerry shows up. George Shapiro, the manager's there. Brendan Tartikoff, president of NBC Entertainment. Warren Littlefield, who's head of prime time for NBC. And then Rick Ludwin, who heads the specials department, the variety and specials department that they're thinking about Jerry for.

So Jerry says at the meeting, we sat in there. We chatted about, oh, what do you think you want to do? Would you be interested in a talk show? And we kind of settled on doing a special in the Saturday Night Live time slot one week when Saturday Night Live wasn't airing. So NBC says, come back with a script for what you want to do for the special and we'll make it.

I always like when they ask Jerry, so what do you want out of this meeting? And he has some comment like, oh, I actually hadn't really given that thought. Success as a comedian is getting this meeting. So I'm liking this room. I'm excited to be in this room with you right now. I'm just happy to be here. So NBC at the time is in this pretty interesting place.

They had just recently figured out who they were. In the late 70s and early 80s, they did not have a cohesive strategy. It was the classic, we're making anything and everything for everyone. But they turned it around in the mid 80s. So Brandon Tartikoff, who you mentioned, was the president of NBC Entertainment, had developed this philosophy to try to appeal to urban audiences aged 18 to 49 with smart content.

And it worked. They're becoming the number one network. In 1986, GE comes in and buys the company. And they had two big messages. Keep in mind, this is GE. GE, like Jack Welch, GE, General Electric. Yeah. One, you need discipline in your business. You got to pay attention to costs and ensure that everything that you do aligns with your chosen strategy.

You can't just be haphazard. And the NBC guys kind of know this at this point. And two, things are changing. Viewers have way more choices with cable. They're not just going to watch whatever you put on by default. So you need to quickly develop great shows. And if they're not great, get rid of them that are aligned with your business strategy and the audience you want to reach and the advertisers you're trying to reach and stop doing everything else.

So, of course, NBC kind of looks at, hey, this is already kind of working for us. Let's build a real business strategy around it. Hey, this is a very valuable demographic. Urban audiences, 18 to 49, who want to watch smart content. That's a great business to sell to advertisers. This is obvious now, but at the time, that was pretty novel.

Well, it was also novel, I think, for a broadcast network to just have a corporate strategy, period. The other networks and NBC before this point in time, they were just like, we're the broadcast networks. America watches what we put on TV. GE coming in and saying, no, we're General Electric. I'm Jack Welsh, Mr. Black Belt Six Sigma, greatest CEO in American history.

Until it all fell apart. But, you know, at this point in time, you need a corporate strategy. Yes. It's tied to revenue and profits. Yes. Everything that GE does. So the perfect thing to do is sign Jerry Seinfeld to a development deal. Yes. Now, there's just one problem, though, walking out of this meeting when Tartikoff and Littlefield and Ludman, they're like, yeah, yeah, whatever you want to do.

Just come back. We'll come back with a script. We'll make it. Jerry has never written a script in his life for anything, especially not a TV show. But Jerry knows one guy, one of his old New York standup buddies who does have some experience with script writing that might be useful for this special here for NBC. So three days later, after this meeting in L .A., Jerry flies back to New York and he goes looking for that guy, Larry David, late at night after the sets at Catch a Rising Star, where Larry was a regular as a standup comic.

And they got to know each other well during this period where they're just both constantly going up, trying new material. You don't go on till 9, 10, 11 p .m. So you're like friends with other comics just sitting in the bars, chopping it up. As Jerry was coming up as a kid out of Queens College, Larry David was one of the established comics that he looked up to.

But their careers had gone in very different directions here by the end of the 80s. Who was Larry David here in November of 1988? The answer is he is nobody. And he's not even like a promising young nobody who has potential and talent like Jerry. He's 41 years old. He's single. He's broke. He lives in subsidized artist housing. His standup routine has I think the term that people use to describe him at the time was he was a comics comic, meaning that he was appreciated by other comics.

But his humor did not exactly land with audiences. And he had basically been chewed up and spat out of the industry. Jerry said, you know, they always just sort of had like a comedic resonance, the two of them, and had known each other for a long time. But Larry has had this kind of like George Costanza eclectic string of failures that lead to this moment.

So the stories about Larry before Seinfeld, you probably already know them. You just know them as George Costanza stories. So Larry had actually moved to L .A. not for a sitcom, but because he got a job on a show called Fridays. That's right. It was an SNL knockoff. Yes. I didn't know anything about this. ABC here in the late 70s, early 80s was jealous of Saturday Night Live on NBC.

So they decide that they're going to just do a wholesale knockoff of Saturday Night Live. And the only two things they're going to change is one, they're going to film in L .A. instead of New York. And two, they're going to do it on Fridays instead of Saturday. So they call the show Fridays. And they're going to fish in the exact same talent pool.

Yeah. Yeah. They also can't get the best talent out of New York. Two is interested in this kind of stuff because they're going to SNL. So they get Larry David to come out for this. They get a eccentric young comic named Michael Richards. Might have heard of him. Fridays last, I think, three seasons and then gets canceled. But fortunately, SNL says, you know, we could use some extra writing talent around here.

Everybody who was a writer on Fridays will offer you a one year trial. So Larry, he just needs a job. He needs a paycheck. He comes on for one season at SNL. The entire season, he gets only one skit that he writes included on the show. And famously in Saturday Night Live history, one day Larry is so frustrated that what he's writing is not getting on the show.

He flies into a rage, yells at all the producers and screams that he's quitting. And he walks out of the set. And then he's freaking out. He's like, oh, shoot, I don't have a job. I'm not going to be able to pay my rent. What am I going to do? He's so worried. So worried. He goes home. He explains the situation to his next door neighbor in his apartment in part of subsidized housing there in New York, who is named Kenny Kramer.

And Kramer, the real life Kramer says, Larry, why don't you just go back in tomorrow and pretend like nothing happened? So Larry does. Which he does. And you might be thinking, I feel like I've heard this story before. George Costanza does this on a Seinfeld episode. This is the first of many, many, many examples where what you see in Seinfeld is just things that happened in Larry and Jerry's and eventually other writers lives.

But this is the early stew of what would become Seinfeld is mining their own lives for stories. Yes. And most specifically Larry's because Jerry's life is exciting. There's Hollywood and stuff. The funny stuff is happening to Larry. Yes. Also, this is going to become so important once Jerry brings Larry into this project with NBC.

Larry did this and things like this during the one year period where he was working at NBC. NBC hated this guy to the extent he had any reputation. It was as a loser and somebody who like could not function in any sort of corporate environment and NBC wanted nothing to do with. And he turned out to be a genius. A genius. And one of the best comedians and writers that the world has ever seen.

Yeah. Yeah. So during that ill -fated year for Larry at SNL, he also intersects with a young woman on the cast named Julia Louis -Dreyfus. Who also had a very short stint at SNL and kind of churned out of it. Yeah. I think she lasted two or three years, but they bond over, you know, not getting any airtime or their material on the show. So back to this night here in early November 1988, when Jerry goes looking for Larry at Catch a Rising Star.

This is what's on his mind. Hey, my buddy Larry has experience writing this kind of stuff. Fridays, SNL. He's been on TV. He can help me flesh out what we can do with this opportunity. So he finds Larry. They go out for a walk together. Jerry explains to Larry what's going on. And they stop at a Korean deli there in the Upper East Side. Lee's Market, which is right near the comedy club.

And when they're in the deli, they can't help themselves. These are two comics together. They start making jokes about all the products here on the shelves in this Korean deli. Larry makes a quip about Korean jellies. And Jerry looks at some fig bars and says, it looks like somebody made these in their basement. And the words come out of Jerry's mouth.

And Larry turns and looks at him and says, this is it. This is what the show should be. This is the kind of dialogue that we should do on the show. You know, two guys just just talking like this. They're both excited, inspired by this. They said, OK, OK, great. Let's meet up again tomorrow night after our sets. So the next night they meet up again.

They go to the Westway Diner on Ninth Avenue. It's around midnight. And Jerry says to Larry, you know, I've been thinking about what we came up with last night. You know, the number one question I get asked, I'm sure you get asked to be in standups is where do you get your material? And Larry says, bingo. That's how we set up the show so that we can do that kind of dialogue on the show.

The premise will be how do standup comedians get their material? Jerry says, yes, yes, great. The comedians, they get their material. They do this. And he's just gesturing with his hands to themselves there at the table in the coffee shop, hanging out with his friends. And at that moment, Seinfeld is born. Which you'll notice nowhere in there did David say the words a show about nothing.

That has nothing to do with how the show Seinfeld is born. Later on in the show, Seinfeld is so meta. They would do a season arc where Jerry and George are creating a show called Jerry and pitching NBC about the show. That is a show about nothing. And then, of course, that gets co -opted to be like, oh, Seinfeld in real life is a show about nothing.

But no, no, no. The premise is the show is about how standup comedians get their material. Yes. And so this leads Jerry to believe, OK, whatever format this takes, I'm playing myself and I'm not just playing someone named Jerry. I'm playing someone with my sensibilities, with my observational humor about the world. I'm not going to cast myself into a character that is super different.

I don't want to do that. I'm not acting. I mean, we all know Jerry can't act. Yeah. Roseanne Barr, the comic who did Roseanne. Like, she's not playing Roseanne Barr on Roseanne. She's playing a sitcom character. It's a slightly different Jerry Seinfeld. I mean, the version on the show is in a little shoebox apartment and this guy was making a million dollars a year flying around.

So there are differences. But still, it's pretty true to personality. And again, you can see how this all takes shape because nobody's thinking about a sitcom here. This is a one -off special that they're going to do. Right. So that brings us to the next month, December 1988, when Jerry returns to NBC in Los Angeles to meet again. This time bringing both a pitch for the idea for the script and a partner, Larry.

And NBC, as you might expect, doesn't exactly like either of them or especially at least doesn't like Larry. But nonetheless, the two of them, Jerry and Larry, walk out of that meeting with probably the most valuable TV deal that has ever been made in all of television history. But before we tell that story, now is a great time to thank our brand new presenting partner this year, Sierra.

Yes. All of the leaders of the world's most important companies today are wrestling with the same question. In a world where everyone has access to the same intelligence, what is my competitive advantage and what is the right way to turn AI into revenue for our company? That's where Sierra comes in. First, your customer relationships are your competitive advantage.

When you deploy Sierra's AI agents, every interaction adds to your understanding of that customer, deepening the relationship and generating insights that compound over time. Second, you should pay for outcomes, not tokens like an insurance claim paid or a sale closed or a customer retained. Sierra's pricing model is quite novel in that way.

Sierra is already the leading platform for customer service agents, everything from account sign up to troubleshooting, subscription management. They work with over 40 percent of the Fortune 50, one in three of the world's leading banks and five out of the 10 largest health care companies. And their agents can also handle complex workflows that generate revenue, too.

So think about appointment booking in health care or refinancing a loan in financial services, things that can take weeks or months and span across voice, chat, email and WhatsApp conversations. And they just introduced a new product, Personas. Instead of every AI agent sounding the same, you know, polite but slightly robotic, you can give your agent a distinct voice and personality, tailoring its tone, humor, even the rhythm of how it speaks to your brand.

And great brands should have a recognizable character to them. And your company's agents should match that same character that you have worked hard to create. How an agent speaks impacts customer trust. And Sierra told us that one of the largest telecommunication companies in the world just introduced a new voice and persona for their Sierra agent.

And the rate it solved customers' problems increased by nearly 50 percent, five zero. So to find out how you can build standout customer experiences that grow your business with AI, visit Sierra .ai slash acquired and just tell them that Ben and David sent you. So, David, Jerry and Larry, they've got a TV deal, right? There's a show? Well, right.

So Jerry and Larry have this TV deal that would go on to become arguably the most valuable television deal in history. But NBC isn't sure about the idea and they definitely aren't sure about Larry. Why on earth do they go through with this? Well, one, as we talked about this whole, you know, comedians crossing over into television is currently hot, so they're motivated to do it.

It's part of their corporate strategy, which in general, you're probably going to get eyeballs if you bring in a brand name star, a star in a show, young male comic. You want your young male audience in urban areas, et cetera, et cetera. Great. But two, more important, at the end of the day, this is just a one off 90 minute special that they're talking about here as a commitment.

This is not a big deal. If it doesn't work, it doesn't work. Like they decide in the meeting. Great. Okay, fine. Let's call this thing Seinfeld's stand up diary. Oh, I never caught this. Yeah. Oh, there's a name before the name before the name. That was the original working name for the show when it was still in this conception as a one off special that was going to be about how Seinfeld got his material.

And then the premise was going to be at the end of the special. You would see him on stage doing his stand up material that he got throughout the episode. Ah, okay. What's the name again? Seinfeld's stand up diary. Okay. This is so fun to see how like all the rough edges get sanded off. So it eventually becomes the thing we know. Totally.

Totally. Okay. So the deal, what's the deal? Why is it so valuable? How much is NBC going to going to pay these guys? Well, actually NBC isn't going to pay them anything directly because at the time NBC could not legally own the show. Thanks to rules from the FCC at the time, broadcast networks were prohibited from actually owning the content that they broadcast on the networks.

A set of rules called financial interests in syndication or FinCyn. Yes. So time for a little history lesson, listeners. So today, you know about these like media conglomerates. But before that, the TV networks were entirely separate companies than the production studios. So NBC was its own thing, totally separate from Universal. CBS, just a broadcast network, nothing to do with Paramount.

ABC, separate from Disney. So the networks, ABC, CBS, NBC, right when TV production started in the 50s, they need to hire the production studios to make stuff for them to broadcast on their networks. Some of these studios were very large, like Paramount or Universal or Warner Brothers or Disney. Some of them were really small, like MTM Entertainment, which is named after the Mary Tyler War Show.

Or Desi Liu of Desi Arnaz and Lucille Ball. Yes. Interestingly, the big guys, the big Hollywood studios getting into making TV, we talked about on our Disney series, it was Walt Disney that started doing that. Originally, the Hollywood studios kind of boycotted TV because they were worried about it as a threat to the film business. Walt was the first one who was kind of the visionary.

No, no, no. These broadcasters, there's so much money that's going to be made here as television sweeps the nation, and we're going to be the best arms dealer for them. And if we flash all the way forward, way more money was in TV than movies. Way more. Way more money in TV. Walt was incredibly right. When you look at where the cash gushers are in the entertainment industry over the last 40, 50 years, it's come from TV, not from movies.

It's kind of one of these jokes in Hollywood that we really learned about studying for this episode. All the glamour goes to the movie stars and the movie directors and the movie executives. The richest people in town were always the TV guys. Yep. Yep. Okay. So back to the, call it 60s, the way that the deals worked between the networks and the studios were called deficit financing.

And this is crazy that this is how it works, but is. The networks would not fund all the production costs of the show. So they would greenlight something, find the production company to make it and say, we'll pay you 60 to 80% of what it costs to make the show. Cause we're like in this case, this special with Seinfeld and Larry David. Right.

Cause historically these networks are cash conscious. And so they'd rather save 20 to 40% of the budget of the show and we'll give up some future upside, but you know, that's okay. Right. Well, in return, the production company would own the show. Yes. So because NBC is not totally covering the costs, they're leaving this deficit. They just get a license to the show to air it on their airwaves once, twice, very limited license.

But that meant that the studio was still in the hole for the rest of the funding to make the show. But you know, it is sort of fair. The studio gets to own the rights to that show in the future to monetize it when there's things like international ways that they could license it or merch or later home video or the eventual huge cash cow of syndication or reruns of the episodes on other networks or on cable channels or something like that in the future.

But then the network started including one deal term that was a very, very favorable to the networks. They overreached and they demanded a large cut of the future syndication revenue, even though they were not fully funding the costs to produce the shows. Ah, I didn't realize that there was a period in the 60s where the networks could own syndication rights.

Yes. So studios, of course, as you would expect, complain to the government and they say, this is ridiculous. Like they're not funding the whole thing, but they're making it so we can't make money now and we can't make money in the future. So in 1970, the FCC issued the thing that you mentioned, David, the Financial Interest and Syndication Rules or FinSyn.

And these rules prevented the networks from owning a financial interest, which mostly meant from participating in the future syndication of shows that they were buying from the studios. So this created a true separation between networks that aired the shows and the studios who make the shows. You've got a buyer, you've got a seller. It's very clean.

Yep. Yep. But then by the late 1980s, flash forward, I don't know, 20 years or so, the networks are now the ones complaining. Cable shows up and a lot of the consumer attention is leaving the network and going to cable. And the networks argued, well, we need more latitude and operating our businesses to effectively compete and make profits.

You might remember this from our Disney episode where we talked all about what opened the door for Disney to eventually buy ABC. So by 1993, the networks won, FinSyn is repealed. The net of this is networks actually can produce their own shows from 1993, 4, 5 onward. Yep. Which means that they'll own those shows in perpetuity. Yes. But here where we are in the Seinfeld story, 1989, it is like the tail end of the FinSyn era.

And the way it works is NBC is not allowed to own the actual intellectual property of the show. They must say, hey, go find a production company, make the show, and then we will pay you 80 -ish percent of what it costs to make it in order for the right to air it on our airwaves. Yep. And that dynamic back in that era had set up this incredible entrepreneurial ecosystem where you had these independent production companies and the creators they work with who got actual ownership of the shows and the syndication rights.

It's almost like Silicon Valley startups, this like capitalistic entrepreneurial incentive to go make these amazing things. And Seinfeld is one of the last ones out of this system. And it had power law dynamics where just like the venture capital industry, most shows fail. But for the shows that succeed, they succeed massively. And the cap tables are like a bunch of individuals or a small production company.

It's not like all the profits just go into a big network the way that they do today. So you actually could have literally exactly like Silicon Valley power law outcomes to individuals on a cap table. Yep. So back to Seinfeld and Jerry and Larry and this meeting with NBC, when NBC says, we will promise you, we are going to make what you are pitching us.

That is an extremely valuable commodity that they are giving Jerry and Larry because they're saying, yeah, you know, go get a production company and you work out your own deal with them, but we'll make it. Usually it's reversed. The production companies are making pilots and concepts for specials and scripts that they're pitching the networks and desperately trying to get the green light to air them.

NBC is now saying to the individual creators, to Jerry and Larry, you go find your own production company, cut your own deal with them. We guarantee we'll make it. This is like free money to use a Silicon Valley analogy. It's like if you're investing in a series A and somebody has already guaranteed that they're going to market up 10 X in a series C afterwards.

Right. You write this check and then there's another check waiting right here for you. Yep. So Jerry and Larry and the agents Shapiro and West, they're just given the golden goose here. So this is where that very nice production company, back when Jerry was being considered to be cast for that ABC pilot comes back into the picture, Castle Rock.

And, uh, Jerry says to George Shapiro, all right, great. Well, why don't we just use those guys from last year? They seem nice enough. And boom, Castle Rock becomes the production company. Now, Castle Rock, you might know of it, or you might just know of it from watching Seinfeld episodes and seeing their title card at the end of the screen.

Ben, what's the awesome history of Castle Rock? All right. So we're going to go back slightly pre -Castle Rock. In 1982, Columbia Pictures, the major Hollywood film studio, yep, gets bought for $750 million by, long -time listeners will know this,

Coca -Cola. The Coca -Cola company. Acquired episode crossover. Coke is trying to get into the movie business. They just had a new CEO, Roberto Goizueta, take the helm and is, is trying to diversify. And I think part of the rationale here is like, oh, Hey, Coke products in movie theaters, films, and then product placements in movies. What if we just own a studio? There can be some efficiencies here, some diversification as you say, but you know, sure, whatever.

Maybe. Okay. So that's Columbia and Coca -Cola. A few years after Coke buys Columbia, Castle Rock Entertainment is formed in 1987 by five partners, including Rob Reiner. The successful young actor and director. He'd been on All in the Family and directed Spinal Tap, I think, and The Princess Bride. Yes. Great movies. And the idea is to be a studio by artists for artists, really talent friendly, flexible, and easy to work with.

Yep. And funded by the big bucks from the Coca -Cola company. This is the craziest thing. So Castle Rock is just this little thing with five partners that needs to get off the ground. Independent production company in the Silicon Valley style we were just talking about. Right. It could end up being very, very valuable because they're going to own the forever rights to any downstream revenue after the first run on television of any shows that they make and any of the movies they make.

But for now, it's just five guys. They find their way through Columbia Pictures to Coca -Cola. And Coca -Cola invests $30 million at founding of Castle Rock. So the studio that funded and created Seinfeld was itself Coca -Cola money. Amazing. Why do you think Jerry drinks Diet Coke in Seinfeld? So at Formation, Castle Rock is owned 60% by its founders, 40% by Coca -Cola.

And part of this deal is that Columbia would get to be the distributor of any films and TV shows that Castle Rock made. Yep. Which doesn't matter that much right now. But later on, you need a distributor in order to sell the syndication for reruns anywhere where you're going to put reruns. So it's kind of a nice thing to put in the contract right now.

Hey, we get to be the distributor down the line of anything you make. In November 1989, right around the same time that Seinfeld is kind of getting started here, Sony buys Columbia from Coke, which means the distribution rights that Columbia had goes to Sony. To Sony. Yep. In addition to a minority stake in Castle Rock itself. Sony did get the minority stake of Castle Rock, but they don't control it.

So that distribution right goes with Columbia to Sony. Yep. But the actual IP ownership stays with the independent Castle Rock. Mm -hmm. And this is all going to become very, very important to the financial incentives behind Seinfeld as we go here. Yes. So taking a step back here, you're probably like, why don't I need to know all of that? And what's the bigger picture here? Just think about the incentives.

If you're Castle Rock and you own the rights, all of your returns are super backloaded. If you make a show, like, great, I'm going to make a show for $500 ,000 an episode. You're only getting paid $400 ,000 an episode by a network to buy that show from you. Right. You have the rights to lose money on every episode. Right. Every episode you make, you're like, oh boy, I hope this does well.

But you just keep losing more and more and more money every single episode. You don't make money until five plus years down the line. Again, much like the venture business, when that show goes into syndication, or the foreign rights get sold, or merch becomes big, or home video becomes big. And same for those distributors. The distributor doesn't do anything when a Castle Rock is selling a show to an NBC.

So that whole apparatus of Castle Rock and Sony is just sitting there on their hands saying, so when do we get to stop losing money? Meanwhile, the networks are sort of in this rental business where they are renting content to show it. I think the contracts usually say we get to show it once and show ads against it on a big night of television and prime time.

We also get to show it one more time, maybe next summer or something when there's nothing on the schedule. But after that, all the rights revert to the IP owner, to the studio. And so the whole business of network is just, we're going to rent content that we are legally not allowed to own, and we're going to bet that we can sell more ads than it costs us to rent.

So they run a very short -term business while the studios and distributors run a very long -term business. It's just like Silicon Valley. They're betting on the equity value in the long run. Yes. So back to Seinfeld's stand -up diary here. Larry and Jerry having the guarantee that NBC is going to make this thing is so valuable to any production company they work with because the idea is this is going to be a one -time special, and it's guaranteed to be made by the networks.

So any production company that comes and works with them to make this thing, it's going to air right away on NBC. Maybe it'll do a summer rerun on NBC, and then it's theirs. They get it to go sell it to HBO or Showtime or whoever, sell it internationally, run the whole business model on the back end right away, guaranteed, no need to pitch the networks, no need to put capital into developing pilots that might not get picked up, et cetera, et cetera.

Awesome. Yep. But you don't know how big it's going to be. Is this thing going to be worth anything to sell to other networks and syndication? Sure, sure. Probably not. It's a one -time special. Right. Nobody's thinking about this as a sitcom. It's a special. But what this allows is Jerry and Larry, via Shapiro and Wes, the managers, the agents, to negotiate a huge percentage of the back end, essentially the equity in this piece of content with the production company.

Ah. Because nobody thinks it's going to be worth that much, and there's no risk. There's no risk. Jerry and Larry have all the leverage. They could take this to literally any production company in Hollywood. Right. And so choosing Castle Rock, they can essentially write the deal terms. So it's never come out exactly what the deal terms are.

You're just sort of the cap table, essentially, of Seinfeld the show, because the only people who really know are Jerry and Larry and Castle Rock and then Shapiro and West. But it's reported that Jerry and Larry each own 15% of the show, which is huge. And spoiler alert, Seinfeld is going to make billions and billions and billions of dollars.

And Jerry and Larry are going to get 15% each of that. Yeah. And they have this very clever way of dealing with it in interviews, because someone will say something like, you've made X hundred million dollars, and they never quite deny it. They say, that's preposterous. That's an insane number. That's a ridiculous number. And it's true. It is a ridiculous number, the hundreds of millions of dollars that end up coming out of this.

But it's not, they're not saying it's wrong. Or even when they do say it's wrong, they're not saying by how much. So someone throws out, it seems like you might have made over $600 million. And they go, oh, that's not the right number. Right, right, right. But you didn't say that it wasn't in the ballpark. So it's just one of these funny, it's admirable the way that they handle it, because it's so true to form.

Yes, yes. But this is why this crazy, unlikely stand -up special ends up becoming the most valuable deal probably in the history of television for these guys. So as best we can kind of figure out by what's been publicly reported, ballpark it at 65 -ish percent left for Castle Rock. The interesting thing to know is, usually the way a distribution deal works, because remember, Sony owns the distribution right eventually, that usually looks like 15% off the top.

So that's like everyone gets diluted down 15% because whoever Sony manages to sell it to, they get the first percent off the top. And we've seen different numbers, we've seen 15, we've seen 30. There's lots of reason to believe it's 15. So simplifying this a little bit, you can essentially think of the water flow of Seinfeld's billions of dollars of syndication profits as 15% to Sony, 15% -ish, a little less because of the Sony dilution, each to Jerry and Larry, 5% -ish to West Shapiro, and then 50% -ish to Castle Rock and its successors, shall we say, as we go along here.

So once all these various parties are in place, they need to go, you know, write the script for this thing. So Larry and Jerry, they go off, they start working on the script, but they have a tough time coming up with 90 minutes worth of stand -up material to do the expose, if you will, on how it gets into comedian sets for the special. 90 minutes of stand -up material is a lot of stand -up material.

It's an eternity. It's really hard to be funny for 90 minutes. So as they're working on it, they're banging their heads against the wall. They also realize that there does need to be some kind of semblance of a story, I put story in quotes, or, you know, some situations to get the characters into the scenes where the conversations would happen that would lead to the stand -up material.

So Larry floats an idea. What if we just do this as a standard 30 -minute sitcom pilot, which a standard 30 -minute sitcom is only 22 minutes of actual content, you know, 22 minutes, great. Like that is a manageable amount of stand -up material that we can come up with for this thing. And doing it as a sitcom here, that'll give us some story reasons, enough situation, situation comedy sitcom to get the characters into the scenes so we can say the dialogue, etc., etc.

And the way that we'll make it all fit is, Jerry, what you want to do anyway, like you said, Ben, you just play yourself in the sitcom to end in the stand -up. So the script for this first pilot that they come up with, the first initial script that they're going to pitch back to NBC, is that Jerry is supposed to go on The Tonight Show, you know, NBC tie -in Tonight Show, but he doesn't have any new material.

So he needs to pull his act together and he's hanging out with his friends, particularly his Larry -like friend, George, to get the material. And then at the end of the episode, Jerry's going to perform it on The Tonight Show. They go back to NBC, they pitch the new version, and they have a new title for what this is to reflect the shift from a 90 -minute special into a pilot, essentially, for a sitcom.

I'm going to change it from Seinfeld Stand -Up Diary to The Seinfeld Chronicles. It's going to be an ongoing chronicle of Jerry's stand -up material. Which, if anyone, like me, now has the DVD box set, you can watch the original version of the pilot that airs, not the edited version later, that is actually called on screen The Seinfeld Chronicles.

Indeed, indeed. Once again, NBC, somewhat surprisingly, just says, okay. Jerry has a great quote about this. He says, every step of the way, we were waiting for somebody to come in and say, you can't do this on network TV. But nobody did. Because it's just different than everything else that's on network. It's like a sitcom that's not a sitcom, really.

We just needed to kind of like borrow from the sitcom format to accomplish our goal of how a comedian gets its material. And it's like not even happening in the comedy department. It's happening through these late night people. Through the late night department, the specials department. This is part of why they say yes to this change in plans, because it actually makes their life easier.

Previously, they were going to have to fit a 90 -minute special into the calendar. Wait, you're telling me now I only need to give you guys 30 minutes? Sure. Whatever you want to do. No problem. So they sort of sail through NBC here. In a wholly unprecedented move, the net of this is that NBC's late night and specials department okays a sitcom pilot.

This has never happened before. The show just stays in late night. And just so listeners understand what we're talking about, the comedy department that has at this point, what, the Cosby show? It has Cheers. It has like a bunch of hits. They've got a whole process for reviewing scripts and giving notes and working with the creators. And the late night department's just like, uh, it's really easy to say yes, because it's even easier yes than the thing we already said yes to.

And they just get to skip all the comedy department checklists and committees. So NBC says okay. And Castle Rock, now the production company, and Jerry and Larry are like, well, all right, let's, uh, let's cast this thing. Let's go make a pilot. So Rob Reiner at Castle Rock suggests that they should look at a mostly Broadway actor at the time named Jason Alexander for the part of George.

He felt, and Jerry and Larry certainly agreed that they needed a really polished, like, like really, I mean, Jason Alexander is an incredible actor. They needed a really, really great actor to play opposite Jerry, because Jerry is not a great actor. He was about to win a Tony a month later. Yes. When Jason came in to read, they were like, this guy's unbelievable.

He's perfect for it. Later on, Jason would sort of figure out, oh, this character is kind of Larry David. He's not exactly Larry David, but he's loosely based on him. He actually thought it was a Woody Allen character at first. Yes. So he came in and sort of did a Woody Allen impression for George. Next, they need to cast Kramer because Larry has decided to write his eccentric neighbor into the script here for the pilot, but he's not calling him Kramer just yet.

Kessler, is that right? Kessler. Yes. He's like, oh, I don't want to make it too on the nose. And also, if we call him Kramer, then like, we're going to have to pay this guy or do some kind of rights situation. So they call him Kessler. The funny thing is, eventually they realize, and this is so Larry David and Jerry Seinfeld, they are looking at the page, they're saying the name out loud, and they just realize, no, of all the names we can think of, Kramer is actually the funniest name.

It just sounds funny. Yes. Something about it that sounds funny. And funny is the most important thing. Everything else is secondary to that. We have to go with funny. And so they name him Kramer. And then, of course, it's the best thing that ever happens to the actual Kramer because he sets up Kramer's New York tours in New York City. Right.

So they need to cast the character. And Larry says, I know the perfect guy from my days back at Fridays, Michael Richards. And that's how Michael Richards joins the show. George Shapiro has this great quote. Michael Richards was standing on his head while he was doing his lines, a yoga pose. And Brandon Tartikoff goes, well, if you want funny, this is at the audition.

This is how he's preparing to go in and audition for this role. Yeah. I mean, again, this is so off the wall compared to anything that would go through the normal process at NBC. So then they need to cast the fourth character, a woman, the character of Claire, the guy's regular waitress at the diner played by Lee Garlington. There's no Elaine in the pilot.

So cast Claire, they shoot the pilot and then they bring the NBC executives in to screen it. And they're not sure. Interestingly, the comment that really sticks out from this session is that some of the executives thought it was to New York and to Jewish. Yeah. Which is quite ironic because basically the entire origins of American comedy are New York and Jewish, but they didn't wear it quite on their sleeve the way that Jerry did.

I mean, this is they named the show Seinfeld and it has this like, I don't know how to put it other than this very Jewish type of humor, the sensibility, the timing, the observational humor, the persnickety -ness, the crankiness, the like the detail oriented, the obsession. It's a really good point. The Jewish tradition of comedy really was the main lineage of comedy in America.

I mean, the Marx Brothers, George Burns, like basically everybody that came out of Audville was Jewish, but they changed their names. They didn't wear it on their sleeves. It wasn't as obvious. I think the thing the NBC executives didn't realize is that here by the late 80s, it kind of didn't matter anymore. Everybody knew Woody Allen was Jewish.

He was the biggest name in comedy. The other point in this is nobody knows anything. Yeah. It's Seinfeld, right? It would go on to become Seinfeld and they're like, eh, I don't know. Yeah. So they test it. They're like, we should proceed with our standard testing and feedback. We'll recruit a test audience to watch this thing. Right. The practice at the time, and I know this is super interesting.

They would cold call, they had a research department would cold call a bunch of houses to recruit 400 households to watch a unused channel on their cable system at a certain time. And if you knew to tune in and you had the right hardware, you would tune in and then you would see the pilot pop on. And then I think there's like nothing else afterwards.

You're like just watching this one channel at this one time. The researchers then convene these people or call them and ask them a standard set of questions. It tested horribly. Horrible. Like the network executives were just a foreshadow of how people in the world saw it. Some of the most infamous comments that came out of this is, uh, one, you can't get too excited about going to the laundromat, which is where most of the pilot takes place with Jerry and George at a laundromat.

And Jerry and George have this whole discussion about what it means that this girl who's coming into town wants to see Jerry when she's there and is she going to stay with them? And like, how much should they read into it? And like, when he greets her at the airport, are they supposed to hug? Is she going to hug him? Like just overanalyzing the crap out of this situation, but they're having the conversation while in a laundromat, which is where a lot of the feedback sort of focused.

The other quotes include Jerry's loser friend, George, isn't a forceful character. Jerry needs a stronger supporting cast. And why are they interrupting the standup for these stupid stories? Yeah. If the viewers liked anything about it, it was actually just Jerry's standup. But even that didn't test that strong. The recommendation from the research department to NBC was if you're going to air this, and then if you're going to green light this and you're going to do something with Jerry, it should be standup and it should be better than this.

Yeah. Uh, my favorite, uh, quote from the pilot research report was no segment of the audience was eager to watch the show again. And the overall pilot performance was rated as weak. And Jerry and Larry did not see this memo for several years, but once it was brought to their attention, they hung it on the wall of the bathroom. Yes, that's right in the bathroom of their production office on the set.

So they do air it. They do air it in a, um, time and day slot where the network notoriously burns off not very promising pilots. They air it on July 5th, 1989. Not a lot of people tuning into television on, uh, July 5th in America. And with that 99 times out of a hundred in history, that would have been the end of the Seinfeld Chronicles would have gotten put out to pasture with many, many, many other failed pilots.

NBC does not pick up the show for a season run that fall in 1989. Instead, NBC picks up two other sitcoms over Seinfeld and all the other pilots that they ran the nut house and sister Kate. You probably don't remember them. Yes, exactly. Just to prove your point, Ben, that nobody knows anything that would have been the end, except that back in the late night and specials department at NBC, they keep thinking about this Seinfeld thing.

I mean, they love Jerry. They want to do something with Jerry. And they're like, yeah, I mean, everybody was worried. It was too Jewish. It was too New York, but, but I'll be damned if it's not funny. Like it was just funny. And even though most people didn't like it, there was a small group of people who completely got it. It's like any successful startup.

You're not trying to be a seven for everyone. You're trying to be a 9 .9 for a very small group of people that you can then figure out how to get those super fans to tell their friends. There were people at NBC that were like, this is the future. This is what we need to do. We need to be in business with Jerry Seinfeld and this brand of comedy.

And it was Warren Littlefield in primetime and Rick Ludwin in specials. And so the two of them come together and they hatch a last ditch plan to give their little baby another chance. They decide, well, since we've been doing this out of specials, what if we just cancel one of the other one -off specials that we were going to do and use that budget to place an order, a season quote unquote order for this show that we love.

So they cancel one two hour Bob Hope special that they were planning to do on NBC that fall. And instead they use that budget. They call up Jerry and Larry and say, great news. We are ordering a season of the Seinfeld Chronicles. Jerry says, great. What's the order? Four episodes making it, I believe the smallest first season order in television history.

And didn't you talk to Warren Littlefield about this? Yes. Yes. So the quote from Warren about how this conversation went down, he says, I called Jerry to tell him the good news. There was a long silence over the line. Jerry finally asked me, has any show in the history of television ever succeeded with just four episodes? And Warren says, I didn't know.

And that's exactly what I told him. Probably not. If anybody knows, it's probably the head of primetime at NBC. Yep. Jerry's telling Larry in the background as they're having this conversation. And Larry famously reacts to this with, that's fine. I think four episodes is all I got in me anyway. It's The ultimate Larry David line. Larry David would go on to be the head writer of 135 Seinfeld episodes.

Yep. Yep. So they've got the order. And Jerry has later said in other interviews that he and Castle Rock were looking around for other buyers because they assumed that NBC was out, which is a fair assumption. Fox actually made an offer and guaranteed 24 episodes. But Jerry wanted that NBC imprimatur of a real network. Well, Fox was also a startup network at this point in time.

It was not Fox that you know it today as one of the major broadcast networks in the US. Jerry has phrased it as it wasn't the major leagues and I wanted to be in the majors. And so they went with NBC's four episode deal instead. Yep. So they get the order and NBC is like, we trust you. But there's some problems with this show. So in particular, the worst scoring demographic in the pilot was women.

Yep. Women don't relate to this show at all. And usually what we do here at the network is we just add a character from that demographic group to the episode. So I know you guys have got Claire, the waitress. She needs to be hanging out a member of the group. Yep. Which leads to the network's, I think one, I think one good creative note in the history of Seinfeld, which makes the whole show work.

You need a girl in this thing. But before we tell the story of Elaine, now is a great time to talk about our good friends at Anthropic. Fantastic. Yes. The makers of Claude. And David, I want to start with that research memo about the pilot. Yes. Viewers didn't really like the cast of supporting characters. They thought the scenes of Jerry and his friends just hanging around were boring.

Not good. Yeah. But in 1989, they weren't wrong. I mean, there wasn't really anything to come back for yet. The show that people couldn't stop watching that it would eventually become was really built out over those nine seasons of shared history. So all the things, you know, Vandelay Industries, Festivus. Yes. Every single time that Newman walks in and goes, hello, Jerry.

All of it gets so much funnier the more you see. Yep. And Anthropic just did the same thing with Claude. For most people, every conversation with an LLM has been like the Seinfeld pilot. You explain what you're working on, how you like things done. And the next time you sit down, it has no idea who you are again. Now, their new memory functionality carries across chat and co -work.

So all of that accumulates no matter where you're working in Claude. And for teams in Slack, Claude Tag does this for your whole team. One Claude in the channel that's read every thread, knows the standing instructions, and can notice things nobody asked it about. So the value basically just keeps building the more you use it. A conversation with Claude isn't disposable anymore.

It carries into the next one. And so if you want to learn more about how Claude can help transform your chats into tangible, memorable work, check out Claude .aii slash acquired. And if you are inquiring about enterprise usage, just tell them that Ben and David sent you. So adding Elaine. Yes. Arguably makes the show. I mean, when you watch the pilot, you're like, oh, yeah, there is a giant ingredient missing.

And it's not just because the couch is weird and Jerry's apartment's weird. And like there's an Elaine shaped hole in the show. Totally. Elaine makes the show. And it's not just NBC's note of you need a girl. It's so much more than that. I mean, yes, adding a female character gives Seinfeld a lot more appeal to more demographics than the pilot did.

But the character of Elaine is also this incredible act of subversion to the network. Because by you need a girl in it, NBC meant give Jerry a love interest. And that is not what Larry and Jerry are doing with Elaine. And I think it's really what establishes what Seinfeld the show is. Yes. Because if you look at every other sitcom, I bet NBC felt like they didn't even need to give the full note.

Give Jerry a female friend who will have an on again, off again. Is there a flame here? And then eventually end up together and give the viewers what they want. It's Sam and Diane in cheers. Yes. It's Ross and Rachel. Blah, blah, blah. Eventually, Jim and Pam. Like, this is the formula. And the way that Jerry and Larry chose to interpret the note is literally.

But we're not going to do any of that other stuff. Yeah, we're just going to need a girl. So George Shapiro, the talent manager, has a great quote about this, about what you need a girl means. He says, The network wanted Jerry and Julia to be married or dating. That was normal network thinking. Fortunately, we had two creators who didn't give a crap.

Jerry and Larry felt strongly that Jerry and Julia shouldn't have a relationship. And they were ready to walk away from the show because of it. And the way that they pulled this off is Elaine is a former love interest. Yes. Like, they've already had a relationship and it didn't work and they broke up. And so, viewers, you don't even need to take your minds there because we already told you it's not going to work.

There is one episode where they explore it. The deal, yes. Incredible episode. But then after that, I think that's the end of a season. They come back the next season. The whole thing is forgotten. They don't take it anywhere. These characters are not a love interest, period. That episode, the deal where the two of them re -explore the romantic relationship is even more subversive to the network.

Because they do it, Larry and Jerry do that episode, and then they just never mention it again. There's no resolution. There's no, they continue. They didn't continue. There's no development. There's no relationship. It's just, eh, that didn't happen. This show would go on to be number one by throwing out the playbook entirely and going straight off of the thing that Jerry and Larry wanted to make with no reverence for the roles that you were supposed to do to get to number one.

Exactly. So, this is why, you know, when I said that the Elaine character makes Seinfeld what it is. What is Seinfeld? It is a merging of stand -up and the sitcom. Just like the whole development of the show, this is what it's leading to. Like a sitcom, Seinfeld the show has continuity of characters, places, relationships, across episodes, across seasons, across years of the show.

You get to know these characters. You know the apartment. You know the coffee shop. You know George just can't help himself. Yeah, yeah, yeah. Every time you can count on them to do the wrong thing, to see the temptation and to give into the temptation. And by creating these consistent characters, it helps have a framework for those jokes.

What does stand -up comedy not have? Continuity. Consistency. That doesn't exist in the stand -up world. Okay, now flip it on the other side. Like stand -up, Seinfeld doesn't have any development of these characters and places and relationships. Jerry is always Jerry. George is always George. Elaine is always Elaine. You can tune in on any episode.

There's no development of the relationship. The characters, they never learn anything. The places don't change. The apartment is the same. The coffee shop is the same. It's a situational comedy. But the situation is static. Or I would say the characters are static. The characters are vessels for humorous situations. Whereas they call them sitcoms before that, but really what they were were these...

They were dramas with jokes. Yes. And Seinfeld drops that and just creates situations that are inherently funny with characters that are static. Versus needing to insert isolated jokes to sort of lighten the mood of a dramatic situation that has a beginning, middle, and end. And those dramatic situations, as we were pointing out with the network note, sort of the unsaid subtext of you need a love interest, are almost always either romantic relationships or family relationships.

And they develop over the course of the show. And the characters grow and learn and change and come together. Seinfeld is so radical by saying, absolutely not. We are not doing any of that. So one of the writers that I talked with for research is Jeff Schaefer. And he wrote for the show in the later years. His comment to me was, the plot itself has to be funny when you retell it.

That's how they know they're on to something. If literally describing the situation is the humorous part. And the best illustration of this is how Seinfeld episodes end. They don't resolve the plot in a satisfying way. It's just like stand -up. When the joke ends. There's no consequences. It's just funny. Right. So the characters find themselves in a tough situation.

But there's sort of no funny arc remaining after that. That's okay. The show just ends. Freeze frame. Bum, bum, bum, bum, bum. Bum, bum, bum. You don't get to know how they get out of the jam. There's no continuity into the next episode. They start fresh next episode. It's literally a stand -up act. But the people are in the situations instead of the jokes being purely verbal.

Yep. You led me right into the perfect Jerry quote about this. He says, I personally believe that what Larry and I brought to the sitcom format, a 22 -minute format, was a stand -up comedian structural sensibility. We didn't really have time to tell what the characters were all about because we had jokes to do. We weren't really storytellers.

We became that, but only through that lens. The jokes. It's so true. Yep. And the thing that makes it so universally appealing is that the characters they developed, we see ourselves in these characters. They represent a side of ourselves. We've all wanted to grab the eclair from the top of the trash can. But we have restraint. We're real people who move around the world.

We're complex. We have multi -dimensions. But Seinfeld represents wish fulfillment. George has no restraint. George is an avatar of our worst qualities. You know, Elaine has a lot of them. Kramer has our most insane qualities. And the recognition of this very basic human element in these characters is surprisingly timeless and durable. So all of this comes together and crystallizes during this kind of first season timeline in Larry's famous rule for the show.

There's only one rule. Which I've heard this is not a stated rule. This was more sort of like something that bubbled up later that they realized they all had a shared understanding around. But Jerry, Larry, the writers, everyone had this ethos for sure. Yep. No hugging. No learning. Which, again, is the exact opposite of every other sitcom that had ever been made to this point.

Right. The characters never hug and make up. There's no, in Full House, you know how the end of every episode would be Danny sitting down on the bed explaining some law of life to his daughters. And, you know, you did a bad thing, but you learned your lesson. Seinfeld is you did a bad thing. You got caught. You lied about it. You dug yourself into a deeper hole.

You learned nothing. We end the episode. You do it again the next time. Yep. Right. No one ever learns from their mistakes. And it provides this, like, perfect substrate for the jokes to happen. These insane situations that they get themselves into. And I think I was trying to reflect back on all this. I think Jerry and Larry viewed it as respect for the audience.

That we don't need to spoon feed you what emotions you should be having. And you don't need to hug and make up and, like, put a bow on everything. You get it. You're in on the joke with us. The joke's over. You're a smart person who can figure it out. And at first, that leads to a very niche audience. That is not a recipe to have a breakthrough season one or two or three.

But that will earn the respect of some small group of people who are obsessed with it. You're so right. I think that's exactly how they thought about it. And it's so ahead of its time. And it's why Seinfeld is still so watchable and relevant today. Because TV, sitcoms, all that other stuff, the hugging, the learning, the emotional arcs, it was all fake.

It was all just fake. And eventually, thanks to cable and then the internet, audiences en masse eventually just kind of came to see that for what it is of it's fake. And Seinfeld was feeling great. We're not going to give you the fake stuff. We're going to give you something that you actually see in your life, too, that feels more like real life.

Yeah, your friends and your family, they don't grow. They don't change. Right. Right. The funny thing about all this is they got the green light for these four episodes. But Jerry and Larry did not think that NBC would actually put them on the air. Yes. The story I heard on this was they literally thought about these four episodes as we are making this for the dinner party that we're going to host with our friends.

And then after the dinner party, we're all going to gather around a TV and we'll pop in the tape of these episodes and we can say, look at what we made. It never made it on the air, but look at how good it is. And the fact that that's what they made and then that's what succeeded gave them this like terrifying amount of autonomy from the network because they did it 100 percent their way, 100 percent the thing that they wanted to make.

And that's what people actually wanted, which if you're trying to exercise any measure of control as the network, that train has left the station. Yeah. Yes. The inmates were running the asylum from the get go. Yes. Especially with Larry running the show.

So NBC amazingly does put it on the air and the scheduling team comes to Castle Rock and to Larry and Jerry and says, if you're willing to wait and have this run over the summer, you know, and summer is usually the traditional downtime for networks where they don't have first run shows going. Mostly reruns. Yep. We could run it after Cheers reruns in the summer.

Now, you might say, why is NBC a broadcaster doing Cheers reruns? The networks would get the right to rerun each episode once over the summer. And they would get the right to box out syndication for a certain period of time. Yep. So Castle Rock and Jerry and Larry are like, no brainer. We're going to roll this thing after Cheers. Now, in the meantime, throughout the spring of 1990, ABC had launched another show called The Marshall Chronicles.

Nothing like Seinfeld. But everybody started worrying, oh, no, if we now launch The Seinfeld Chronicles over the summer, we're going to look like a me too about The Marshall Chronicles over on ABC. And so this is how The Seinfeld Chronicles gets shortened to just Seinfeld. Drop the the. It's cleaner. It's cleaner. Yes. Yes. So Seinfeld goes on the air Thursday, May 31st, 1990, premiering after the summer rerun of Cheers.

And critically, that very same month, Brendan Tartikoff leaves NBC. He was the head of the entertainment portion of the network. So he didn't run like sports or news or anything like that, but everything within entertainment, dramas, comedy sitcom, late night specials, all reported up to Tartikoff. His successor is chosen Warren Littlefield, one of the two primary champions of Seinfeld, just became president of entertainment at NBC, which means that when it comes to the next critical decision point in the young Seinfeld shows life cycle here of whether it's going to get an actual season in the fall, going to get picked up for real.

Finally, it's now Warren Littlefield's decision to make. So the new episodes air throughout June and July. And Littlefield, of course, he loves the show. He wants to support it. And Rick Ludwin, the specials department head, is right there, too. But they know they've got resistance in the network. And yes, Littlefield can make the decision, but they got to build consensus here.

So Warren pulls over a guy from NBC Research named Preston Beckman and says, you know, the folks at Nielsen, the ratings company. I want you to go talk to Nielsen and see if you can get custom reports made for each airing of these new Seinfeld episodes. And I want you to get reports by city, by metro area for each of these episodes so that we can have some data of whether this thing only plays in New York or whether it's universal.

So Beckman does. He goes to Nielsen. He gets these custom reports and comes back. There is no difference in audience retention from the Cheers reruns to staying with Seinfeld in any major metro area. The same percent retained in New York as they do in Chicago or Houston or Seattle or San Francisco. And that percentage is pretty high. It's not 100 percent.

Nobody retains 100 percent from Cheers, but it's like high. Most of the audience that is watching the Cheers reruns sticks around and watches Seinfeld. So they're like, all right. I mean, the audience is not big yet for this. It wouldn't be big for a while. But there's something happening here and and there is something universal to this show.

It's not just New York where this is playing. Yeah. So end of the summer rolls around and now the decision has to be made at the network. What is the fall lineup going to be? What are the new shows that NBC is going to pick up? And Warren has a quote that's in his memoir, which is great. He says, I walked up to the scheduling board and grabbed the magnetic card that said Seinfeld.

I took it off the fringes of the board where we had our backup shows and I put it right smack at the center. This is our future. Rick Ludwin smiled. Now that's the way it's in the memoir. Success has great fathers. The reality is, I think probably because of all the internal politicking and horse trading for the schedule for the fall of the new season, they end up only picking up Seinfeld as a midseason replacement.

So half a season will give you 13 episodes, not a full season order of 22 plus episodes. We're not going to run it in the fall, but we will slot you in when we inevitably cancel one of the other shows in the spring. It's a half -hearted pickup. So NBC comes to Jerry into Castle Rock and says, great, here's a 13 -episode order. Larry goes to Jerry and goes, I don't accept this.

I'm out of material. What else could we possibly do? I've mined my entire life for all the best crazy situations that we could possibly put into these five episodes. I'm basically scraping the bottom of the barrel here. Yes, yes. Obviously, that wasn't true because there was way, way, way more material that Larry would go on to create. But it is illustrative of, okay, they got to bring in some fresh talent because these guys are not out experiencing the world anymore.

They're heads down writing a TV show. They need writers who are out observing the minutia of the world to come and work with them. Yes, totally. It's also unbelievably unlikely that this happened. By the time Seinfeld gets picked up for this first half -season order, it's over 18 months since they made the pilot. Right. And over a year since the pilot aired.

But because of the way it came up in NBC and through the specials department and the belief that these guys had in it to keep metering out little chances to it, it broke through. Yeah. So after they get the pickup, Littlefield and Ludwin already kind of have a sense from Larry and Jerry that they aren't going to take any more notes from NBC.

So they make another NBC executive do it for them. They draft another guy to come be the hatchet man, essentially. To give notes that you know are not going to be taken. It's a giant waste of time. Yes. A guy named Perry Simon. And Perry has a great quote in Warren's memoir about this. Larry and Jerry came into my office and Rick Ludwin was there, too.

I tried to wing typical network notes. Hey, you know, we need a little more story. A little more of this. A little more of that. Larry and Jerry were incredibly gracious. Let us work on this. We'll come back to you. And then they walked out the door and I knew that they were just like, F that. As in, we're not listening to a word that those guys are going to tell us ever again.

Perry continues. And now I think, thank God, whatever they were doing, they were doing it right. It's a good thing they didn't listen. Incredible. All right. So what were these sort of early episodes? What did season two have in it? There's some good stuff in there. They do the revenge where George quits his job and then comes back the next day like nothing happened.

I guess Larry found some more stuff in his life to mine for material. Yes. They do the jacket, which is one of my personal favorites. Oh, where Jerry has to flip the suede jacket inside out to go out in the rain. And then with Elaine's terrifying father. Yeah. Won't walk with him. Another episode that happened to Larry in real life. Because Larry was dating Richard Yates's daughter.

Yes. And the character is based on Richard Yates. Yes. Just like Elaine's dad in the TV show. I see. And then the big moment, the Chinese restaurant that's in that first half season. They never leave the lobby of the Chinese restaurant in this entire episode. That must have been so frustrating for the network executives to get the script and be like, are you kidding me? This is a single set sitcom.

And not only is it single set, you're not even going to use the set that we built you on the soundstage. You know, this isn't free. Like we have to build a completely new restaurant set for you to go shoot this episode. And it's totally absurd what you're doing. Basically, nothing's going to happen all episode because it's just people making phone calls from a payphone, getting mad at the guy who won't let you get a seat.

Is there really enough to move a story forward here in 22 minutes? And it turns out it was brilliant. Yeah. A defining moment for the show. But this episode in production, NBC is freaking out about it. So they consider shutting down production that week of the show, which they would do from time to time with other shows. I mean, the relationship usually of the network with the show is the network can do whatever they want and they don't like something.

They shut down production that week. So Rick Ludwin goes out for a walk with Larry around the lot and explains, hey, we got some concerns about this one. What are you guys doing? And the network has real time data coming in from their ad sales force because they're talking about episode plots to advertisers, trying to get them hooked on advertising.

And imagine you have to arm your sales force with the whole episodes in the lobby of a Chinese restaurant. It's not good for NBC. Well, foreshadow, imagine you have to arm your sales force with the whole episode is about being the master of your domain. We'll get to that one in a minute.

But yeah, so Rick takes Larry out on this walk around the lot and Larry just blows up. He just lets him out. He's like, this is what the show is. This is my vision. If you don't like it, I quit. Fine. You don't want to make it? Show's over. And nobody did this. No creator would. Usually the network says we don't like it. Oh, OK, whatever you want.

It's interesting because like this is why Seinfeld succeeded. But the lesson here isn't be a blowhard and abrasive to everyone and insist that your vision is the correct vision and take no notes ever dot dot dot success. That's not for most people in most situations. That is failure. But it just so happened that these two were comic geniuses and and were right and then absolutely worked their tails off to refine these stories with a team of writers to produce just some of the absolute funniest material ever seen on television at the time.

But like, what is the lesson? You hit the nail on the head. I was actually talking to Warren to Littlefield about this when we were in research because I sort of asked nobody ever made a show like this again. Why not? It was so clearly successful. It was the right way to do it. And, you know, there's all sorts of reasons, bureaucracy and people's careers and politics, et cetera, et cetera.

But he also made the really good point. Like, not every creator is Larry David and Jerry Seinfeld. Like, if you're going to let a genius be a genius, you need to be sure you're working actually with a genius. And most people are not. Occasionally out there, there's a Nathan Fielder or a Tim Robinson. But like most people with these totally ludicrous, absurdist ideas are wrong.

It's yet another parallel with Silicon Valley, right? Yeah. Most founders are wrong, but some founders are right. Yep. And when they're right, they're really right. Yep. So season two, the first full half season here is great creatively. I mean, the finale is the episode, The Bus Boy, where Larry introduces the interweaving storylines that all intersect and resolve at the end in a grand finale.

Yeah. So this becomes a hallmark of Seinfeld. Typically in sitcoms, there's an A story where it opens on the A story. That's like 60, 70 percent of the story. And there's a B story. And you kind of flip back and forth and like maybe they rely on each other, but it's pretty separate. What they figured out in Seinfeld, and in particular, I think The Bus Boy, that season two finale is where they really catch their stride on it.

They would give each character a storyline. So you have four concurrent storylines, which means you have to be really efficient in your storytelling. There could be no wasted words, no wasted minutes. And as the episodes progress, the storylines start to be interwoven in unexpected and surprising ways. And then they almost always converge at the end in like a violent, unexpected blow up that's unfortunate for everyone and ruins all of their lives concurrently and then cut to credits.

Yeah. And that became this like real winning formula for them, which is hard. And David, you and I know this is hard. As you're structuring story. It's really hard. You're kind of like squinting from it from all these different ways, especially as the story gets larger and larger. You're like, God, how do I introduce this here, but then pay it off later, but then not spoil it in the middle? And we're not even doing comedy.

We're doing storytelling here. We're doing nonfiction storytelling. Yes. Yes. It is an incredibly specialized skill to be able to not spoil the interwoven place where the storylines converge, but make them all funny along the way and make all the payoff happen at all the right time. But it's a thing they figured out that no one else ever did before.

I think I can tell you why. This is how every truly great standup routine. Oh, yeah. This is where they're coming from. This is the DNA of the show. The callbacks to the other jokes. Yeah. Yeah. At the end of a truly, truly great standup routine, there's a moment where you realize that everything throughout the whole 20 minutes or 60 minutes all was interwoven and building to this moment.

Yes. And that's what they do with the TV show. No situation is there for filler. Nothing wasted. Yeah. So that sort of takes us to what else makes this show different? We've talked about the fact that they are despicable characters, which is not like novel now. A lot of people figured out, you know, we can put Michael Scott on TV, deeply flawed characters who aren't just like, oh, dad, that never learned from their mistakes.

That's thanks to Seinfeld that people can do that now. You know, they're neurotic. Every situation that they're in is largely their own fault for getting into it. It's super relatable, but there's a lot of structural things about the show also, like the interwoven plot lines that make it unique and that are difficult to pull off and that were just novel.

So a typical sitcom that has a two act structure has seven scenes. That's it in 22 minutes. Seinfeld, first of all, was two to three times as many. So you'd have 14 to 25 scenes per episode, but they just threw out the act structure. Right. Plots often don't resolve. Yeah. Yes. On the set, they actually, Larry originally wanted it to be single cam instead of a multi cam setup to basically resemble a movie.

And for anyone who's unfamiliar, multi cam is sort of a proscenium style show where you have sets and you have four cameras and they're all catching the same action. You might be able to get away with only running the action once because you're catching it from every angle and you're just lighting it. It's going to be really bright, but you're lighting it from every angle so that any of the four cameras at any given time kind of works.

Yeah. It's like theater. Single cam is probably more expensive because you have to run the action multiple times. You probably have to relight it every time you're shooting it from a different angle. So if you're shooting character A and then the next run through, you're going to shoot character B. There's a pause and relight step. It has kind of a more cinematic feel.

NBC was able to push back enough to say, we're not doing single cam for the show, but they brought in a lot of single camera elements to it. So it did have more filmic lighting. It often used a pretty high number of location shoots for a sitcom where they would actually not shoot it on the stage that had the sets that were pre -built for Jerry's apartment, for the coffee shop.

Think about the number of Seinfeld scenes that are out on the street or in Central Park or in an airport or in some other location. Right. And that adds all this expense of packing up the whole cast and crew and getting them out there, especially when you're shooting every week. They borrowed a lot from cinema that was uncommon on TV at the time.

It's not overacted. I think in a lot of sitcoms, when I watch them today, anything pre -Seinfeld, I'm like, oh my God, it's so overdone. Like, stop selling me on your fake emotion. Seinfeld is not that. In fact, Jerry can barely act and he's laughing through the entire thing. But since it's the situation that's funny, it totally plays. And I think Jerry's chuckle kind of like is a cue for you to laugh along with him.

Oh man, the scenes with Jerry Stiller, who plays Frank Costanza, George's dad, are just they're so good. All the other actors are just they're cracking up and you can tell. God, he's so good. Jerry Stiller. There's no artificial laugh track. So this is like a purity thing for Larry and Jerry as standups. If they didn't earn the laugh, they're not putting a fake laugh in.

Right. From the live audience that was there. Every single laugh you hear on Seinfeld is the live audience laughing at that joke. Yes. Even for the scenes that were recorded offset, they would play them on video screens to the live audience when they were there for the taping and then record the laughter from the screens. Yes. Which has two jobs.

One is record the laugh. But two is they need to know if those jokes are funny and they need to change the episode if it's not. It's like a real time feedback mechanism because these guys come from standup. Yep. Exactly. And then the last one that I didn't really realize until last night, I was watching a bunch of episodes and my wife and I were talking about this.

It was kind of this light bulb moment for me. Seinfeld episodes are not live camera switched. They are edited in post. So normally what would happen is at a sitcom, you'd be sitting in a proscenium. There'd be a live audience. The actors are on the stage. There's someone at a control board saying camera A, camera B, camera C. Okay, now back to camera A, camera B going for the two shot.

Great cut to camera B. Like they're directing it. Right. In Seinfeld, they do some live switching, but that's kind of to get a feel. All of the real work is done in post, which gives them the flexibility to do two things. One, to make all the cuts much tighter. The scenes can be shorter and you can get more scenes in and more situational jokes.

And two is it lets you tell jokes you couldn't otherwise do. So if you think about the episode, The Contest, where David, you mentioned being master of your own domain, there is a joke where the The way the joke is told is they're cutting to each of those characters and you're seeing them lay in bed and they're either restless and they can't sleep or they're sleeping like a baby.

And that's the joke as it cuts around. That's impossible to do in a live switch show because there's no way to make those cuts in front of a live audience. You have to just go record all the material and then have a whole step after that of sitting there in a editing bay making the cuts be the jokes. And of course, that adds production complexity and expense.

It's kind of a way to get closer to the single cam or film like ethos. That's exactly right. It's hard, but these guys are nutjobs. They're obsessives. They're purists. And so they want all the flexibility and pacing of editing a movie while also getting the benefit of what you would get with a live audience at a play that laughed and let you know if the joke is landing or not.

And so they kind of threaded this needle and invented a novel production process to get the best of both worlds. Yep. Yep. So at the end of that half season, midseason replacement, Seinfeld does get picked up for a real first full season, season three of the show. Still with kind of a cult following. Exactly. Starting to catch. Still on Wednesday nights.

They're not on Thursday nights yet. But even at the end of season three, that first full season, Seinfeld was the 42nd ranked show on television. Seinfeld's got this cult following, all this creative juice, but certainly not the centerpiece for the network. But season three would be the last time that that would be true. And really that any of the actors in the show, be they leads or guest stars, could live a normal life ever again.

But before we tell the story of how Seinfeld finally caught on and became the Seinfeld that you know it today, now is a great time to thank our good friends at Sentry. Yes, that is S -E -N -T -R -Y, like someone standing guard. Which is exactly what Sentry does for developers. Sentry helps teams debug everything from errors to latency issues, basically any software problem, and fix them before users get mad.

So David, I want to talk about the whale. My favorite episode! We're going to spoil it. The show gave us the single best root cause analysis story ever put on television. Absolutely. The perfect illustration of why you need Sentry, decades before Sentry was invented. I love it. In the episode where George pretends to be a marine biologist, he wades out to the beached whale that is in front of a crowd and comes back holding a golf ball that he pulled out of its blowhole.

And he says, the sea was angry that day, my friends. The actual root cause of the golf ball being in the blowhole of the whale is Kramer from way earlier in the episode when he was hitting golf balls into the ocean. Nobody in the audience connected those two storylines until George pulled out the Kramer golf ball. And that is exactly what a real software outage postmortem feels like.

Yes. Yes. There is the hero of the story who gets paged in the middle of the night and that they tried to fix the issue. But then there's the golf ball. Some small change that shipped a long time ago that nobody mentally connected to the thing that is currently on fire. The hard part is not noticing the whale on the beach. It is realizing that, ah, it is actually the golf ball causing the issue.

Yep. Yep. Yep. And that is what Sentry does. It takes the thing your users are yelling about and traces it back to the exact change that started it. Which release, who was impacted, and the very commit or very golf ball with the developer's name on it. Then all that context goes straight into whatever writes the fix, whether it's Claude Code or Cursor or Sentry's own agent Seer, which finds the issue and opens the PR for a human to review.

This is why 200 ,000 organizations run on Sentry, whether it's a solo side project or the engineering teams at Anthropic, Vercel, Linear, or GitHub. You can learn more about where software gets fixed at sentry .io slash acquired. Or click the link in the show notes and just tell them that Ben and David sent you. All right. So here we are now in the fall of 1992, heading into season four, the second full Seinfeld season.

The show is this cult hit. It's maybe a little more than that. Season three averaged 18 million viewers per episode. Yep. But it still hasn't cracked the Nielsen top 30. Which is crazy, though. I got to interrupt you. The 18 million, that's not in the Nielsen top 30. Today, you would never, ever, ever see 18 million people watching a single thing, no matter how good a show is.

Other than like NFL and NBA games. I mean, there were four networks. That's what you watched. No internet, baby. YouTube, phones, podcasts, short form video. I mean, cable had just started coming up. But most of America's attention is still on one of those four broadcast networks in prime time. So 18 million viewers an episode not cracking the top 30 is nuts.

I mean, I think we're still a year away from the Mosaic web browser, right? 1992? Yep. Yeah. There's no competition. Yep. It's a great time to be in television. Yep. Meanwhile, though, NBC, the network, has a problem. Because Cheers, the anchor of its whole comedy lineup, is on its final season. And Warren and the whole crew, the executives there, don't know what they're going to do to replace it.

So Time Magazine ran an article from this time. NBC, the one -time kingpin of primetime, has seen its fortunes turn sour almost overnight. Its biggest hit of the 80s, The Cosby Show, took an early retirement last spring. The network's last remaining top 10 hit, Cheers, we'll call it quits at the end of the season.

And then, on top of that, so Seinfeld is running on Wednesday nights, currently. You're going into season four. So, ABC, the competitor, moves their big new comedy hit sitcom, Home Improvement, to compete directly against Seinfeld in the Wednesday night slot. So, for the first time, Seinfeld not only has to prove that it can get a bigger audience, but it has to do so against a big challenge.

A direct competition in the same time slot from another network. Yep. And Home Improvement kicks its butt. Yep. So, by mid -season, Home Improvement is pulling 28% share of audience in its time slot. And Seinfeld is down at 17. Not great, and doesn't feel to me like the future of the network. I mean, the 17%, if you're thinking, ooh, 17% versus 28%, they're like a close second or something like that.

They got so much of it for free. Yeah. It's like, if you're going to turn on your TV, there's four options, more or less, that people are actually watching in this time slot. So, it should be very competitive. Yep. Larry and Jerry, though, and especially Larry, they don't care. Like, they're not making the show for the ratings. So, this season, season four, they just go on like an all -timer.

So, they start with, I think the first season -long meta arc ends up becoming a show -long meta arc where they have NBC, a fictional NBC, ask Jerry in to pitch a TV show. Called Jerry. Called Jerry. They went with his other name. Yeah, with his other name. Because they don't want to call it Seinfeld. And he and George come up with the idea of a show about nothing to pitch it to NBC.

That's the first episode of season four. That then continues off and on throughout the whole season. And the off and on is important because each of these episodes still can stand on its own. You don't have to be invested in the story, the multi -episode season -long arc in order to get it. Yep. Episode seven of season four is The Bubble Boy, another classic.

I'm not sure you could make that now. Like, if that was actually a news story right now, making fun of The Bubble Boy that everyone is writing articles about is completely off -limits. Well, speaking of completely off -limits, that brings us to the critical midpoint of the season where everything changes. Episode 11. Isn't the outing also in season four? Yes, but later, after episode 11.

Ah, I see. Also so good. Not that there's anything wrong with that. Not as good as episode 11. Not that there's anything wrong with the outing. But it's not as good as episode 11. The contest.

So, oh man, we've alluded to this. But for anybody listening who hasn't seen or heard of this episode, this is the master of your domain episode with the four characters making a bet to see who can go the longest. The episode opens, George walks into a diner, and the opening line that he gives Jerry, Elaine, and Kramer in the booth is, My mother caught me.

I can't even keep it together just talking about the episode. They don't need to do much from there. They go the entire episode without saying what they are having a contest to try not to do. There's just this giant, unstated elephant. You know exactly what the elephant is the entire episode. And yet, it's perfect. It doesn't break any rules.

But they break all this new comedic ground. So, apparently, like all or almost all great Seinfeld episodes, this actually also happened to Larry. Of course it did.

And Larry, even Larry was scared of this episode. He would have been thinking, nah, we can't do it. It's too much. But finally, here by season four, they've got enough confidence and enough, you know, just no fear attitude. Larry's talking to Jerry and says the idea. And Jerry says, that's funny. Let's do it. So, they write the episode, the two of them, in secret.

Usually what they would do in their office on the set, Larry and Jerry's office that they shared together, they had a whiteboard. So, if you watch the Seinfeld reunion on Curb Your Enthusiasm that's in the office, you can see the whiteboard. And on the whiteboard, they have all the plot points for all the characters and the candidates, etc., etc.

So, anybody could come in their office, the other writers, the NBC executives, they'd see what's on the whiteboard. They didn't put this one on. They just wrote it in secret. I don't know if they put decoys. That would be even better. Word did get out, though. Well, so the story continues. So, they have it in secret all throughout the writing process.

And then it gets to the table read. So, the way the week would work was the cast would do a table read of the script first and then do some rehearsals and then they would shoot the episode. This is pretty close to filming. Like, you're well into production week at this point. They bring out the script.

And NBC is just like, oh, my God. We're going to talk about the full schedule, the weekly schedule of making a Seinfeld episode in a few minutes. But know this. When you're at the table read, you are six days from shooting the episode for real in front of a live audience in studio. Yeah. You're pretty close to the point of no return or as close as Larry and Jerry could engineer getting.

Yes. Before revealing what they were doing. So, the broadcast standards department at NBC, which is the in -house sensor that is responsible for keeping all of NBC's programming up to broadcast standards rules. They, of course, hear about this right away. They're just losing their minds. And the woman who runs this department, her name is Dr.

Roz Weinman in New York. She calls up Warren and is just apoplectic. And Warren's like, well, it is Seinfeld. It's the guy's. They don't say the word. It's funny. And somehow, I don't know if she was a fan of the show and she got it. She said, well.

All right. We're going to keep a close eye on this. Like we could pull the plug at any time. But in this case, with this show, it might be enough that this show has a pact with its audience that we can get away with this. This is unbelievable. Because broadcast standards really has two jobs. One is, are we literally going to fall afoul of any FCC regulations where we will get in trouble as a network? Two is, is there going to be any blowback on our network where it hurts our brand? People don't like us anymore.

Advertisers run, things like that. And if you're not running afoul of one because no words are coming out of your mouth, then it's really just about. The question is only number two. Yeah. Right. Do we think the audience will love or hate this? Yeah. And I think it's a big risk, but a very perceptive one to be like, Seinfeld actually has cultivated an audience where this is entirely okay, especially done this artfully.

Yep. Yep. So broadcast standards lets it through. And then sales calls up and they're like, are you out of your mind? You know, we have to, we have to tell the advertisers what their spots are going to run against. And Warren says, all right, well, let's let them keep going. We'll get a rough cut of the edit before we have to put it on air.

So the rough cut comes in. They give it to sales. Sales shares it with the advertisers. They come back and they say, we've got a bunch of advertisers that are going to pull out. They're not okay with this. We're going to have to cut the rates for this episode to backfill to get enough people in last minute, enough new sponsors to fill the episode.

Warren says, okay, how about this? There are these cable networks out there. MTV's out there. They've got this same kind of audience. They're killing it with a bunch of alcohol companies as sponsors and, you know, Nike sponsoring them. What if you guys go to all the advertisers on MTV and say, hey, we've got an opportunity to get you into Seinfeld this week, which they do.

And they fill the episode. And that's how sales allows it to go through for all the advertisers that didn't pull out the regular sponsors that stuck with the episode. They end up having leather bound copies of the script printed, autographed by the cast and sent out as a thank you for sticking with us. And then the episode airs. There's no protest.

It's great. It becomes the first catchphrase moment for the show. Master of my domain. Are you master of your domain? Yep. It completely changed the rules for Seinfeld. And it cemented Seinfeld as a water cooler conversation show. Yes. This was something you were going to share with your friends. You sure as hell were going to talk about this the next day.

Yeah. So many years later, in 2009, TV Guide did a ranking of the greatest television episodes of all time. This episode was ranked number one. Yeah, of course. So had they moved to Thursdays yet at this point? No, no. They're struggling. They're getting the pants beaten off of them by Home Improvement here on Wednesday nights. This is like the crucible moment for the show.

So right after this is when NBC makes the decision. They say, all right, this is magic. We were right about this show that it's just special. We're going to have to bet on this. We're going to make this our future. We're going to move it to Thursday right now. We're going to air it after Cheers. And then when Cheers goes off the air after this season, Seinfeld is taking our top slot.

If it performs. If it performs. Yeah. Yeah. Which, of course, Larry David. He's furious about this. Yes. Yes. His quote is, if they didn't watch us on Wednesdays, I don't want them watching us on Thursdays.

We've earned this weird niche audience that is our people. And you're just about to, like, blast us out to the mass public. Yeah. Just going to go right from Cheers into Seinfeld. They're going to get hit by a mental bus. Yes. Famously, that was Larry's reaction. And equally famously, this is why they were such a great partnership. Jerry's response to NBC about the move to Thursday night was, thank you very much.

We will take the new time slot. Yeah. Good business decision. Yes. Yes. It is interesting thinking about Larry's reaction here. So part of it is like just this purist because he's a purist in so many ways. And he's got the element of George Costanza. He's not as pathetic as George's. No. I think that's a fair. George, they've amped up the pathetic dial to 11.

But he does have the sort of duality in him that George has, which is thinking he's the greatest thing to ever walk planet Earth. And George is not, but Larry kind of is. But coupled with extreme self -consciousness, self -loathing and self -doubt. Yes. And so to tell Larry David, like, we're going to promote you to this giant spot. It's like, no, no.

If people truly loved us, they would have sought us out and found us. I don't need these people who aren't going to do work to watch my excellent, perfect television show. Right.

And I think it is true. You know, we think about this for Acquired a lot. I think there's a business strategy angle to growing slowly through word of mouth. It makes you more durable when you grow slowly through word of mouth and have a core of extreme fandom versus quick mass exposure. It's like the quicker you go up, the quicker you go down.

Whereas I think Seinfeld taking four seasons across five years to break through is part of the durability. There was like a real core to explode out from. Absolutely. That is all true.

And once you make the contest, you can't go back. That's true. You got to go to Thursday night. Yeah. You got to be in the big leagues. It is a landmark moment. Okay. So I never understood why Thursday nights were such a great business before or why this was such a big deal for TV. People always talk about the Thursday night lineup. And I grew up watching Friends.

When I watched Seinfeld, it was more in reruns because I was born literally the month that the pilot came out. So to me, the whole arc was basically before I was of Seinfeld watching age. I've now seen every episode, but mostly in reruns. So for me, Friends was the anchor NBC show on Thursday night. And I kind of knew Thursday was the biggest night.

But why? Right. Why is it different than Tuesday? I get why it's different than Friday. Friday is a weekend. Saturday and Sunday are kind of about sports or going out or living your life. But like, why are we discriminating between days of the week? It was your last chance to reach audience before the weekend. Yep. So if you're launching a movie that's going to come out on Friday, you need to be advertising.

If you're launching a product where you want to drive people to stores over the weekend, if you're trying to hit consumer messaging before some set of weekend activities, Thursday night was your last shot at it. And it was the most important for recency bias to land a message. If you're NBC itself and you want to advertise that week's NFL matchup.

Yes, it is the most important night. And the Thursday night lineup on NBC was more profitable than all of the other nights combined. What? Yes. It's that outsized? Yes, it was that outsized. Now, part of that, too, was just because NBC was such a powerhouse on Thursday night. That's where their marquee shows lived. But wow, because you have the same amount of ad inventory you are selling each weekday night.

And Thursday's rates were high enough that it dwarfed the sales for all those other nights. Wow. Yes. Combined. Yes. So Seinfeld moving into this hallowed time slot is huge. Huge. Huge. And boy, does it work. So the first week that Seinfeld moves to Thursdays in February of 1993. NBC, by the way, had had the Super Bowl in January 1993. They used promos during the Super Bowl to announce the Seinfeld move to Thursday night.

So they went big. And had they coined it must -see TV yet? No. So they rolled out that must -see TV slogan for Seinfeld as the anchor moving into Thursday nights. And it was what? Seinfeld. Cheers had ended. So I guess Frasier was the spinoff was just starting. I think Wings. Right. Mad About You. There's a whole sub -drama of Wings was the golden child from the comedy department at NBC.

So the actual sitcom department, they were always trying to push Wings over Seinfeld. But NBC did something really smart here, branding the night as must -see TV and creating like a network identity around NBC rather than just marketing the shows themselves. So you actually ended up with this affinity for the network. I mean, for me growing up, NBC meant something because of this.

Like none of the other networks meant anything. They just had stuff that I watched on them. And that continued. I mean, if I think about what came after Seinfeld, Friends, The Office. In between the two, you had Will and Grace around the time of The Office. And later you had 30 Rock, Parks and Rec. Yep. Yep. There was like this whole... NBC comedy powerhouse.

Yes. Yep. And a lot of it using SNL Talent. Yes. Which is also NBC. Which is also technically true of Seinfeld. Yes. So back to the actual move here in February of 1993, when Seinfeld moves from Wednesday to Thursday, the show's ratings rise 57%. And it goes from the 45th most popular TV show on air to the 5th in one week. Now, obviously, a huge part of that is the power of the time slot.

But it's also like after the contest, it changes everything. You can't go back. And the thing that was shocking even to everyone at the network was if you put something after Cheers, it's going to get good ratings. But it's going to be a drop -off from Cheers to that show. It's just a matter of how much drop -off. Seinfeld actually gained audience over Cheers, that they retained the Cheers audience, and then new people tuned in just to see the next Seinfeld episode.

This is the punchline. I mean, now here at the big leagues, first run Thursday nights, it retains all the audience. And then by the end of the season, it's bigger. It's crazy. It's the new anchor show. It's the new king. Larry is asked about this in 1993. The LA Times does an interview. Because I think viewership hit an average of 30 million viewers per episode by this point.

And Larry's quote is, this probably means that a catastrophe is imminent. Something terrible will emerge from this. I don't really know how to account for it. Oh, man. Oh, man. Well, a catastrophe was not imminent because, you know, the season continues. They just keep crushing it. The outing. Yep. Episode 17. Not that there's anything wrong with that.

Episode 20 is the junior mint. Oh, of course. Which really starts to foreshadow the absurdity that would come into Seinfeld in later years. This is a great example of the concept of the episode is a joke in itself. Like the absurdity of Jerry and Kramer. Jerry and Kramer. Get invited to observe a surgery from like a balcony above the OR. And they're eating junior mints.

And one of the junior mints gets fumbled and actually ends up falling into the patient.

Oh, man. Which, fun fact, using the cameras at the time, the cameras would not have picked up a junior mint. So they actually used a York peppermint patty. That's right. For the slow motion tumble. Great trivia. Great trivia. And the cultural relevance, the catchphrases beginning with master of my domain, master of your domain. After that, we get yada, yada, yada.

Double dipping. Shrinkage. Festivus. I mean, on and on. These are all words and phrases that Seinfeld invented. And all this is hitting here as we head into 1994, 1995.

Right as the internet is coming online. That's right. According to the book Seinfeldia, which is a great read, there were a bunch of early online communities about Seinfeld. Analyzing each episode the week it comes out. It was crazy. Steve Case would talk about, head of AOL, that AOL's main competition was Seinfeld. They would never see AOL connection numbers dip except when Seinfeld was airing.

And then they would go right back up as everybody came on AOL to talk about Seinfeld. And you know who's talking about stuff on the internet? Urban, well -educated, affluent, young males. I mean, it was the most perfect timing ever that you could imagine for this type of show to have that moment of cultural relevance with the contest, move to the marquee slot on Thursday nights on NBC, and then have the internet hit all in quick succession.

It's amazing. So this is all going really well, but what's going on inside is basically killing the people who are making it. The obsession that is going into this, the like every word and the writing and the rewriting and this obsession with the joke, nothing else matters. It is these like real auteurs that attracted other people as psychotic as them to obsess with them.

And they needed to because at this point, Jerry and Larry, after five years of existing in writing a television show, they're not experiencing the real world anymore. So they need to keep bringing in young writers because they need to mine those people's brains for stories that happen to them. They need to find like mini Larry and Jerry's who still live in New York, hopefully, so they get some element of that.

But what ends up being an amazing bed to recruit from is the Harvard Lampoon, where it's these young comics, super smart, except that they actually are experiencing the world. So every year for a while, they were bringing in a completely fresh crop of writers because they would basically steal all the best material from everyone's life and then move on to the next one.

I mean, Festivus was a thing from someone's life. George's whole thing about is he going to put a tip in the jar when they're not looking because he doesn't get credit for the tip. That's a thing from someone's life. You kind of need all this fresh blood to come in and get material. Okay, so how did it work to actually produce the weekly Seinfeld episode? Thank you to Alec Berg and David Mandel for talking us through this.

They were writers on the show. And then there's some great interviews with Jason Alexander that share a lot of the detail, too. So the typical sitcom schedule would start its life on a Monday with rehearsals leading up to a Friday shoot. And on Seinfeld, they realized, well, actually, we could start the week on Wednesday and shoot the following Tuesday.

And when the actors go home for the weekend, that means we can get some extra time coming in and rewriting the episode to make it better, which is fine since then they weren't married. They didn't have kids. Like they had no personal life to speak of. They were obsessed with this. So that's just what they did. So day one, it starts with a table read.

Everyone is there. There's producers, writers, NBC executives, Castle Rock representatives. And as Jason Alexander put it, they would then have a go big powwow after the table read. They would give their notes. Then Larry would quit. Then the notes would be thrown away. Then Larry would agree to stay. And then he would come back tomorrow.

Sounds about right. So that's day one. And the actors start trying to do some rehearsing, but it's all going to change so materially and they kind of know it. So they're not taking that rehearsal that seriously. It's just like familiarizing themselves with the material. So Larry and Jerry would then go do a bunch of rewrites overnight. The scripts don't really have stage direction.

It's just dialogue because they're comedians. That's that's what they write. And so then the actors had to figure it out. So Seinfeld had this really unique collaborative way where the actors would stay on set even when it wasn't their scene. So they could work through it together and they could trade say, oh, actually, I think it would be more funny if Kramer's at the fridge right now with the door open going through or then maybe George's and try to figure out the blocking together.

Yep. So then day three, more full rewrite overnight, more rehearsing, still just internal to the team. The network's not there yet. The actors, they're there. The writers, Larry, Jerry. This becomes more or less the shape of the final script. Then at the end of the day, NBC and Castle Rock come in. They watch a full run through. They give their notes.

As Jason Alexander says, Larry would quit. Their notes would be diminished and Larry would come back. Day four is camera block day. So this is when the cameramen come in and start learning their shots. Who's taking what? The episode is sort of finalized enough to figure out what shots do we need and which cameras are we assigning? And it's a very difficult thing because it's not like the four cameras just sit there and don't change.

Let's say you're camera one. You're responsible for a wide shot. It comes off you and goes to camera three. You have five seconds to scramble, shift, zoom, get a two shot on two characters because then when it flips back to you, that's where you're supposed to be. Yep. So it's this like real ballet and art. So they all rehearse as a unit, the cameramen and the actors, because the next day they're in front of a live audience.

Yep. On day four also, especially as the show got bigger and they were doing more on location filming where they'd shoot outside the permanent sets, the coffee shop and Jerry's apartment. They do things like go to the fake New York street on a different lot to do the sort of outdoor street shots or actual filming locations like the cemetery where George visits Susan.

Oh, boy. Yeah. Then day five is rehearsal in the morning. Then you bring in the live audience to film in the afternoon. They'd run the entire show in chronological order. And if there's any scenes that were not on those permanent sets, because the audience is just sitting there in front of the coffee shop in Jerry's apartment in in big bleachers, they would bring down a screen so the audience could watch a rough cut of what was shot outside.

And that way they could record those laughs just like we talked about earlier. If they didn't get a laugh, do you know about what they would do, David, if they if it wasn't going as expected? Even with the live audience there, they would pause production. They would huddle all the writers and the actors and the director on stage. They would bring out a live band who was just like waiting on set to entertain the audience.

And they also had like comics and stuff warm up the audience. And they would huddle and try and figure out like a better joke. Yeah. Why? How to rewrite it live. The best example of this is in the marine biologist. Yeah. So the episode is supposed to end with George walking into the ocean. And if you've seen this episode, that is not the end.

This is the best story. It's so good. They bring down the screen to show the on location shot. George walks into the ocean. Audience is kind of confused. There's been like a lot of buildup, but there's no joke here. So they all huddle. They come up with this idea for George to have the additional scene in the booth where he does a monologue.

And then he finally produces the golf ball out of his pocket, which is, of course, tying in a plot from earlier in the episode where Kramer's hitting golf balls into the ocean. And that golf ball turns out to be lodged in a whale's blowhole in George's storyline, which is why the whale needed a marine biologist in the first place that George was pretending to be.

So it's so good. Larry goes off after their huddle, and he writes a full -page monologue on the spot, which Jason Alexander tells Larry, yeah, I can do that. I'm a Tony Award -winning actor. I'm a theater actor. This is, put me in, coach. This is what I do. Give me a monologue. It's already late at night here at this point in time. So yeah, he memorizes it, performs it on the spot.

It's incredible. It's the first time it's ever been read. There was no rehearsal when George goes, the sea was angry that day, my friends. Oh, so good. It gets this giant laugh. And then of course, when the laugh finally dies down after he produces the golf ball, Kramer looks at him and goes, that a titleist? Yep.

Hole in one, huh? So this happens. And then the next day they come in for a table read. Yep. Isn't that insane? Non -stop. In parallel to this entire process is the pre -production where all the writers are, you know, some paired up in groups of two, but often just alone in their own offices, writing the next week's episode, the week after that, the week after that.

And then... And Larry and Jerry are working with them and getting it ready for the table read. But like, how are they working with them? Because they're also full -time... That's the point. Yeah. In a seven -day work block to produce the current episode, it's crazy that... No wonder they're just kind of like looking over outlines of the next week and the week after and why it requires so much rewriting week of is because it really hasn't gotten especially Jerry's attention yet.

Yeah. The Seinfeld star is burning brighter and brighter and brighter and consuming everybody within it in the fusion reactor at its core. Yes. Which is a good time to flip back over to the business side of Seinfeld. Because also, right at this time, after the move to Thursday night, after the huge success, after the internet starts to come online, Seinfeld hits syndication.

So Jerry's quote to the LA Times here is, We'll be in syndication next year, and that will probably help us further the same way it helped Cheers. Most people are still just now discovering our show. Most of the audience watching the show on Thursdays have not seen us before. They're new to us. There's 60 -some -odd episodes they haven't seen.

Yep. Ooh, boy, and were those 60 episodes going to be worth a lot of money to the ownership group that we discussed? Earlier in the episode. Because Seinfeld is basically the most perfect syndication show ever created. Because of the no -hugging, no -learning element, no character development, no relationship development, you can tune in anytime to any episode in any order.

Doesn't matter. You're going to get a full entertaining experience. Yes. And because these characters are just kind of vessels that you don't really need to invest in their storyline, they're just like mirrors of the worst part of ourselves, the situations provide the comedy. And so it's a very internationally relatable show, too, in a way that not all comedy has.

Yep. Yep. Totally. So why now? And what exactly is this business of syndication? There's sort of a magic unofficial number for TV shows back in this time of 100 episodes. That was when you entered into syndication. And the 100 episode thing kind of stems from you have a large enough number of episodes to demonstrate that people liked the show and there was familiarity with it or you wouldn't have continued.

And that there's a big body you can license to someone to show it. Because they don't want to buy your 10 episodes. That's not interesting. They want to buy a big block of them. And so syndication, for those not familiar, is basically any time a show gets licensed to another distribution option besides the primary first run TV network. And essentially those options are international, off network, which this is the biggest one for the longest time.

I did not understand how this worked. When NBC buys a show, they're buying it directly from Castle Rock. But once that enters syndication and the reruns are going constantly, that has nothing to do with NBC. Yes. That is just the local affiliates. And the local affiliates, you know, it starts with a K or a W. It's a four -letter station that's broadcast over the air in your city.

Yeah. And it might be a NBC or an ABC or a CBS or a Fox station. Right. But they only take the network's programming during primetime or sporting events, et cetera, et cetera. The rest of the time, they have to go find their own programming. So either they need to make it or they need to go buy it directly. And there's like a thousand of them.

And so this is where Sony actually does something. This is where the distributor matters. They earn their keep now. For off network syndication, what you're really trying to figure out is how many of these individually owned local TV stations are willing to buy my hundred episodes and at what rate. And so that is how off network works. Then there's off network cable.

Same thing, but to cable stations. Fortunately, there's many fewer cable stations than there are local TV affiliates. And then in the far future, but it didn't happen yet, is a subscription video on demand or streaming, which would become a very, very valuable part of syndication. But the interesting thing about the TV business is just how large off network syndication and streaming syndication could be relative to the original first run business.

Because if you think about what does it actually cost to make a Seinfeld episode in season one, probably less than half a million dollars, probably less than $400 ,000. You're not paying the stars that much yet. Production costs aren't actually that high. And so then what's NBC going to pay for it? $300 ,000? Right. You know. 80% -ish of whatever that number is.

Not a lot of money. So let's look at season two, for example, 12 episodes. That probably costs somewhere in the five to six million dollars to produce, which means that somewhere in the four -ish million dollars for NBC to buy. It's actually like kind of a small thing. But those 12 episodes, when they're sold later in syndication, can fetch huge sums of money, especially if it runs for a long time, because the rights can be sold over and over and over again.

And the most important thing is that group, David, that you were pointing out, that sort of cap table of who owns the show, it's a totally different split from who makes the money the first time around. The first time around, there's all these people you're paying on salary, especially the actors. The second time around, the people who are participating in all the syndication, it's that whole waterfall of who actually owns the show.

Yep. And this is back to why Larry and Jerry got the most valuable deal in television history, because they got huge amounts for creators in that back -end waterfall. Yep. And then that back -end waterfall would be billions and billions of dollars. And this is where it all starts. At least reportedly. Again, this is like a funny thing about doing this versus covering public companies is like, we're relying on some reporting done by a few news outlets over the years.

But I think we have to take that at face value. Yes. But assuredly, billions of dollars have gone through this waterfall. So yeah, we sort of joked about Sony slash Columbia earning their keep. In this first syndication cycle, which is just for local broadcast affiliates, they can't take it to cable yet. Sony sells the show to a record 224 local TV stations across America.

Out of the thousand TV stations total. So basically one station in every market of the country taking the exclusive local rights. And that generated an aggregate sum of $500 million in revenue, actually over $500 million in revenue in a single event here in 1995. And that was just for the first five -year syndication window and only on local TV affiliates, not even on cable yet.

Yeah. And it turned out that those local affiliate stations that were paying all that money for Seinfeld actually were getting a pretty good deal because all of a sudden reports start popping up as Seinfeld enters into syndication where stations that would run Seinfeld reruns would end up winning the time slot in their local market. They would beat live programming on other stations at the same time.

So like, let's say you're, you know, local affiliate TV station in Buffalo, New York. You decide that you're going to run Seinfeld reruns during a particular time slot when the other stations in town are running local news. Seinfeld beats the local news. It's the audience of people who never got to watch it on network because it only ever aired twice.

Like you missed a big episode. Let's say you missed the contest. You were working the first night and then you weren't around because you were doing summer travel or whatever. The only chance to catch it is in syndication. And that's a thing that everyone talked about. That could be a marketing event. If you were a local TV station trying to drive a bunch of attention, we're going to air that episode.

Right. You could market that you are going to be running the contest on Tuesday night at 11 or something like that. I mean, that sounds way more compelling than local news to me. Or whatever other local programming. I mean, I think Wheel of Fortune. There were a lot of like game shows that would be, I think the phrase is first run syndication that would skip the network altogether and be produced directly to sell to the local affiliates.

Actually, Oprah was this. Yes. We talked about this on our Oprah episode. Yep. And just to make it even more fitting, that same year in 1995 when Seinfeld hits syndication is when FinCin gets repealed. So the door is now slammed that no other shows are going to have these dynamics because the networks now are going to own their own shows.

And this is going to play out over broadcast television a little bit. And it's going to play out big time in the streaming era. Which if you're Castle Rock, it's a good time to cash in your chips because you have this super valuable library, which you own. You actually own it and it's guaranteed to make all this money in the future. And the regulation that was in place that let you make future shows, you have no idea if you're going to be able to sell the next hit show to NBC.

They probably should make it in -house themselves. So this is a very good time to sell the company. Yep. So Castle Rock sells itself to Ted Turner and TBS here as this is all going down. It's a little earlier, December 93. Yes. But it was when it was announced that the FinCin rules were going to get repealed, even though it went into effect in 1995.

Castle Rock sells to Turner. It was $100 million in cash for Castle Rock's owners, plus another $300 million or so in paying off the outstanding debt. So the total out of pocket that Turner paid for Castle Rock, which owns that huge share of Seinfeld's profits and a bunch of other great stuff was about $400 million. What an unbelievable steal to get the Castle Rock library for that.

And of course, that happened before the actual sales of the first syndication cycle for Seinfeld. Right. Right. Also, isn't there a wild story that Steve Bannon was an investment banker on that deal and took some of his commission in equity on the Seinfeld waterfall? The details are a little bit murky on this, but I have seen it reported that Steve Bannon still gets royalties from Seinfeld syndication.

Yeah, because of this deal. Wow. Wow. So Turner and TBS buys Castle Rock and then they turn around and sell to Time Warner in all this consolidation that's happening. The net of which is that Castle Rock and the largest ownership slug of the Seinfeld waterfall ends up in the Warner Brothers library. All right. So, Ben, you said now is a great time to sell.

In the moment, yes, for Castle Rock. But actually, even if they had no viable future business from Fincene ending from Fincene ending, they should have waited because the value of the Seinfeld waterfall once syndication hit was about to become way more than the 400 million dollars that they paid for it. I'll spoil the ending for everyone.

We're pretty sure that Castle Rock, if you work through the whole waterfall, made somewhere between two and two and a half billion dollars on Seinfeld syndication over the years. But they captured almost none of that because they sold the entire entity. And so it was actually Turner and then Warner Brothers, the IP's ultimate resting place that would have received the lion's share of those proceeds.

So I will revise my previous statement. Castle Rock absolutely should not have sold. But no one could have known that Seinfeld would go six syndication cycles and be as relevant as ever three decades later. Yep. But importantly, Sony keeps the distribution rights. We'll come back to that when we get to streaming in a little bit. Yep. So that was the business story of Seinfeld from 1993 to 1995, culminating in that first syndication sales cycle where Sony generates an astounding 500 million dollars in revenue that hits the, so to speak, cap table.

Right. Sony gets there, cut off the top of that. But then there's probably 400 plus, maybe 425 -ish million dollars that then flow through to everyone else who owns the Seinfeld IP just for this first cycle of syndication to the off -network affiliates to watch around the US. And then the next year, in 1996,

Larry leaves the show. Honestly, it's hard to blame anyone after walking through the intense pace that they'd been working at for six years now. Well, yes. And yes, I think that is the reason Larry left the show. He was totally burned out. He'd gotten married at this point. He was ready to move on with his life. But putting that aside, now that you know the economic history of the show, Larry leaving in 1996, of course, makes sense.

Right. Why stay? Everybody just got the payday in 1995 from syndication. He's in the money. And he's not just in the money with a one -time payout now. He's in the money forever. And it's not like he was making a lot. I don't think. Again, we have no access to these private contracts. But in general, a non -acting creator lead writer is not drawing a giant paycheck on a per episode basis in making a show that, you know, you own the show.

So you're expected to make your money on the back end, which is going to happen whether or not he makes any new episodes. Again, to use a startup analogy here, this is like the company went public and the lockup ended. Yeah, that is the right way to. Yeah. There's a lot more value you could build, but other people can build it too. You're going to have a life -changing event.

Yes. But for the show, this is brutal because everyone else was kind of just an input to Larry in the writer's room. And Larry was like, we heard him referred to as the CPU. You know, he would be the one that ultimately would come in on weekends, do the rewrites. You could get a script most of the way there, and you could always be confident that Larry would make it great.

Without Larry, they need an entirely new process. Right. And like Jerry was there as the co -processor, but he's also starring in the show. Oh, Jerry was not available to play Larry's role because you can't have a lead writer who is also running the whole show as producer and the lead actor and, you know, doing all those rehearsals that we talked about.

So what this leads to is more people are involved in the writing process and they just need more hours. So now all the writers are coming in on weekends, not just Larry like the old days. And when we were talking to Alec Berg about this, who was a writer on the show, he told us that he looked at his calendar at one point and realized that he had come into the office every day for some amount of time for 56 days.

Yeah. Yeah. What was the story like they would go watch the Super Bowl and then they all go back to the office after? Yeah. Jerry would run a suite for everyone at the Beverly Hills Hotel and then back to the office. So it's a Herculean task after Larry leaves. Castle Rock and by extension NBC keep upping Jerry's salary, like the amount that he was being paid per episode for all of his duties.

First to $500 ,000 an episode. And then by the ninth and what would end up being the final season of the show to an unprecedented million dollars per episode. Per episode. Per episode. For one person who also owns the show. Who also, yes, gets all that back end that we were talking about. The tenor of my voice should not be anything around like surprise or didn't earn it.

But it's just like to underscore these are separate things getting paid as the person making the show slash acting in it and the ownership. Yep. The show, though. I mean, look, you can argue whether seasons eight and nine are as good as the Larry seasons. They're certainly different, but they're more ambitious. They are more ambitious. Yeah.

The only way that they could find to sort of move past Larry was to try and do bigger stuff. And there's some classics. I mean, true all timers in there. The Bizarro Jerry. Yep. The Chicken Roaster. The Kenny Rogers episode. Yes. The Andrea Doria. Muffin Tops. Is that in there? The Pothole. Van Buren Boys. Yep. Yada, yada, yada. Yep. You're right.

Muffin Tops. The Summer of George. I mean, this is season eight. Again, they're firing on all cylinders. Season nine, The Butter Shave. The Voice. Oh, The Butter Shave. Serenity Now is season nine. Oh, that's right. Yeah. Jerry Stiller got a bigger role. The Slicer. The Dealership. The Reverse Peephole. The Wizard. These are all season nine.

Yeah. Yeah. So creatively, definitely different, but still excellent. Ratings and ad sales wise, though, for NBC. That's changed quite a bit. The show definitely does not miss a beat with Larry leaving. So in 1996, Seinfeld makes $150 million of profits for NBC after paying ad agency commissions and all the production fees that they're paying to Castle Rock for whatever it is, 80% of the actor's salaries and sets and the production and all that.

In 1997, the show makes $200 million in profits for NBC. So that's the revenue they got from advertising minus the cost of paying Castle Rock for the show. It's $200 million. And I think also the cost of commissions to ad agencies for the advertising. I think it was actual profits. Because to put that in context, NBC's entire profit during that era was about a billion dollars a year.

So 20% of the network's profits were coming from Seinfeld directly. And probably more than that, because those directly attributable numbers actually understate the value of Seinfeld. Because the way NBC would sell their ads, let's say you were General Motors, you wanted to place a $30 million ad buy for Seinfeld that season. You can't do that.

The only way you can get $30 million worth of media on Seinfeld is to buy $200 million of media on primetime at NBC that season. Bundling, baby. Bundling. Yeah, exactly. Exactly. Then there's all the value that Seinfeld delivers in terms of launching other shows or propping up other shows, just like Cheers did for Seinfeld. Right. So it's how much revenue did it catalyze? And then also that it served as a launch pad for other shows.

That sets up the 1997 cast renegotiation of their salaries. Because they haven't been making anything near where Jerry was, and they have no back end. It's not like the cast of the show owns the show like the creators do. They're paid actors. They're employees. They just get their Union Guild standard residuals in the show, which is peanuts.

I think Jason Alexander has been quoted as saying that each of them, probably lifetime in standard Guild residuals from Seinfeld, got a quarter million dollars or so. But they were making good salaries at this point. Yes. Early on, it was nothing. But then by this point, I think it was $160 ,000 per episode that they were making now that they were big stars in the number one show.

But they start getting pretty nervous because they're like, no,

this shows days might be numbered. Like, we don't know how long Jerry can keep this going, how long Jerry will want to keep this going. Larry's already left. They're both rich beyond anyone's dreams here. They realize that after the eighth season, they kind of have a now or never moment where they need to hold out and negotiate for much higher salaries.

Which is incredibly awkward because the relationships between the actors and Larry and Jerry was always fantastic on set. Yes. It is notoriously a very professionally run show. There's no like drama between people. Whenever issues came up, they would resolve them and move on and try to get to the root of it. And they would actually help each other with their acting, which other TV shows like there was an unwritten rule that actors didn't give notes to other actors.

Right. So it creates this big awkwardness of we're all going to hold out. Right. I mean, at the end of the day, Jerry holds all the cards because he's the one who decides whether the show continues and how. Right. Nonetheless, they get it all done at the deadline for the ninth season. And Jerry supports the cast by telling NBC and Castle Rock that he will agree to come back for a ninth season in 1997 into 1998.

But only if the whole rest of the cast also signs on. He's not going to come back if they aren't able to sign all three of the other cast members too. So they reach a deal. $600 ,000 per episode for each cast member for one season plus an option to extend that same deal for a second next season, hypothetical 10th season if the show comes back.

Which is all dependent on Jerry. Yes. So on season nine, the cast effectively did secure what they had set out to do. It wasn't like the highest number that they originally asked for, but it did get them the amount of money where they don't need to work again. Yes. Because all of them are extremely typecast now. It's like the worst thing as an actor to be on a number one show in an extreme role like any of these roles.

And not have back end. And not have made your entire rest of your life's income from that show. Because it's just hard to get other parts. So at $600 ,000 an episode, that's $14 ,400 ,000 for each of Julia, Michael, and Jason in that season. Good. Like, yeah, not what it would be if you had back end, but like you could live the rest of your life on that when you may have cut off your ability to make big money from acting ever again in the future.

So with Jerry now at a million dollars an episode, each of them at $600 ,000, that means that the cost per episode of talent is $2 .8 million, which now means that the cost of each episode is, I don't know, $3 .5 million. But NBC is absolutely happy to pay this because of the giant advertising profits. Yeah. So $70 ,000, $80 million in production costs for the season.

Okay. We're going to make $200 million directly from ad sales, let alone all the other secondary benefits that come from it. Yep. And we should note here, too, that Jerry's $1 million per episode salary made him the highest paid TV actor in history at that point here in season nine. Yeah. Without back end. Yeah. Just from the per episode fees.

Just from the per episode fees. So all of this leads here at the end of 1997 to Jack Welch inviting Jerry Seinfeld to brunch to discuss a hypothetical 10th season. Jack Welch. The CEO of the conglomerate General Electric, which is at the time thought to be the best run company in America, in the world. Yep. And I think the most valuable company by market cap in the world at this point in time.

Yes. It is worth Jack Welch's time to take this extremely seriously and invite Jerry Seinfeld to brunch. And talk about a potential season 10. Yes. But listeners, before we tell that story, now is a great time to tell you about one of our favorite companies, WorkOS. You have heard us talk about this all season. Once you find product market fit, the fastest way to grow is upmarket and enterprises won't buy your product until you have gotten enterprise requirements like single sign on, SCIM, that's SCIM, permissions, audit logs.

WorkOS gives you all of those as drop in APIs. But the twist now is that it's not just your customers' employees who need to get into your app anymore. It's their agents. Which brings me to Kramer. In the classic season eight episode, The Bizarro Jerry, Kramer wanders into an office and just starts working there without ever being fired. When he, Kramer, finally does get fired, quote unquote, for sloppy work, he says, I don't even really work here.

This, listeners, is the situation for most agents today. People just hand out shared API keys to an agent or borrow human login credentials with full permissions, but obviously with very little accountability. It's really not that different from Kramer managing to get an employee badge. Yes. So WorkOS built the right infrastructure for this, a signup form for agents.

It's called auth .md and it's an open protocol. You publish one plain text file to your domain. Auth .md tells any agent how to register, what your service offers, and what it's allowed to do. An agent reads it, signs up on the user's behalf, and walks away with its own access token, scoped exactly to what it needs, and nothing more. A real world example is Neon, the database company that Databricks bought for a billion dollars.

More than 80% of their databases are created by agents, not people. An agent reads neon .com slash auth .md, spins up a database scoped to that project, and a human claims it later with one link. Nice and clean, and much more secure. Auth used to mean proving you are you. Now it means proving your agent is allowed to do this specific thing as you right now with limits.

That's how you get in the door with enterprises now, and it's why OpenAI, Anthropic, Cursor, Perplexity, and hundreds of other AI startups build on WorkOS. You can learn more at workos .com slash auth hyphen md, and just tell them that Ben and David sent you. All right. So Jack Welch invites Jerry to brunch at the end of 1997. They set it up in the then -CEO of NBC, Bob Wright's apartment in New York City on the 38th floor of the Trump Tower.

In attendance from the NBCGE side are Jack Welch and Bob Wright, the NBC CEO. Helping prepare for the meeting were Warren Littlefield, president of entertainment, and Don Olemire, who is NBC's head of LA Operations, which is the location of the operations of the show of Seinfeld since it's filming in LA, which I still can never get over that Seinfeld was filmed in LA.

But even some of the exterior shots of the apartment are recreations of New York buildings in LA. I know. I know. I don't like to think about it because it feels wrong. So that's the GE, NBC side. And then Jerry is obviously there, and George Shapiro and Howard West, the talent managers, agents, are there too. They settle down to brunch, and the NBCGE team brings out slides, like presentation slides.

Jack Welch starts giving the presentation to Jerry Seinfeld over brunch, making a presentation, arguing that the show has not yet reached its peak. It can go higher. It can get bigger. You can do more. Jerry, we have the data. The audience wants you back. It's not over. You haven't reached the top.

Wow. Jack concludes his pitch to Jerry with this line. You know, Jerry, I go all over the world.

Everybody who talks to me, they only want to know one thing. Is Jerry Seinfeld coming back for another season? And that line about it hasn't peaked, that is one of the things that is going through Jerry's mind, in addition to exhaustion and having really not started his life because he's just been doing this for 10 years. Yeah, he's 43 years old at this point in time.

Right. There is the concern that the show will keep going past its peak and he doesn't want to see it. So the only way to go out on top is to go out before you reach your peak because you're not going to time it perfectly. Yep. Yep. Yep. All that's going through his mind. So Jerry starts demurring after Jack's pitch sales job here. He's not outright declining, but he's making noises.

He's like, ah, gosh, I appreciate it, Jack. But I don't know that I really can keep it going. They say, all right, well, don't make a decision now. Don't make a decision now. The meal ends. Everybody stands up. Jack says, Jerry, come over here for a minute. I want to talk to you one on one. He takes Jerry Seinfeld to a corner of the room.

Jack takes out a piece of paper and he starts writing some numbers down on the paper. He writes down five million dollars.

Twenty two. Twenty two episodes. One hundred and ten million dollars. He hands it to Jerry, says this is a firm offer for your salary for next season. Five million dollars an episode. If you come back and do a tenth season. Jerry is already the highest paid TV actor in history at one million dollars. And Jack Welch is handing him a piece of paper.

Not not not just like GE executive Jack Welch. Mr. Operational Efficiency Six Sigma Black Belt. Yes, people are replaceable. Go listen to our Home Depot episode about how cost focused Jack Welch and GE is, is making Jerry an offer, a firm offer to five X his already record salary. That hundred and ten million is eleven percent of NBC's total profit for the year.

Yes. That is being offered to him. As salary to Jerry. Yes. Not as like budget for the show. Who already has the back end in the show. This is how valuable Seinfeld is to NBC to GE. So Jerry says, well. All right, thank you.

I'll get back to you. Keep in mind, listeners, that Seinfeld is the only show in history from this last season to ever command over a million dollars a minute for advertising rates, a feat only previously accomplished by the Super Bowl. Yep. Yep.

So the group disperses and Jerry says to Howard and George, let's go for a walk. Go for a walk in Central Park. They stop and they sit down on a bench at 81st Street and Central Park West. And Jerry looks at George, looks at Howard and says, guys, when I was 21 years old, I sat on this same bench bench with my dad when I told him that after college I was going to go into stand -up comedy as my career.

And he thought it was a great decision. He backed me all the way. He said he wished he could have done it.

So what do you think we should do? Howard looks at Jerry and he says, gosh, if it's me, I'd love to do one more season. George looks at Jerry and he says, if it's me, I think it'd be great to go out while we're on top. Howard says, you're the guy making the show. It's your call.

A couple days later, December 26th, 1997, day after Christmas, the New York Times runs an article. Oh, they run this article on A1 in the top left corner of the paper. Yep. Front page news. Seinfeld says it's all over and it's no joke for NBC. The article reads, Mr. Seinfeld, the most popular television comedy of the 1990s and the centerpiece of the most profitable night in television history, will stop production at the end of this season.

Jerry Seinfeld, the show's creator and star, said yesterday. Yesterday being Christmas Day, 1997. Mr. Seinfeld said his decision did not hinge on money. Instead, he wanted to follow the tradition of standup comedians and leave the stage with the audience wanting more. Jerry would later say about the decision, I thought about the audience.

How are they feeling? Where are they? I was trying to perceive it like a comedian on the stage. When you've been on the stage for a pretty long time and nine years is a healthy run and they're still screaming. If you can get off, they'll scream even louder. They'll never forget you. That was the best business decision that Jerry Seinfeld ever made.

Because on the surface and at the time, and for a long time after, the narrative around this is like, oh man, Jerry, gosh, he was so burned out. And it was comedic timing. It was artistic. It was personal. But man, it was a terrible business decision to walk away from $5 million an episode. And you're about to make the argument that it's because they went out on top that syndication went nuts.

Is that what I'm hearing? That's the argument I want to make. Is that actually it was the best business decision that Jerry Seinfeld ever made. Okay, so let's explore that. So in the hypothetical world where they do season 10, season 11, Jerry's making hundreds of millions of dollars out of each one. They're good, but like it's getting tired.

Kind of jumps the shark. You believe that there would not be the staying power to go through six syndication runs at very high dollar amounts, including recently here in 2026 with Netflix. Maybe I could see that. I think so. I think this is the taste left in people's mouth. It's the taste left in people's mouth. And the reason that three decades later, Netflix has paid a billion dollars to the cap table of Seinfeld this decade.

Over a decade. Over a decade. is because of the cultural relevance of Seinfeld.

And it's Jerry's quote. It's Jerry's quote. If you can get off that stage when they are still screaming, they'll never forget you. And by our estimates, Jerry, so far, has earned somewhere around three quarters of a billion dollars from ongoing syndication sales, DVD sales, all back end deals of Seinfeld over the past 30 years. And yeah, my argument is that a huge part of that value was set up and protected by Jerry's decision here at Christmas 1997 to end the show, go out on top.

Because if you look at the data over the 28 years since Seinfeld ended and the 31 years since it first entered syndication, not only has Seinfeld never gone off the air, interest, viewership, basically has remained constant. As in like, very, very, very high. There are many times the number of people I've seen estimates of 3x to 5x who have watched Seinfeld since it went off the air compared to when it was on the air.

Right, right, right. So if you take that, the majority of Seinfeld's audience have come after that Christmas decision. It's an interesting hypothesis. A different hypothesis was put forward by the Harvard Business Review. This is, listeners, David and I read this quote, I want to say like a decade ago. Yeah. And have referenced it a dozen times since because we think it's like one of the all -time greatest business quotes.

No doubt it is. And it is delightful that we get to do an episode on Seinfeld and bring it up. So I've got the whole thing here. Somehow, Jerry ended up getting interviewed by Harvard Business Review in 2017 when he was doing one of the promotional cycles for comedians and cars getting coffee. The HBR interviewer says, so you cut off the show when it was so successful, really as a result of the fact that you were burned out.

Why didn't you try to come up with a more efficient, more sustainable way to make the show? What would McKinsey have said if they'd come in and said, there's a better way to do this? And Jerry says, who's McKinsey? The interviewer says, well, McKinsey's a big consulting firm. Jerry says, are they funny? The interviewer says, no. Jerry says, then I don't need them.

The interviewer says, no interest in efficiency or, and Jerry says, no, no. If you're efficient, you're doing it the wrong way. The right way is the hard way. Well, for him, it's, it's his extrapolation of the thing that he learned going on Carson when he was in his twenties, that if you don't just grind and find new material the hard way and write and think and rewrite and go through all the pain, then you're going to run out of material and you're going to become irrelevant.

Like you, you must go through the fire. And look, I think there's two things embedded in this McKinsey back and forth here that we love so much. One, for our purposes of the episode today, is the point that even in 2017, the consensus view was that this was a bad business decision that Jerry made to more universally. Jerry is so absolutely right in what he says in response to the interviewer here, at least in any creative field.

And I think any entrepreneurial pursuit is by definition, a creative field. The efficient way is, is the wrong way. Like if you're going to do the accepted, efficient, what McKinsey will tell you to do, you are going to get accepted, normal, efficient results. If you want outlier results, you need to take the hard way. It's the Bezos -ism that he likes to invent and wander.

Without wandering, you cannot invent. They are intrinsically linked. Yep. Yep. So we're in the last season of the show. What happens next? Well, first off, the second syndication cycle, kicks off. Sony goes to work again. And this time they can add cable syndication in addition to local broadcast affiliates. Which is the thing that has been true my whole life, which I said at the end of our last episode, which is you can't turn on the TV without finding Seinfeld on some channel, be it broadcast or cable.

Yep. So here's the amazing thing that happens. Remember we told you in the last syndication cycle that Castle Rock got acquired by Turner, by TBS. When Sony goes out to bid the cable rights, TBS, Turner, makes an over -the -top bid of a million dollars per episode for four years of cable rights, which is almost $200 million. Wait, so TBS is buying the rights from themselves, but they have to go through Sony to do it because Sony owns the distribution rights? Yes.

This is why the distribution rights remaining with Sony was so important to the business of the show, because it means that bona fide real bids always have to happen for Seinfeld rights. I see. Because if- TBS couldn't just say, nah, it's not going to market. We got it. Fascinating. And then Turner, of course, gets acquired by Warner Brothers.

So fast forward to today with the streaming rights, which we're going to talk about in one second. Warner Brothers can't say, ah, no, we're just going to keep Seinfeld on HBO Max. The thing we own. The thing we own. No, no, it's got to go out to bid because- Sony has the right to distribute it. Yep. Warner Brothers doesn't actually own the decision making for does it get to go on our service.

They have to make a bona fide bid in addition to others like Netflix and the free market for it. Free market capitalism driving maximum shareholder value to the Seinfeld cap table. All right. So what is the 1998 syndication fetch? So in total, across the renewed broadcast affiliate sales, cable now with TBS and international, it brings in a reported $1 .1 billion of total revenue here in 1998.

So for those keeping track at home, the show's not even over yet. And syndication has already fetched $1 .6 billion. Sure, making that decision at Christmastime for Jerry go down a lot easier here when the second syndication cycle happens. Which brings us to the finale of the show. I think the thing that people don't realize about the Seinfeld finale and that I didn't realize until doing this research was that it's a thank you.

It's a thank you to all the guest stars that made Seinfeld what it was over the years. Yeah. So what is the finale? For those who haven't seen it or those who don't remember, on May 14th, 1998, they aired a special extended episode. They brought back Larry David to write it. He had been doing other projects for the last two years. And the gang is put on trial for some sort of new law.

Violating the Good Samaritan laws. Where they watch someone get held up in a carjacking and they do not intervene to help. And they are bringing in dozens of past guest stars as character witnesses to attest to if these people are good people or not. Which is just so perfect for the theme of the show. But when you're watching it, you kind of do think this might be a little excessive.

Yeah. Yeah. This might be a little much. And the way it ends, spoiler alert. So like stop this episode right now if you care about not knowing how Seinfeld ends. They are convicted and go to jail for violating this Good Samaritan law because the parade of Seinfeld guest stars over the years paint this very clear cut case that these are not good people.

Yeah. It's perfect and poetic. And also at the same time, I completely get the public outrage at how much they didn't like it and how much they hate that these characters just all end up going to jail as the end of the episode. Yeah. Yeah. The fact that nobody likes it doesn't really matter. If anything, it maybe kind of adds to the lore of the show because it's the ultimate.

No, there's no there's no point. Nobody learns anything. There's no development. Yes. So much so that we're not even going to give you a satisfying finale. And yet it is watched by 76 .3 million viewers, which is 58% of all viewers that night. The finale ad rates eclipsed the Super Bowl. So NBC sold 30 second spots for as much as $2 million.

This is back in 1998. That is about 54% more than the $1 .3 million you would pay for the same 30 second advertisement during the 1998 Super Bowl. Yeah. One of the advertisers during the finale is Apple, which is in the middle of their Think Different campaign. Right. And they run a special commercial where they add Jerry at the end to the Think Different campaign.

He is the final black and white person that flashes up on the screen. And it's the only time they ever ran the Think Different with Jerry in there. Yeah. So good. Interestingly, this was not the highest or really even like close to the highest watched finale ever. MASH, Cheers and The Fugitive were much higher numbers in their finale. But to me, the interesting thing is I've never watched a single episode of any of those shows and no one's paying anything to get the streaming rights to them now.

They're not relevant. They didn't transcend generations. And there's something very, very interesting and intrinsic about Seinfeld that made it last, even though on the highest day of heat and light and attention on them, they actually weren't the biggest finale ever. Yep. And audience reception wise, the finale was not loved, at least. But again, it doesn't matter.

And to put a perfect comedic button on it, the joke that Jerry makes in the jail cell is the joke that opened the pilot, where they are talking about the second button on the shirt, even while they're sitting there in jail. And then the last perfect little piece of comedy is, David, did you watch the Curb Your Enthusiasm finale two years ago, maybe 2024? No, no, I did not.

But I did watch the Seinfeld reunion on Curb. Oh, yeah. Everyone should know that on Curb, they did a arc of four or five episodes that were fictional Larry David planning the Seinfeld reunion. In the finale, again, spoiler alert, if you've never seen the Curb Your Enthusiasm finale, give you three seconds to pause.

The finale is a trial, just like Seinfeld. Larry gets convicted. Larry goes to jail. He's sitting in the jail cell. And someone walks in and he has a visitor. And it's Jerry Seinfeld. And he opens up the door and he says, hey, turns out it's a mistrial.

But you don't want to end up here. This isn't where it ends. You don't want this. Trust me. Nobody wants this. Yeah, yeah, yeah. And it's a 25 year payoff from a joke that was set up in 1998. So good. So good. I have seen that clip. So good. All right. So I think let's put a bow on the economics of Seinfeld's first run on NBC. Ignoring all syndication.

No syndication. Just the first run business for NBC. NBC in total made about $2 billion in cumulative advertising profit from Seinfeld during its run. But again, that vastly undercounts the actual value to NBC because of the dynamics of, well, you can't buy Seinfeld. You got to buy primetime, et cetera, et cetera. But no ownership because they rented it.

Yep. Castle Rock takes a loss on the show by design. That's right. By design, they lose money on nine years of Seinfeld. Kind of like the first nine years of an early stage venture portfolio. Yeah, exactly. Exactly. Although that's not fair because in years, what, six, they started participating in syndication. Right, right, right. You're scoping this just to.

No syndication, just the first run. Columbia slash Sony. They're like a did not play. They make zero dollars. They spent zero dollars. Again, by design. Cumulatively, Jerry made 50 to 60 million dollars in salary from all of his seasons of Seinfeld as the star, creator, co -writer, et cetera. You know, huge, huge. But peanuts compared to the back end.

Larry's salary during the show, as we talked about, has never been reported, but it's safe to say much, much lower for Jerry's and only for seven seasons. The rest of the cast we talked about, they're just employees. In total, they each probably made 25 million or so, kind of give or take. But of course, from a syndication standpoint, the business is just getting started.

Right. In some ways, the story here on our episode is over, but the business is barely started. So to date, Seinfeld has had a record six plus broadcast syndication cycles more than any other show in history for broadcast syndication. No other show ever got five, right? Not on broadcast affiliates, just on, you know, like cable TV land, etc.

Over the decade of the 2000s, the show continues to do great. By 2010, the show had done 2 .7 billion dollars in total syndication revenue for off network and cable. Three years after that, by 2013, that figure is up to 3 .1 billion dollars. Along the way, they also start to drip out DVD home video releases in a great business model move.

Only one or two seasons at a time over several years, followed by the complete box set at the end of it for true collectors. In total, DVD home video generates, we estimate, about another 500 million in revenue. So call it up to 3 .6 billion total post airing revenue. It's actually a fun coda to the cast economics with the DVD releases. They hold out again to get back end in the DVD releases in order to come back for the commentary.

I think this is part of why it takes so long to get the DVDs out. Oh, interesting. And, you know, totally makes sense on their end, right? Like, it's just the last point of leverage that they have. And it gets reported that each of the cast members get kind of, like, low tens of millions each out of the DVD sales. Along the way here, throughout the 2000s and into the 2010s, I think Jerry and Larry start to realize that basically their main economic job from now on is to be on a permanent book tour for Seinfeld, the show.

Like, to be permanent ambassadors to the continued cultural relevance of the show. Without being too on the nose, like, I'd say they both pursue their artistic passions and a secondary benefit to the work that they make is that it reinforces the relevance of Seinfeld. And, like, you know, Curb reinforces Seinfeld, especially when you put the reunion of Seinfeld on Curb and Jerry doing his stand -up.

He would be doing stand -up no matter what. But it definitely reminds people that the show Seinfeld exists. Well, I think all of these things are true. I think Larry and Jerry made the decisions to do what they did after the show, the activities and projects they pursued out of personal and artistic reasons. And kind of if you look at this, like, through the lens of our Disney flywheel from our Disney episodes, the way you maximize the value of IP in a flywheel is you generate lots of other IP around it, but you don't disrupt the core thing.

And that's exactly what Jerry and Larry do. They never disrupt the sanctity of what Seinfeld is. But Jerry's stand -up, comedians in cars getting coffee, the stand -up specials, again, even Curb, these things never compete with Seinfeld. They only focus attention back on it. Yep. And look, like, they're probably making at least as much money from the increased attention on Seinfeld as they are directly from any of those things, even Curb.

I mean, Curb was great, but it was on HBO, so it didn't make a lot of money. Like, Larry David made a fraction out of 25 years of doing Curb as he did from seven years doing Seinfeld. Yeah. You know, we can't do this whole episode without bringing up the raging racist remarks that Michael Richards had in his stand -up. In 2006. Let's just scope this to the business, because that's what this podcast is about.

Aside from just how absolutely awful the comments were, it's a problem for the business. Totally. It puts the business model at risk. Right. If you are a Seinfeld cap table member like Castle Rock and these folks, the goal is to keep this asset going, to keep people loving it. And if that could have spiraled into a boycott the show Seinfeld thing, and I think everyone had to tow a very tight rope between, one, their feelings about the issue, two, their feelings about Michael as a friend of theirs, three, making sure to appropriately condemn condemnable words, but four, make sure that Seinfeld is able to be preserved as an asset as they go through that PR crisis.

Even if it just creates some subconscious negative associations and ick for viewers, it's really, really sensitive, the value to perception here. So it was interesting, kind of going back and watching a lot of the commentary on that. Jerry offers up things like, well, you know, a comedian on stage is not actually that person. It's sort of a person playing a role.

But if you look at it from a pure comms and business incentives perspective, you need to condemn the act enough to make people go, okay, good. Jerry doesn't have his hand in the sand here. He realizes how awful that was. But not condemn it so much to make people go, well, then I don't like Kramer either. And I don't want to watch Seinfeld because of that.

So it's kind of interesting. The art of stewarding a business asset involves a lot of that like tightrope walking. Yeah. A business asset that is where the value is so tied to the present day cultural relevance. Yes. So, yeah, then there's the Internet that's associated with all this, too. I mean, it's kind of amazing. Again, back to Seinfeld hitting its stride right as the Internet was going mainstream.

The meme ability, the catchphrases, the gifs on the Internet. Gifs, gifs, gifs, gifs, gifs. Sorry. Oh, it's like hearing a sour moment. That's a memeable moment right there. Like an untuned piano. No, I'm sorry. I apologize. The gifs on the Internet, you know, like the modern Seinfeld Twitter account becoming one of the early big mainstream Twitter accounts where the whole premise is, you know, Seinfeld episodes in the modern day.

That's all part of it, too. Yeah. Which brings us to streaming. Yes. So syndication is still a thing on broadcast networks and cable stations, but that's not where the big money is anymore. It's these streaming deals that really get started in 2015 with the Hulu deal. So that was a $150 million five -year deal. Yep. It would go up from there.

So two years later in 2017, Jerry signs a personal deal with Netflix to bring comedians in cars getting coffee onto Netflix. It was on Crackle, right? It was like a web series. It was on Crackle. Do you know what Crackle was? I have no idea what Crackle was. Crackle was Sony's early in -house web streaming network. Got it. That's why it was on Crackle.

And then that went away. So that sets the stage for this Jerry Netflix deal to bring comedians in cars over and to do two new stand -up specials for Netflix. Because when the first renewal cycle comes around for Seinfeld streaming rights in 2019,

Netflix does a landmark deal with Sony worth reported well over $500 million for five years of worldwide exclusive streaming rights to Seinfeld. That is a huge amount of money. And this is a result of Netflix had Friends and The Office, which I think became their top -viewed shows, and they were losing them because Friends—it's so funny, all three of these shows were on NBC.

Friends was produced just like Seinfeld in the FinCen era, and it was produced by Warner Brothers, which is exactly where the rights are held for Seinfeld. So you might say Friends and Seinfeld are the same. But in the case of Friends, Warner Brothers also controls the distribution rights. Those were not ever owned by Sony. So HBO Max is about to become a thing.

Warner Brothers is like, nope, Netflix will take Friends back. We're going to use that on our streaming service because we control the distribution rights. And The Office was produced after all the FinCen stuff, so NBC actually owned it directly. And they go, nope, Netflix, we'll take that back. We're going to put that on what's about to come out and be called Peacock.

So Netflix loses their top rerun sitcom shows. They need Seinfeld real bad. And Sony owns the distribution rights and is not coming out with a streaming service. So they're kind of the only ones to go to and say, give me 180 episodes of people loving their 90s and 2000s sitcoms. Yep. So it all goes down that same year in 2019. Friends with HBO Max and The Office with Peacock, they have to announce like a dollar value for the deals that they do because they have to calculate all the guild residuals.

And I think the creators did have some back end. Yes, yes. Kind of suck to have back end in a deal where the distribution wasn't independently owned. Right. Because it means that like you just kind of have to trust that the invisible wall between the sides of the company exists. And the value is the real fair market value. Yep. So they announced that the Friends deal is $425 million for five years.

And The Office deal is $500 million for five years. But this is not real money. So all three of these are in the same ballpark. But Seinfeld is the only one where there's actually a company paying another company. And then that brings us to this year with the 2026 Netflix renewal reported as slightly lower than the original greater than $500 million deal.

But this time it's exclusive for Netflix only in the U .S. and Canada, not worldwide. So Sony is basically taking the bet here of, oh, we can start selling international streaming rights for Seinfeld separately and monetize those better, which they will begin selling shortly here. Yep. In addition to that, they're still doing the other forms of syndication.

So basic cable to Paramount for $45 million -ish. They had a full cycle four and a full cycle five and a full cycle six. So all told here, all the syndication ever, all the off -network and international and cable, the streaming plus all the DVDs, this is around $5 billion to the cap table of Seinfeld from all of these deals. And it's real liquid cash changing hands every five years when they do a renewal cycle because Sony has no streaming service of their own.

Yep. And all of that is just so far. I think at current course and speed, you can reasonably expect another billion plus in streaming rights to get stacked on top of that every decade from Netflix or whoever takes it next. Assuming it stays this relevant, but you would think if it fell off in relevance, it would have happened by now. Yep.

And it definitely hasn't. And then, you know, total, total revenue, you stack the $2 billion in profits for NBC from first run, you're at easily $7 plus billion for this little TV show that shouldn't have gotten made. And by my calculations, David, this thing probably in total, including everyone's salaries, even that crazy high last season, cost about $250 million to make.

And those costs stopped in 1998. So this is an asset that's now well above $7 billion in returns that keeps stacking another billion dollars every decade. And all the costs are paid for 30 years ago. It really is like a Silicon Valley startup type story. Yes. As a TV show. I mean, it's not Google or Facebook. We're not talking about trillions of dollars or NVIDIA here.

But that that level of investment would continue returning cash flows for that period of time of that magnitude. And it's a 30x on its costs. Yeah. Incredible. That's the other thing is if you just divide 7 point something billion by 250 million, that's a 30x return. All right. Should we transition to analysis? Yes. So one big thing I wanted to talk about is why is Netflix buying this? Like, why is this particular asset and this category of assets, Seinfeld, The Office, Friends, so valuable to a streaming service? Well, streamers need content to do two jobs.

One is acquisition and the other is retention. Yep. These are awesome retention vehicles. Yes. So acquisition is a totally different thing. That's what the new content is for. That's the like super high polish thing you can market to get people to sign up for your service. And I think I'd be curious to get feedback from people in the entertainment industry.

I think the reason why every show is like eight episodes now instead of 22 to 24 is because in broadcast, it was an ad based business model. So you needed something on the air always. And then you needed to sell ads for eight minutes of every half hour. And so you'd take 22, you'd take 24, you'd take 30 episodes if someone could make you 30 if it was a good show because it suits your business model.

On streaming, the point of a new show is to get people to sign up for your service. And I'd be willing to bet that there's not a big difference between a great show with eight episodes and a great show with 20 episodes, how likely it is to get someone to sign up. And these things are expensive now. It's, you know, eight, $10 million per episode for some of these high polish ones.

There's no way that the $10 million you spend on the 14th episode of a season is justified versus sinking it into the sixth episode of another show that you could do instead. Once you kind of like wrap your mind around, oh, shows are now acquisition vehicles rather than ad inventory carriers, you sort of understand why shows are so different now than they used to be.

Yep. And the other thing, in addition to the fact that these seasons are really short, they're mostly not comedies. Yes. It's really weird. Like everything is a drama or spectacle or a sci -fi. And I was really grappling, like, why don't we see more Seinfelds now? Why are there so few things that look like this? Part of it is I think that comedy doesn't travel internationally.

And these businesses now, these streaming businesses, are all scale economies businesses. So whatever you make, you want to expose it to the broadest number of people to justify its cost. And so it's really hard to greenlight something where, like, you know, British humor doesn't translate. When they brought BBC's The Office over to the U .S., it bombed.

And they had to completely remake the show in order to make it appeal to an American audience. So I think that's part of why you get white lotuses, but you don't get Seinfelds anymore. It might also be kind of as you see in the Seinfeld story, when you're just doing comedy, it takes a while to get the audience hooked. You can't just, like, hook somebody right away with an incredible drama or a flashy sci -fi or something like that.

Like, it's a slow burn. And that just doesn't make sense in the acquisition side of the business model for streamers. Right. It's not even obvious that I would sign up for a streaming service to get access to a new comedy. Like I watched Tires because I was already a Netflix subscriber and it was awesome. But would I have gone to sign up for Netflix on my own just to watch Tires? I would have needed a pretty strong endorsement and people endorse comedies differently than they endorse dramas because you're like less, to your point, sucked into the story.

Now, flipping over to the other side, retention. That is Seinfeld's job these days. It is like the single perfect retention vehicle. I'm happy to subscribe to a service where worst case, if I'm surfing around and I can't find something, there's always Seinfeld. Ah, that sweet, warm Seinfeld. It's comfort food. Yes, exactly. It's really weird because it started as this like jarring, crazy, daring show.

And now it's comfort food. It's the chicken pot pie of Netflix. And it's like a churn reducer in two ways. One, maybe I signed up for K -pop Demon Hunters. Yeah. And then I realized Seinfeld's on there. Okay. Well, actually, I got hooked on Seinfeld and I'm going to watch every episode of that while I fall asleep at night. So that's like one thing.

But two, now that I know it's there, I'm just not going to cancel. I don't want to lose access to something that I think I theoretically at any given time might want and decide to watch. Yep. So yeah, that is why it's so valuable to streaming services. Incredible retention tool for streamers. So while we are on the topic of the weird incentives that fall out of subscription -based streaming versus advertising -based TV networks, this is a bit of a brain buster.

Tell me if you agree with it or not. Okay.

NBC's 90s advertising business model incentivized attracting a more educated audience than streaming. Yep. I buy that because advertisers are willing to pay for audience demographics. Whereas in the streaming world, everybody pays the same $12 .99 or whatever it is a month. It doesn't matter who you are. Right. In the streaming world, you're just a vehicle for your $12 .99.

Mm -hmm. There are lots of counter arguments to this that I'm open to, but it is sort of an interesting brain puzzle that streaming doesn't incentivize you to get the most valuable viewers. Well, you're happy to take the highest quality viewers. You just want viewers, though. You just need viewers. You want everybody. Yeah, you don't differentiate.

And look, streaming is historically subscription -based, but they're adding ad tiers now. Netflix is adding an ad tier. Right. And those advertisers will care who the subscribers are. Yep. Okay. So my big question for you in analysis, before we get to powers and quintessence, we opened the episode by saying this couldn't happen again today, that this was so anomalous that needed to happen at the exact time that it happened with the exact people who made it.

I have a list of things that I think couldn't happen today, and I'm curious your thoughts on them. Great. I've got a list, too. You want to trade back and forth? Yeah, let's do it. So my first one, arguably the whole show, it was so creator -led with essentially no design by committee. I bet that's pretty hard to find today. Well, it's easy to find on YouTube or podcasts or creator media.

Completely outside the system. Completely outside the system. And it is almost impossible to find inside the system because the stakes are too high now.

Executives at some organization are involved, whether it's the streamer or the production company or the studio. The budgets are so big. That was my point about the stakes are too high. You want to make a TV show these days, you need a lot of freaking money. There's no way that something could start like Seinfeld back in the day with that budget, that set of episodes.

Right. I think Always Sunny did, but that's now 23 years old or something. Tires, I think, did. Tires was pretty low budget when it started. And it was creator -led independent. So yeah, I guess it can happen out there. But by and large, you want to make a TV show, you need a lot of money, which means you're going to have suits weighing in on what's going on.

Which is just going to make everything worse. Those damn suits.

Yep. All right. Next for you. No doubt the independent cap table and incentives associated with Seinfeld made it what it is today. The fact that Jerry and Larry, as creators, got this incredible deal and sort of set of circumstances that let them get huge back in from the production company. And then they made the show artistically what they wanted, but they were incentivized for the long run, always.

Yes. Made all the difference in the world. It is probably impossible today to make a TV show that you in any way make $500 million from. I mean, you can make it in secondary ways. You can get famous from the TV show and then pick up sponsorships and get to invest in companies and stuff like that. But to truly own enough of a show's long -term economics to make hundreds of millions of dollars, I think that's over.

That would only exist in the creator world, like podcasts and YouTube and it doesn't happen on TV. So the question is why? Because both business models are totally viable. The old media networks one where you're like, I don't want to own the long -term upside. I just want to have profitable business today. Or the one that the Netflixes of the world are doing where they do want to own all the long -term upside.

And follow me on this. I think it's because the distribution that happens today is on tech companies at their core, not on media networks, which I think were capital constrained. Tech companies are very, very used to making big investments up front the way that you would make in software with very high margins when you get to scale. But obviously, you're like way in the hole for a while until you get to scale.

You know, Microsoft's a terrible business with 100 customers, but an unbelievable business with a billion customers. The modern media company wants to own all of that risk like a tech company and pay for it up front so they can own all the rewards later in the success case, which is the exact opposite of the traditional media business. Right, right.

Or the traditional networks business. You know, what's interesting? I sort of expected going into this research to hear over and over that, oh, NBC realized their great mistake in not owning any of the back end of Seinfeld. And they let so much value walk. And it was this bitter lesson that especially once FinCin was repealed, they never allowed something like that to happen again.

That's the fact pattern. But actually, back in the day, the executives were fine with it. They were happy with the arrangement of, yeah, totally. You production companies, you're essentially the VCs. You take the risk. You make money on the back end. We get this great stuff that we can put on our network. We have a one -year payback period on a multiple of our invested capital.

Sell ad units. We're super happy. That works great. Yeah. I think it comes down to tech companies are trained to seek operating leverage and attract investors that want operating leverage. And that was not a thing when media was distributed by networks. But now that's the ultimate end state of the media distributors being tech companies. And back in the day, they were the only game in town, right? Like you were going to tune into NBC, ABC or CBS, and then eventually Fox too.

That was it? Yep. One other little piece of analysis before we get to seven powers. There's a very real argument here that FinCEN being repealed is one of the worst things to happen to the industry in the last several decades. Yep. The networks start saying, we're going to pick from the in -house things that we've sort of come up with to hit the airwaves.

It just means that you get bad stuff out there. Whereas if you have this thriving free market of a whole bunch of independently funded small studios coming up with things and you can buy from any of those, that's a much better world for content. Totally agree. And we heard that universally in the research. Like, yep, those were the good days.

FinCEN being repealed ended that. Yep. And consolidated where content can come from. Yep. Fortunately, the internet changed that. And we have, you know, the YouTube and the explosion of creator diaspora now. Yep. Uh, powers. This is actually going to be really fun. So let's see. Normally the way we do this exercise is seven powers are the seven things that could give a company persistent differential returns or the ability to be more profitable than their nearest competitor on a sustainable basis.

Who's the entity here? The Seinfeld cap table? Yeah, I think we should talk about it from the cap tables perspective. And it's what lets Seinfeld, the asset of the show, even when it was being produced and today, be more valuable than anything that competes with it. Other shows. Yep. Yep. Okay. I think counter positioning today might be the biggest one because it's the last of these huge retention tools left that is not captively owned by a streamer.

So it can come to market in a way that friends in the office can't. And you think that's counter positioning? Well, if you were to say friends in the office are its competitors, they are structurally hamstrung. Right. By their ownership situations now. If they did compete with Seinfeld to go to the free market and be able to go anywhere, it would hamstring their parent company.

Their parent companies would be making value destructive decisions to do that. Yep. At least based on their chosen current strategy of needing to have owned and operated streaming services. Yep. Scale economies all over the place. I mean, the fact that the world has an install base of 100 million plus Seinfeld fans. Oh, I agree. But I would say this is network economies, not scale economies.

Oh, that we're all like... The fact that you know all the memes from Seinfeld is extremely valuable to me. You're right. I don't think there's scale economies because the definition of scale economy is when

I can do something that is more profitable to me for the same input than one of my competitors can do because I have more scale. But this asset doesn't actually make any decisions or do anything. Yeah. I mean, like the only activity is... Netflix has scale economies. When Netflix decides to pay $500 million, it can make better use of the Seinfeld content and be more profitable on that acquisition than smaller streaming services.

Yep. But yeah. Branding? Maybe? It depends what you consider branding. Right. Is the whole tenor of the show branding? Is it just the logo? Is the... Like, I'd much rather watch Seinfeld than Big Bang Theory, but that's not because it's called Seinfeld and I trust Seinfeld more. It's because I think the intrinsic quality of the show is higher.

Yep. Yep. I don't think there's any switching costs here. No. Can't even think of what that would be in this case. Cornered resource. Obviously, they have the rights to Seinfeld. Maybe that is the power. It might just all be cornered resource. Cornered resource. We have a thing that we can sell that other people can't sell and make a lot of money on it.

Yep. And then the last one, process power. Not today, but there was... If you change this exercise to what did Seinfeld have when it was being produced that other shows didn't have, it's absolutely process power in the way they were making it. It's absolutely cornered resource in Jerry and Larry and some of the other writers that they had too.

I think there was process power clearly just to the act of making the show. I don't think Jerry or Larry individually, or if they were to come together again now, could repeat it. It was a magic moment. And in fact, the evidence is right there in Curb, right? Like, Larry had to run Curb differently than Seinfeld. He couldn't do again what he did at Seinfeld.

Curb was improv'd. Larry couldn't create the scripts and all of the intense effort and alchemy and magic that went into every week of Seinfeld in the same way. You just couldn't do it. All right. Should we bring this baby home and do quintessence? Let's do it. I know where you're headed. So, listeners, the way that we decided that we want to do our quintessence this time is to answer the question, what made Seinfeld such a ludicrously good TV asset to own? What made it durable? What made it continue to get renewed for these really high rates three decades later? And yes, there are comps in the office, which actually is my preferred thing to watch nightly.

I grew up when it was on. And so it's like more for me and it feels more modern and blah, blah, blah. Friends is arguably more valuable, but is held captive. So Seinfeld is like the one free agent in the top tier that actually can go and trade on the free market. Yeah. And look, of course, there's a whole list of these, most of which we talked about earlier in analysis.

But I think if you were to ask Jerry, at least, it went out on top. I think the driver is viewership begets viewership. So Seinfeld has been everywhere for the last three decades on a bunch of channels and streaming service. And because it has been omnipresent, there's so much demand today to watch it because we're so familiar. It is today's comfort food, even though when it launched, it was very uncomfortable.

I mean, during my childhood, teenage years, college, adulthood, it was everywhere. And I have all the jokes memorized. Mm hmm. Always on every channel every night. Yep. It's passed from generation to generation that way. I talked to my dad about it. In fact, we were prepping for this episode and my three -year -old son is sitting on the couch with me because we had the DVD on.

He was putting the DVDs in the DVD player. And he goes, he points to the screen. He goes, is that Jerry Seinfeld? I was like, oh my God, that's awesome. I just passed it to another generation. And then we're watching the DVD like interviews afterwards. And he points to the screen. He goes, there, there's Larry David. And I was like, I'm so proud of you.

Wow. Wow. Good for him. I know. Right. But it's this thing. My parents liked it. I liked it. I like it. It's so in the water in our society. There's a crazy stat from Nielsen in 2021. 41% of Seinfeld's then current audience had either been toddlers or not born yet when the series ended in 1998. Amazing. So you kind of have to just keep tracing it back.

Like, I think you might be right that it's because it went out on top. But the reason, in my opinion, is because the 1995 and the 1998 syndication cycles were so successful and exploded out of the gate that it created this in the water -ness to Seinfeld. Yep. I think, I mean, look, at the end of the day, it's a stew of all of these things.

But I don't know. I just think if they'd milked it for a few more years and quality had gone downhill, this thing is so hypersensitive to the aggregate cultural assessment and impression of it

that if at the end it didn't have that, like, greatest show of all time vibe in the culture, the engine wouldn't have continued like this. Yeah. Totally agree. And we're saying very similar things here. It's ultimately that coupled with quality. Like, the situational jokes that they set up just don't feel dated. Even though a lot of these things could be solved with a cell phone, but the intrinsic quality of the situations they are in still feels relevant today.

Well, more than 20% of America agrees with you. 22%. There you go. All right. Well, on this one, we've got some fun trivia that we should include here that didn't make the episode. Number one, the theme music. Yes, that was mine. The bass line. Boom, ba -dum, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom. I wish I had like a beep -beep -beep -beep -beep -beep.

Ben, tell everybody why the theme music is so distinctive. So, in the pilot on my DVD that I have, you can hear the original pilot with the original theme music, which is not what you are familiar with. The bass riff composed by Jonathan Wolfe is something completely different. And it interferes horribly with Jerry's stand -up at the beginning.

It's just like, it's tonally overlapping each other, and you almost can't make out his words. So, when Jonathan Wolfe got the call about it, he said, oh, I know exactly what I'm going to do. I'm going to treat Jerry's voice like the lyrics of a song. Yes. And I'm going to compose around that. Like, he's kind of carrying the melody. And he even felt like there was a tempo that Jerry did stand -up to, and it came in around 110 beats per minute.

That, like, that's how his jokes were told in that rhythm. So, he didn't create a theme song. He created a theme song system where he could uniquely compose on a synthesizer in front of him that had the bass guitar riff, you know, mapped to a bunch of different keys, and also all the little sounds, like, all the mouth sounds that he makes.

And he uniquely composes a theme for every episode that is slightly different, that fits in around Jerry's jokes in the intro. And so, he has this great quote on this. Every monologue was going to be a variation of the theme. So, whatever I did, I needed to architect it modularly so that it could be shiftable, changeable, like Lego music.

It needed to not conflict with his voice. So great. So great. And so distinctive. I mean, it's part of what makes the show. Yes. It's so different at the time, too. Of course, like everything else, the network execs hated it because it wasn't like anything else on the market. Of course. That's a signal of quality when the network executives hate it.

All right. That's number one. Number two. This has come up on Acquired before. Julia Louis -Dreyfus is, yes, from that Louis -Dreyfus family. The very large French commodities trading family. Yeah. Big multi -generational business. Has made an appearance before on Acquired in the Ferrari episode because Julia's grandfather was one of Enzo Ferrari's first clients and raced his privately owned Ferrari 166, like the first cars that Enzo made in Le Mans at the beginning of Ferrari.

Amazing. All right. That's number two. Number three. NBC had a corporate relationship with Nike. Hmm. And so any of the stars of any NBC sitcoms could just go to the Nike warehouse in L .A. and get all the swag they wanted. So how do you think Jerry Seinfeld started wearing Nikes? Oh. On Seinfeld episodes. Freebies. But yeah, we talked about this on the Nike episode that, like, you know, they had their athlete strategy and then they got into entertainment.

And this was part of it. Jerry Seinfeld was one of the first, you know, or big parts of Nike's get into entertainment strategy. All right. All right. That's what I got for trivia. Carveouts. Carveouts. So I decided for this one appropriately enough, I got to just do Seinfeld episode recommendations. Perfect. So the marine biologist, number one, by far, it's just the most, like, masterful piece of 22 -minute episode crafting I've ever seen.

It's great. A couple deep cuts that I'm partial to. One, the jacket, which I already mentioned. And two, the first Seinfeld episode I ever watched, I vividly remember this like it was yesterday. I was nine years old when this episode came out. I saw it air live on TV. I had a babysitter for the night. My parents were out. I got to stay up late.

And I had the TV on. It was the dinner party airing live, which is the episode with the black and white cookie. I will always, always remember Jerry eats a black and white cookie. He's talking to Elaine. He's like, Elaine, the world needs to look to the cookie. Racial harmony here in the cookie. What we can learn from the black and white cookie.

And then in the end of the episode, he throws up due to food poisoning from the cookie.

Oh, Jerry. Oh, Jerry. All right. What you got? For me, I have another Seinfeld related one. Everyone, if you have a browser open right now, go to Seinfeld .visualizingdata .com. There is the most insane web project I've ever seen called the Seinfeld Chronicles, an unnecessary data exploration by Andy Kirk.

This is a book. When various characters got screen time. It walks through why he thinks the show worked. What makes it unique. But the most wild thing to notice, it's all hand labeled. So it was him watching episodes on his couch with a spreadsheet open granularly every five seconds, pausing and labeling who's on screen, who's getting laughs.

I mean, the whole thing is astonishing that a human did this manually before AI. Wow. So I have the marine biologist up right now. There are 23 scenes in the marine biologist. Yeah, it's crazy. There you go. Seinfeld and the Internet made for each other. My second carve out is Buck's in Woodside. Oh, yeah. Incredible restaurant. David and I just went there for a meeting this week, and I was reminded of just how special that place is, especially if you like Silicon Valley lore and ephemera.

And I mean, they've got an Apple One up on the wall. They've got a signed Jensen jacket, the first one he ever wore on stage. It's like you just tour around the place and get a history of the tech industry, which is very fun. It's like a Silicon Valley version of Monk's Cafe, you might say. Yes. And my last carve out is a company called Tin Can.

My son is obsessed with it. He's three, but it's more for like five to 12 year olds. It is a phone. It's a landline with no screen that uses Wi -Fi that is built for kids so they can call pre -programmed numbers. And if they need to call 911 or an emergency contact or something, it stays plugged in in your house. It's like exactly the type of phones that we had when we were kids and just got to call other kids without all the smartphone stuff.

The weird coda to this one is somehow I ended up being the first investor in this company. No, yeah. Because it was a completely different company first. It's like my last check when I was a professional VC that I wrote. You're like the NBC network executive. Like it accidentally pivoted, turned into this company, became this like massive viral hit.

They're on Good Morning America. It's the face of this movement around great ways for kids to communicate without screens. And my son is loving it. So forever, I was just sort of sitting on like at some point I should carve out Tin Can, but I don't want to be like too self -promotional and promote a company I invested in. But this thing is just really fun watching all these kids use it.

Oh, so good. All right. Well, listeners, if you want to listen to any other Acquired episodes, you can do so on Spotify or Apple Podcasts. And we've got some thank yous. Yes, we do. Thank you so much to our partners this season, Sierra. Sierra helps the great companies of the world build better, more human customer experiences. Sierra .ai slash acquired.

WorkOS starts selling to enterprise customers with just a few lines of code and build authentication in minutes instead of months. WorkOS .com. To Anthropic. Claude thought with me a lot while I was researching this episode, and it can think a lot with you too. Claude .ai slash acquired. To Sentry. Application monitoring software considered not bad by millions of developers.

Sentry .io slash acquired. You can click the link in the show notes to learn more about any of the sources, the several dozen that David and I have between us, the books that we read, especially Seinfeldia by Jennifer Keeshan. Yep. Great, great book. All of that is linked in the show notes. And a few people to thank in particular. Yes. David, what you got? Yes.

Research. Thank you as well. Speaking of books for the show, first and foremost to Warren Littlefield, NBC executive responsible for the decision to officially pick up Seinfeld. Warren spent a great amount of time with us, which was wonderful. He also wrote a fantastic oral history memoir of his time at NBC called Top of the Rock, which is well worth reading about Seinfeld.

Friends. Mad about you. Cheers. All the great stuff from NBC from this era. Famously, right after Seinfeld ended, Warren got fired at NBC and went on to have an amazing second career as a producer. So he executive produced Fargo, The Handmaid's Tale, Dope Sick, and now The Testaments, which is doing incredibly well. So great to talk to him.

Alec Berg, Dave Mandel, and Jeff Schaefer, three of the writers behind some of the most legendary episodes on Seinfeld, especially the second half of the show. To Jeremy Zimmer, former head of the UTA Talent Agency. To Michael Linton, former chairman and CEO of Sony Pictures Entertainment. To our friend Ravi Nandan at A24. And Brian McAndrews, longtime television executive, first at ABC Capital Cities and then at Disney.

And to our friend Jeremy Jaffan for helping inspire this episode with his original recommendation that I made a carve out on our last episode of Jerry Seinfeld's movie Comedian. Thank you, Jeremy. I've got a couple. One to Arvin Navaratnam at Worldly Partners for his great mini study this episode on Seinfeld, which is linked in the show notes.

And then also to good friend of the show, Danny Passman, an entertainment lawyer who has spent his whole career around deals in this industry. If you like this episode, go check out other episodes on TV and entertainment. Taylor Swift, Oprah, way back in the day. More recently, much higher quality episode because we got better over time. Disney, part one and part two.

And for a tie -in on Coca -Cola. That's right. You can visit library .acquired .fm to get access to all the visuals associated with this episode, charts, tables, and illustrations. You can join the email list at acquired .fm slash email. That's where we will send out behind -the -scenes photos for research, episode corrections, and vote on future episode topics.

And come talk about this episode with us and the whole community in Slack after you listen. Acquired .fm slash Slack. With that, listeners, we'll see you next time. We'll see you next time. Who got the truth?

Is it you? Is it you? Is it you? Who got the truth now? Huh. Holy shit .atta

of the world. Is it you?