And how do you get people to be their truth cells rather than, well, whiskey? Where's the whiskey? That should be part of your mobile. One of our like airplane is Urgency. Take Take Killa Shot or Sunday

Welcome to Season four Episode eight of Acquired the Podcast about technology acquisitions and I pose I'm Ben Gilbert, David Rosenthal, and we are your hosts to introduce our episode today. I want to play you a little clip from Emily Chang on Bloomberg TV. This is from the day of the zoo, my po, where she interviewed Erich You Wan, the founder and CEO of Zoom. As you can tell from this clip, Eric is incredibly grounded, humble and quite a different type of Silicon Valley CEO, as we will see when we get into this episode, and that's very exciting. But it's also a lot of pressure. We've seen some of the recent I pose, like lift, have a lot of volatility.

Do you feel that pressure? I do. I do, because the price is too high circle. So you think the price is too high? Yeah, I think so. When But enemies. So yesterday we finalize the prize in search of $6 today. Wow, There's a bigger part. So and it is automatic control. You know, we just go back to work. So this I p o pop last month put zooms market cap at $16 billion today, just under two months after he said that it has risen another 60% to $26 billion.

So what's going on here? What is zoom and what makes it so special today on Acquired, we dive in with one of the best people on the planet toe. Help us tell this story, Santi. Sabotage key. All right, David. So who is Santi? Ah, we're super lucky to have Santi here today. Santi is partner of Jake Safer on who was on the LP show a few months ago and is here in emergence capital. Santi has been on the board of Zoom since he led emergence investment in the company in 2014. And Santi is also from Argentina. And, like Zoom CEO,

Eric Yuan is an immigrant to the U. S. Which we're going to talk about a lot more on this episode. Before joining emergence Santi, you founded and ran an online learning platform in Argentina. And you also did your each year MBA at HBs. And I think the class here and had some pretty good entrepreneurs. That

right? We had some great people. Yeah. Ah, and I actually saw them last week. We were all celebrating our 10 year

reunion. Wow. Nice. That's Ah, that's awesome. De ah, visit rent The runway came out of your class. Ah, Cloudflare five flare yet

a few other guys right up, threat out. We had a bunch of great companies.

Yeah, it was. It was a great year.

I mean, to be honest, it was a horrible year to be looking for a job. It was 2009. So that's why the opportunity costs of starting a business was

much lower. Yeah, it's kind of funny. It's like your life cost of capital was very low. Exactly. Yeah, wild. Well, Santi, thanks for having us in your office today. Here. Ah, beautiful emergence capital. We're super excited to dive in. Thank you for having me. Well, if you like the show when you want to go deeper on company building topics with David and I,

you can become an acquired limited partner and get access to our second LP only bonus show. On our last episode, we give an update on a lot of our thinking from the uber and lift episodes, regulation and autonomous vehicles. We also answered a bunch of LP question and answers. If you want to join, you could become an acquired limited partner by clicking the link in the show, notes were going to glow dot FM slash acquired Now, lastly, before we dive in, I want to thank the sponsors of all of season four. Perkins Kui Council Two great companies we have with us today once again Alison Handy, friend of the show and partner in the corporate and securities group. So Allison, we know a lot about I pose from the outside looking in. But what's something that you know from actually working on them that most people wouldn't think of?

So many in Tech are aware that there's a lot of work that goes into being ready to be a public reporting company. But the work and the cultural changes required could be substantially greater than people realize. I'll give you two examples 1st 1 thing that happens a lot that people might not realize is that the first audit for public disclosure can be pretty hairy. It could even end up delaying AIPO Tiny. Second, some public company policies could be a culture shock for tech companies that are used to being really transparent with their employees. The SEC rules around disclosing material nonpublic information often lead companies to adopt more controls on what executives can share and how they share it. In addition, policies that prevent employees from trading and company stock based on inside information may require significant employee training efforts to ensure compliance and can lead to policies that curb internal transparency pretty wild that the audit can actually delay the AIPO timing. Thanks, Alison. If you want to learn more about Perkins Kui or reach out to Alison specifically, you can click the link in the show notes or in slack. Well, David, I think we need to dive in.

Let's dive in. It was thinking about how to frame this episode on Zoom and ah, a good lens for resume as a company's is almost like a bridge both between kind of Hera's here in Silicon Valley, you know, in many ways it is classic old school Silicon Valley. It is an enterprise software startup. It's located in San Jose, down on the peninsula and the D N. A, as we will see, came out of a classic nineties startup, WebEx. But it's also undeniably part of this new wave of IPO's in part of the shirt a plus cohort of companies that are coming out here. Um, and it's also on acquired theme, a bridge between Silicon Valley and the rise of China and the tech ecosystem in China.

So really excited to dive in here and diving Basanti. But before Santa comes in the picture, we actually start in 1970. Speaking of China, Courtney in China in the middle of the Cultural Revolution in the Shandong Province, which is in the east coast of China on and it's located about halfway between Beijing and Shanghai, and Shandong, is sort of the religious and cultural birthplace of China. Um, it contains both Mount Tai, which I believe is where Eric is from and is the most revered sight in tal ism and is where the first emperor of China was crowned. And it also contains the city of Kofu, which is where Confucius was born away on both of those are gonna be very apt, as we will see with the American zoom as we go along here. Eso in 1970. A boy named Eric Johannes is born.

It's still the middle of the Cultural Revolution. But his parents, as far as we can tell her pretty well off his family does does. Okay. Um, his parents are educated mining engineers. Eric. Early on, even though the country is converting communism, he starts showing some entrepreneurial tendencies. He starts collecting. His parents are mining engineers, Remember? He starts collecting and selling mining and construction waste and burning it down to get that raw copper inside so that you can sell the copper to recycling place. You know, like every young tech entrepreneur.

That child. Exactly. Exactly. Apparently he almost burned down his neighbor's house doing this. A That was Ah. Maybe that is when he saw the light that technology enabled businesses were better than Santi. Did you know this when you were making the investment that he was so irresponsible and reckless?

We didn't e would have still docked him. I think

he learned a good lesson there because he does not burn capital as we will learn and as he goes off to university at the Shandong University of Science and Technology. But his girlfriend at the time, who would soon become his wife, goes to another school. That is about a 10 hour bus ride away. And it's on these bus rides between their universities that, as legend has it, Eric starts daydreaming about how technology could one day bridge this physical gap between him and his girlfriend, soon to be wife. But many people around the world and would lead to many things eventually zoom. But before that he graduates. He ends up getting his master's degree after undergrad graduates. He marries his girlfriend. He goes to work, and in 1994 the company's working for in China sends him to Japan for four months, and, ah,

while he's in Japan, he sees Bill Gates give a speech there. This news of the days of the information superhighway and here's bill, talk about the information superhighway, and he thinks this is the future. David, I was looking at this in in your research, and ah, it's kind of ironic, given how Microsoft missed the Web and how then Bill Gates had to sort of about face the company writing the classic Internet memo that he wrote, It's amazing that Bill Gates is actually the one who ended up inspiring Eric and so many others. You know, when Microsoft almost I had a very, ah existential moment about the Internet. Yeah, and crazy that like a speech Bill Gates gives in Japan,

you know, in 1994 that is heard by a young man from China ends up leading to the most successful hypo in the U. S. Of 2019. Like the world is crazy. So Eric goes back to China and he realizes, though, that, um, he's inspired by the Internet. But the internet in China is so long way away, it's not gonna be mature for a long time. And if he really wants to be part of this, what is going to change the world? He needs to come to the U. S.

And he needs to come to Silicon Valley. So he knew an entrepreneur from China who had gone over to Silicon Valley. I believe it was Min Zoo who was the co founder and CEO of Web X. Men had come over. I believed to teach at Stanford. Um, and that was how he got to Silicon Valley. Minutes of hiring Eric into this fledgling startup of Web X, which is also communication, not video communication to start, but communication across the Internet. The first step in bridging the gap between him and his wife. And the main focus of Web exit this time was was not videoconferencing, but screen sharing.

Correct? Yep. That's how they started

screen sharing and presentations. And so X is great. I'm gonna join you. Come over to the U. S. I just need to apply for a visa work visa to come over and meet my family will come on over. Well, he applies. This is 1995 and his application is rejected. But Eric is undaunted, he continues. He applies again and again and again and again and again and again. And he ends up playing a total of nine times before his eyes. A horrible is accepted. I mean, this is just crazy. That tenacity and that desire to come to Silicon Valley come to the U. S. Be part of this toe, put up with all of these rejections and keep coming. It's just amazing

Yeah, that's something else that Eric and I connected really well on. I had to go through a similar experience coming from Argentina. And until I kept a month ago, I was still going through the process of, like, back and forth and Visa and green card and another visa and an extension and a rejection on those letters that said, You have 30 days to leave the country, you and showing up on one of those in for pass offices, standing in line, trying to explain a case. So yeah, and we bonded over that as well. You

just recently became an American citizen. Yeah. Congratulations, E. I mean, this is not a political show, but this is the one topic that just comes up again and again, like this is so crazy. This is again the most successful I p o in the world of 2019 and all these great people involved in it. And they just want to be here. And we're again like the US makes it so hard. So anyway, sidebar overto Santy for a second. Like while being a general partner of emergence and doing the work and economic development creation that you do? Did you? You had to, like, mandatorily leave the country for periods of time. Toe?

Yes. I got notified that my status had changed and I had to figure out some other ways if I wanted to stay here.

Wow. Yeah, that's just so incredible. Well, congratulations on citizen. And I hope that inspires a lot of people listening to this show. Uh, Ana, both citizens and not a citizens here. So when Eric finally does make it to California in 1997 he shows up, he and his wife come to California and he comes starts working physically at WebEx. There's just 11 problem. Um, he doesn't speak English. Hey, doesn't speak English like at all. You can write code really well,

but he's really hungry to learn and grow. Anybody so focused on writing code as, ah, founding engineer of weather, accent and developing weather, ex dead. He doesn't actually take English language classes. He just learns and picks up English from working here and working with his teammates, which again is incredible. And even though that's how he starts, he is really interested in management and hiring and developing people. He rises up he becomes an engineering manager, he ends up getting promoted to becoming VP of engineering at WebEx. And then in July of 2000 WebEx goes public and ends up getting acquired a number of years later by Cisco for $3.2 billion in 2007. Eric is then promoted within Cisco to become VP of engineering for all of their communications platforms. By the time he leaves Cisco to start Zoom after 14 years in total at WebEx and Cisco,

talk about loyalty. Um, he's managing 800 people across the globe. I may have actually reported to Eric, and I don't think I ever knew it. But, um, I interned with Cisco in the summer of 2008 and 2009 and worked in the telepresence unit. And so I'm sure somewhere in the management chain, either, sort of, I guess, because I was, Ah, test engineer and the engineer. I probably did enough actually going toe.

You're one of the 800. I don't know if they count interns. So by the end, though, of Eric's time it at Cisco, uh, after the acquisition, he was going around and spending a lot of time, a lot more time with Cisco customers and former WebEx customers that are now Cisco customers. And this is gonna sound simplistic, but but bear with us here cause it's really important, he starts noticing that there really unhappy with the product. This is now, you know, 9 24,010 2011. And that makes Eric really unhappy.

And again, the sound simplistic. But But this is really important for Eric and for Zoom. Happiness is kind of like his philosophy. I want to say, quote that that he has here. He says you along the way, he talks about his career. I really came to understand that the purpose of life is to pursue happiness like here in the U. S. That's really the most important thing. I also learned how to pursue happiness, especially how to pursue sustainable happiness. You've got to make others happy. If you make others happy, your happiness will be sustainable.

So for me to apply that philosophy to the company world to the business world, if we could make a customer happy, our company will be happy that happiness is also sustainable. And so if you looked at his LinkedIn profile today. It's wildly enlightened. It sze like I told you, compute this was gonna be important. If you look at Eric's linked in profile today, it doesn't say CEO of Zoom. It says, delivering happiness to our users. Your happiness is my happiness. And ah, I'm just curious for Santa to bring you in here. This philosophy of Eric's obviously a permeates the company, which we're going to get much deeper into. But like, What did you make of this when you first met him?

I mean, we heard it directly from the early customers. I mean, when we came across Zoom, this was back in 2013. That's the first time that we came across the product zoom and we came across the company because off a personal need that I had being from Argentina, I tried every technology to stay in touch with friends and family, and there's a big difference when you're trying to transact on when you're trying to build a relationship with technology. When you're transacting, then you can deal with issues, even though it is frustrating. You just deal with them because you want to get to the end of the transaction. But when you're trying to build a relationship, if their technology doesn't work, then that's detrimental to that relationship. So that's why I felt I was not staying in touch with my friends and family because I dreaded those communications on. That's when I started trying every technology, and in 2013 I tried Zoom, and it worked. And this was very early in The life of Zoom

is about two years after the company was founded, but during the first year of its operations,

yeah, a few months after they released the product, and we not only experience that the product worked, but then, after having those first initial calls with my friends in Argentina, I started getting random Eva's from other people in Argentina for zoom calls. So it not only worked, but people loved it, and they started sharing that with their friends. And that was delighted by moment where we said, there's something here and then another interesting piece of information is when we were doing diligence on the company, we talked to early customers and what we heard ISS lines up along the If you turn off Zoom, I'm gonna quit my job and I'm gonna join another company that has well, so it wasn't just customer happiness. It was a customer obsession. Customers were incredibly thankful because Zoom was enabling them to do their jobs on be happy while they were doing their jobs.

I think this is something that's really easy to forget. Like a lot of things we cover on this show. Technology moves so quickly that we sort of acclimatize to what it is today. And I'm remembering back. A friend of mine started a company, and it was three of them that grew to 12 of them and a live work space. And I remember him telling me my morning is five or six zoom calls with some of our most loyal customers. Just don't understand what's going on with them. And I was like, You can't do that from video call today it seems quite reasonable because you're like, Oh, yeah, it's probably zooms Very reliable, like that makes sense to me. But I remember being in shock at the time. I'm like you can actually get the consistency and quality of understanding how year the customers of your startup are going from doing. Zoom calls every morning from your apartment.

Yeah, and I like that memory is really grounding for me for how bad that technology used to be. Yeah, So speaking of, you know, this was the Cisco technology and Web expert for then, of course, there were competitive. Oh, and expensive. I mean, the other thing is in my head, I remember thinking, Well, I've never heard of Zoom, but what are you using for that?

Because, like, I know there's, like, enterprise e things, but you can't afford that. And they probably won't even send a sales. Got to talk to you. But also, like I, you know, I use hangouts and I use Guy Blake. That's that's a very different class of thing that can't be working for you. And this middle didn't didn't exist

on those technologies were built for a different era. If you think about a lot of the incumbents, they were built for a time where people were sitting at a desk with fixed Internet, so everything was monitored and controlled. Now people are on the goal and you're using your laptop. Your deft up your phone on WiFi three g switching from cell towers so you had to rebuild the infrastructure from the ground up on. That's what a lot of the incumbents couldn't do because they built this model living architecture on. Then they were just trying to patch it on, adapt to the New World. On that were Eric had this great vision that he had to rebuild the entire software stack on. That's what he did. He worked really hard even before releasing the first product to make sure that everything worked.

Santi, did you, uh, going through all the hardships that you did to try and communicate with people in Argentina? Did you have an investment thesis around? Someone's gonna make this better and I'm on the lookout for it. Or was it more just I'm trying to solve my own problem and oh my gosh, this company happens to be a great investment.

So we're incredibly thematic here. Emergence. We were not just running around saying what's hard and trying to follow what everyone else is doing. The way the firm was started was with a big thesis that Silver was gonna move from on premise to the cloud before it was obvious. And that's why we invested in Salesforce early on when again? It wasn't obvious in this specific case. We had a thesis. We knew that things were gonna change. I need to cause three years to find the right company. We talked to a number of companies in the collaboration space, and we could never find the right company in the right company is not just the right technology is a combination off the right technology, perfect timing and the right leadership. And that's why when we came across Zoom, we like the technology on. Then we met Eric. We fell in love with Eric and the timing was right. So even though the company wasn't raising capital when we met, we kept on building that relationship, forging a partnership that eventually ended up in an investment.

You know, we've already talked a little bit about Eric's background. What makes him special. But this is He saw all the things that were broken within Cisco, and he went to Sisko Senior leadership and said, I want to re architect how we do our communication and collaboration platform as VP of engineering here within Cisco and build this product rate. They didn't let him because they were obsessed with these were the days of, you know, yammer and jive. And Cisco thought the future of enterprise collaboration was Facebook for work. And, um, I like Zoom is about but anyway, eso In June 2011 Eric finally leaves the company. He's 41 years old at this point right after he leaves. Ah, whole Codrea.

Basically, anyone who had ever worked with Eric immediately gives him money just blank check to back him toe work on whatever he's gonna d'oh! And he knows he wants to start a company. And I believe the first idea Santy correct us if we're wrong is, um, he actually thought he wanted to build an application on top of video chat. Uh, the company was initially called SAS B. It was

more of a consumer play, not an enterprise play.

Yeah, but then pretty quickly, he figured out that actually, the real big opportunity is to do what we should've done with and Cisco outside of Cisco. That's when the company became

Zim. That episode that you just shared about Eric's life. It's very unique for him because people wrote him a check, not because they loved the idea. I mean, some people even hated the idea. It's like, What are you going to do this? But they believed in Eric. They they have full confidence in Eric, and that was a great lesson for him on That's what he used every time he raised capital when he raced capital, he didn't share all the information. He didn't do the typical dance that most entrepreneurs do. It's like, Oh, this is my car It was more about I want people who are investing in me who are convinced that I'm going to do something on. Then if I get to that point,

then I'm gonna open up on share everything else. But if I don't get there, then it makes no sense because business has changed on he saw it with SAS B Sands be became zoom. The business changed. It went from our consumer product to an enterprise product, and if someone had invested in the consumer product, they might have pulled their money. When Eric said, we're going to do enterprise. But given that people invested in him, people were supportive of whatever Eric wanted to do

for folks listening out there who are sort of first time founders or more junior in their career. That's a move you can you can sort of execute when you're 41 have led a gigantic organization and have the track record that Eric has. In addition, of course, to the personality that he has. I disagree.

Yeah, I think that you should always do that. You should always find the right partner, someone who believes in you before they believe in the business. Because if they believe in you, they're gonna be with you in good times and bad times on. Believe me, a lot of this company's that we're now talking about, Oh, great outcomes they want probably They got acquired. It wasn't a straight line. And they have the homeowner the so Yeah. I mean, it's I mean, you know it. It's not a straight line on. You want people who believe in you.

We're gonna help you when things are tough, especially when things are tough, because that's when you need a true partner. When things are going well, then everyone's gonna be a cheerleader on. They're all gonna be your best friends. But you want to make sure that you not only get the right partner, but you also get the right group of people because partners are just one piece off a firm. You want to make sure that everyone is invested in your success.

We just talked about this, but I want to highlight again of the eight plus companies who have gone public this year that we've covered. Uh, I think now three of four have been pivots of Exhumed was a pivot. Interest was a Pinterest was a pivot. Left was a pivot. Uber was not. It was. I mean, they're real line of business is not where they started. True. Yes, Well, it was a pivot to peer to peer ride sharing. Um, I weaken debate whether we can class by that. But it's such a good point like and and absolutely.

And you know, we take this to heart. I think you know any any great investor and partner does that. The most important thing is the DNA of the team you're backing, and if you believe in them, you know, it's, ah, we like to say the early stages turbulent. You have to believe in the pilot's ability to navigate the turbulence. So I want to spend a minute before we move into building Zoom, eh? So what was it that was making making WebEx customers so unhappy? Santa, I'm curious from from your perspective, especially having a thesis coming into the space like lots of people.

And we'll get into other other companies that competed with Zoom over time. But this was not a unique insight to Eric. Like there was something that had changed. What? What was it about? The collaboration space.

I think a big change that a lot of this big incumbents missed was the purchasing a process for this products. When WebEx got started and you talked about it earlier, they were selling to i t. Because they had a very high price points on. They just needed I t to be okay. They didn't need i t to be happy. They just wanted I t to be okay with whatever probably they were selling on. It was more about yeah, where compliant were secure. We check all those boxes if your users hated. Who cares? We're just gonna make sure that we cover your back on that. We check

all the boxes. Classic enterprise software is the user is not the buyer.

Correct that change over time with sass and this free Mu models, the end user became the buyer, and then the purchasing decisions got to centralized from just pure I t to the end user on. Then I t needing to manage. I mean, the CEO no needs to manage all the applications that people are buying independently on. That's why happiness matters a lot more today than a dead 10 or 15 years ago. Because now every interaction can lead you to lose a customer. Early on, if you just took the CEO on a big trip and fancy dinner on, they were happy with you. That was totally fine, even if the end users hated your product. So that's why dares, where you're gonna find the next opportunities. Just ask people which products they use, which broads have a happy about on which broads they hate.

It cuts both ways, right? It's not just if customers are unhappy in the SAS world, you're gonna lose them. There's also a multiplication effect on the upside. If they're very happy, they're gonna become evangelists, and the buyers now are actually distributed and have buying power. Whereas like if with an enterprise product, if users love the product before, like it didn't matter because the C I. O. Is the one making The decision was so funny because predating this like, two or three years before this, there was this phrase that was floating around in like, 0809 That was the b Y o d. Bring your own device and CEOs hated it.

I mean, there's this thing that I t suddenly had to deal with iPhones for the first time on their corporate networks and people saying, I need to be able to get my e mail on my phone And it's not BlackBerry, but, like, I like this thing so much that you can pry it from my cold, dead hands. And it's amazing that it actually went hardware first and then took a few years to trickle into software. And now you know, you look at Zoom, you look at slack. So maybe these companies, their distribution is bottom up, and sometimes even their payment is bottom up because it's any employee with a credit card can can sign up for it. So, Santi, my question to you is, Why did devices come first? And now we're in a bring your own software world in a nightie.

It's kind of we moved from. Bring your own device to buy your own app. I feel that the devices on locked that purchasing power because when you brought your own device, you had full control on the applications that you installed on. A lot of the consumer applications were driving this incredible user experiences because they needed to make sure that you were paying for those consumer applications. So they knew that you had to hook them and deliver value on that rewired the way people thought about business applications. So it's like I have this great consumer application that I used to communicate with friends, and now I'm going into business and I'm still using my phone and it doesn't work, and I can can't set up a conference calls. So I'm gonna use the consumer application. So then, when you were able to create a consumer like experience with enterprise grade security and features, that's when you win the enterprise game on. That's what what Zoom has accomplished

and end the S O once a week and landed on Zoom and get going. This after leaving and raising his seed round from all the folks that he'd worked with in the past. This is just another like this episode is full of incredible stats about Eric, 40 engineers of the 800 that he had worked with at Cisco. Come over and join him to build this new technology from the ground up. That's gonna, you know, pursuit customer happiness. Maybe that says a little bit about Sisko during that era, not to bash on them too much, but it says a lot about Eric, like 40 engineers right off the bat, and they just crank for basically two years building this product. And then finally, at the end of 2012 they get their first paid customer, which is actually the Stanford continuing education department. And this was super cool.

Also, right before then, they got a review from Walt Mossberg in all things D. Before they had a single paid customers. What a great writer and walled is glowing. We'll link to this review in the show notes in his in his typical Walt way. Ah, just glowing about how great the product is and how well it works, and it's funny. He talks about it as a consumer application, even though at that point they were a business application. But that's how good it was. But anyway, so Stanford is is the first customer, and I think that Santi, let's talk about it.

I think that actually ends up becoming a great beachhead customer for them. Because education, this was the time of the rise of MOOCs and, uh, course era had just launched his audacity and to you, um, tutor, which became to you and all of these universities around the country were thinking about like, What is our online education strategy and component and zoom becomes the way that they deliver that education still a huge vertical for a zoom, right? I mean, something like 90 plus percent of universities use it.

It is a huge vertical. And I think it makes perfect sense for this disruptive technologies because if you think even about apple, the way they did it, they went into the education vertical because that's where you capture the next generation. The older generation is poli okay with what? They have things they're not gonna change. But the younger generations are expecting a different type of experience on then those younger generations getting to the workforce on they demand the same type of experiences. So this was not only our great decision by Eric to focus on education early on, but I feel that they also created a lot of value because if you're trying Thio communicate to someone and deliver message on people are remote, they can show up to class on. You have a seamless way to communicate. That's gonna have a huge impact. So I believe that if we could measure the impact on happen as within students and graduation rates off those people using Zoom, which we should probably see an

increased there. Yeah, I was thinking about it as education was a great beachhead customer because they were ready to adopt. But that's such a good point to, like again, what a perfect strategy to go in these, these people, that these kids are all gonna go join the workforce, they're gonna show up. And then we like you. I'm using a poly com who has icing on the cake. Right? Timing is, is all about Are you solving a customer's pain point in a way where they didn't have this sort of pain before, where there's sort of an opportunity for you to slide in there. And, you know,

all of these companies had already bought, you know, the I T departments had all bought videoconferencing quote unquote systems before, and so there was not really an opportunity there. But this sort of slipstream that happened with MOOCs with that happened with students expecting to be ableto watch things remotely, it sort of enabled you to go. Yeah, that's exactly what we're for. And then you get this massive upside later of a 20 year benefit of them, sort of joining the workforce and selling within their own companies. So the other really, really smart thing that Zim did in their Freemium model with with Go to Market was Zoom wasn't and still is free for anyone to use the full product for up to 40 minute meetings. How did do you know? It's not how they landed on the

40 minute. Yeah, I mean, Eric, I spent a lot of time in this space, so he knew the stats on. He knew that most productive business meetings were 45 minutes long. So that's why 40 minutes was a magic number and we still have a lot of people using zoom for business and using the free version on. As you said, they get access to the full product. They get to experience the full experience, and then we see them. They use it for 40 minutes. They drop on. They start on your meeting on. We're totally fun with that, which is one people to use it on.

If they can't pay, they can use it for free, and if they want to pay, they can remove that. I mean that restriction.

Yeah, it's so such a smiling I think this demonstrates such a great understanding of, like the customer and customer needs. Yeah, and the in the business model, like when you have a business that requires a network effect to work like videoconferencing. It is. It provides a Tana value to do it with at least one other person who provides literally zero value to do it alone and so

providing. And if you're using zoom by yourself, you have bigger problems. Mental. There's got to be some use case out there. 45 i people are recording messages with film, so there are some use cases,

but but but the idea that like to take advantage of the inherent network effect that's both necessary to make the product work and enables this incredible business that we're now seeing really as a public company. Today, you have to be able to, if you're paying, communicate with someone who's not paying and make that incredibly seamless for them, or even if you're trying to use it for the very first time and and you know you're not paying yet being able t jump right in on that. In a network effect, business

is crucial to success. It is. And on top of that, if you think about Zoom and we talked a lot about happiness, people are not only buying video conferencing from Zoom, they're buying an experience. And that's what enables a company to do more than just videoconferencing. If you if you've been following the recent announcements, I mean they released phone and zoom rooms on the marketplace on. That's because our customers want us to do more. They don't want a phone solution. They want the zoom experience with their phones. They don't want a room solution. They want the zoom experience in the conference room on That's magical when you get to that point,

and it sounds like the vision is really to become sort of a full scale collaboration. Productivity companies is that Is that sort of how you think

about it? We're listening to what our customers want and we're building based on what what our customers need. So so that's why we released this products, Because that's what our customers wanted us to do.

I want to get to, you know, kind of now's the point. So Eric and Team builds Zoom. They've got the education beachhead, beachhead, vertical. The companies in the product is starting, starting to spread virally. You started using it as a consumer to starve. Walk us through how your relationship grew with Eric and the investment process. And in particular, I'm interested in, you know, you mentioned you've been looking at the space for three years. You met with their there. We're in our lots of competitors out there run by smart people who also get all the problems in the space.

What? What was it about? Zoom that like you. You were like this. This is the one

First of all. It started with the product worked even before meaning, Eric. I knew there was something special in the product, and then when I met Eric for the first time, I realized that it was more than just the product working. It was strong leadership and someone who was committed to doing things right, not taking short cuts, not building it on top off open source stuff, just to patch things together, changed you I and deliver quick value. He was focused on doing the right thing. So then I became obsessed with Eric and the product. I remember stalking him. They have the small office in Santa Clara. I run Side Road. I think the elevator never worked,

and they had boxes piled on on camera stacked on top of refrigerator and boxes. And Dad was the state of the art setting. And when I would drive down to Santa Clara to meet with Eric and the team on a regular basis to build a relationship on, tried to convince him to partner with us. My goal was to invite him to present to my team, and he said, I don't have a pitch deck. I'm not raising, so I'm not going to do that. And the hook that we found was Look, we're using Skype in the office. I had bought ah, Skype camera that I would use to talk to entrepreneurs, and I hated that. Can you come in and talk to us about how Zoom is

gonna replace that

to a sales pitch? Exactly. Can help, man. And he basically pitched us on. Zoom on. The pitch was very risky because he didn't present the metrics on NPS and all that stuff. What he said is everyone in the room download Zoom. Now we're going to do a live demo. And if you've been in this industry doing at live, Demo is enquired Lee risky on We all downloaded the product on. We were inside. Did he

leave? Did he leave the office, go somewhere else

and presented? No, We were on the same room and we joined the zoom call. I need worked incredibly well on. People were account of Okay,

there's something here that's amazing. Is So uh So what happened from there? We were talking about Jake a little bit ahead of time. As you said, Eric wasn't. He wasn't raising, you know, it was numbers prepared. You started digging in on diligence. And and then you found a big surprise, right?

Yeah. I mean, the metrics were a lot stronger than what we even anticipated on. We've seen great businesses. I mean, we we work with companies like box and yammer and Salesforce early on, but this metrics were off the charts on To be completely honest, I don't think that team knew exactly what they were doing because they sent us, like the data dump. A lot of information on for weeks. We try to piece things together, and a lot of people couldn't even see what was going on. We saw some friends, like people were paying for zoom, and then they were churning on in this standard industry. If someone turns, that's bad.

But then a few months later, those people came back. So we saw those return rates. People were addicted to zoom. Some people just needed to you zoom once a month once every two months. Some people were using it on a daily basis. So when we pieced everything together, we were completely blown away by the fundamentals off this company. So having seen the product work, having being upset with Eric for a long time and then seeing all this underlying metrics, that's what drove us to. Yeah, we should partner with this team, unhealed them, build a big company in it. And we also felt that we could add some value beyond just a capital because we've seen a few of this movies play out in

the back, and this is what emergence does. You're able to figure out how to take these companies and professionalize sort of the ability to toe cell at scale and enterprise

exactly scaling go to market. And when we first started working with Zoom, it was mostly focused on the S and B sector on. We knew that over time we had to go up into mid market and enterprise on. That's what we focus on. I remember having conversation with Eric even before we invested where we started introducing him to grade heads off, marketing great heads off sales so that Dirty MME. Could learn from other people and take the company to the next level. So I feel that that, combined with our approach to partnership, is what convinced Eric and the rest of the team to go ahead and partner with us and even though we wrote a very big check when we invested in the company. The largest check emergence has ever written. The company never used our capital, so they were not looking for capital. They were looking for a true partnership to help them scale the business.

This is amazing. Hearing it from the sort of zoom side. Can you talk about a little bit? What it's like as a venture investor to write the largest check ever from your firm in this really high conviction? Bet in this quite unusual scenario of the way that you're sort of chasing the company and it's not as formal of a presentation like, What is your life like in that moment,

my life was kind of hell, because I didn't have a lot of experience and I mean, I still don't have a lot of experience in venture. I'm learning a lot, and this was gonna be a big investment on it was gonna be my investment. I remember one of my partners telling me son to your bedding your career in venture because if this doesn't work out, then I mean, it's gonna be hard to get out of this. But I had no pressure, though. No, but that made me think about the conviction. And then after doing all the diligence and after everyone met Eric, we came together as a team. We make decisions as a team here on. Everyone was not just supportive off during the deal, but we have this bar,

the recall, unanimous enthusiasm Everyone needs to be excited about the partnership on. We were all there even though we didn't all start there as we did more work on, everyone met Eric. They try the product. We got to this point where we said, Yeah, this is something that we need to do, even if it doesn't work out. But yeah, it doesn't feel great. Yeah,

that was leading up to rated writing the check in making the investment. How did your emotions like evolve after that? Like I mean, obviously it worked out, But But how long did did it take before? You felt pretty good about it.

I felt pretty good about it all the time, because what I invested in the relationship with Eric and Team that has never changed. So I didn't get any surprises. I mean, older surprises were positive surprises. It was one of those board meetings where, ah, we would show up and every would say we didn't do what we said We're going to do with it better. Uh,

it's a hard job.

It was a good feeling all along. And the more time I spend with Eric and the team, the more excited I got. Because initially it was just videoconferencing than it's okay. Our customers want, want us to doom or weaken doom. Or and that's how we kept on expanding the TEM. And that's where we are now. And we still hear our customers want in a lot more from Zoom that what we're offering. So it's been a great journey, and for me, personal, It's been great, because when I wanted to John Venture, I got a lot of rejections. I was talking to over 70 firms. What,

being an entrepreneur?

Yeah, I was. I mean, it was my sales pipeline and they had a sales pipeline different, um, in different conversion metrics and funnel and ah, lot of the nose I got were not specific about my track record. There were more about me as an immigrant, as a Latino in venture and That was before people got a lot more politically correct. This was back in 2010 that a lot of people said Latinos are not in venture, so you should try to find a different job here in the Valley. So I always had that chip on my shoulder where it's like I'm gonna prove you wrong. That's why I got a lot more energy from those conversations. Unfortunately, the emergency team gave me a chance on I couldn't be more thankful for what they did for me. Ah, a few people in venture.

Alex Mendez was a founder off Storm Ventures. He believed in me and he held me a lot, would have very long conversations on it. He had no vested interest. So there were a few people that help me out. And and I'm incredibly appreciative of that and also Eric and the team who trusted that we could help them out as well.

Yeah, that's such an amazing story. And thank you for sharing it. I can only imagine you going through that on the venture said. I mean, I think I would imagine Eric probably went through a lot of that on the founder side to

um Yeah, he got a lot of rejection early on when he tried to raise capital. That's why he decided that he was not gonna raise capital. And even when we invested in the company and we could tell the company was doing really well, people wouldn't even take meetings with Eric. So when when I would talk to my friends in venture about Zoom, it's like, No, we're not doing anything in video conferencing. It's a race to the bottom are there were different comments about it. People wouldn't even

take the meeting's Wow, that's

so incredible. So that's why I feel that when people are looking just for our category, they might miss out on great people.

Yeah, yeah, totally. Especially because, you know, if you believe which has shown to not be true, that the raw video conferencing technology is commoditized, like it's not. Zoom is still excellent, and it is widely true that most others are not as good as you were talking about tam expansion by leveraging that customer base and that happiness and that love for the company into all these other things that you're completely blind to that Tam. Otherwise, I mean go to market innovation to the 40 minute Freemium model like nobody else is doing that illustrated no better than WebEx being bought for $3.2 billion in 2006 or seven or whatever that was today. Zooms market cap. You know, they were 16 after their AIPO. 26 billion We're recording today. Like the enterprise value. This company is number one, not just about videoconferencing, and number two turns out that wasn't

a commodity in the first place. Yeah, I also feel that there's a lot off bias when it comes to venture investments, and people are looking for the next artificial intelligence. Blockchain powered whatever. And there's some basic building blocks that go through this renewal faces. See Aram and what Salesforce dead was not a new technology. It was a new way to deliver on existing technology. Same thing for Zoom. So there are a lot of existing markets that go through replacement cycles, especially when the incumbents miss out on the big changes in the market. When was the last time that you heard someone say I love email on the way things are being handled all right?

Before season end here

or I love c r. M. There are a lot of those core building blocks that are gonna go through big transformations. Uneven incumbents don't see it. Other people are gonna take advantage of that.

Yeah, well, before we wrap up with the zoo, my p o. I wantto build on what we were just talking about a minute ago and kind of the underdog status of you of Eric. Can you talk a little bit about both the senior management itself? It zoom and the philosophy. I mean, unlike I would imagine, a lot of a lot of companies in the Valley and a lot of companies emergence works with Eric talks a lot about, you know, they don't really recruit superstar outside execs to come into zoom they build from within and people who are who are hungry, who have the capacity to learn. What have you seen being on the board and being part of this process of building the management

team? I need to disagree that they don't recruit superstars. They don't recruit known superstars. Yeah, but publicly known. But the people they recruit to lead the different functions are superstars on people who have worked with them, recognize their superpowers, but they're not the ones that are being listed in every list Off. Oh, are the top 10 CMOs. Let's hire one of those.

You won't see a former president of Oracle coming to work for Zoom any time

soon. You're gonna look for the people who are actually doing the job on a war. Gonna work incredibly hard on, are gonna connect with the mission off the company. And that's another area. Were emergence connected really well with Eric. So if you think about me, I'm a general partner now. I joined us a senior associate, and when I joined, I was doing everything from like copies to coffee to setting up technology. Still do that. I'm take support and I don't care. And possibly

the best investment in the firm's history by side. By doing tech support

for a conference, I still I mean, we still do that and we recruit people senior associates on. We invest in them to make sure that they become the next generation leadership. But Kevin Spain, who's also general partner, joined the firm as an associate. Jake, who you guys know also join us an associate and now it's a partner. So we invest in rock stars before everyone recognizes him, and we do what it takes to make sure that we create the right conditions for them to succeed. And that's what would Zoom does on the team. There is one of the strongest teams that I've ever worked with and is probably the most humble team that I've ever worked with.

And one other thing that point out here again, we're being super laudatory of Zoom because it deserves it. Like of the name senior executives on the S. One for the AIPO Other than Eric, all of the other named senior executives are women and try and find another company in Silicon Valley that looks like that. And that is not a story that there sort of pounding the pavement with. You'll notice that this is true and it's not the cover. And you probably didn't know that. Yeah,

yeah, I was talking to one of the executives at Zoom she described Erica's. Harry doesn't see color decency shape, doesn't see anything. He just sees raw talent. Um, so that's why he's not saying, Oh, we are an incredibly diverse team because he's not gonna use that for marketing. He's just going to do the right thing. And that's being a strong core value of the firm just doing the right thing even if people don't even notice.

Yeah, I was shocked that I hadn't heard Zoom or anybody else talk about that before and going through the S one. I'm like, Wait a minute. Yeah, this is This is different. Yes, absolutely different. All right, so I want to catch us up before. So, Santi, I want to ask you to sort of lead us through after the investment through today and other funding rounds on their milestones. One thing that we did skip over in sort of the growth of the company is so, he said, Founded in 2011 they launched in January of 2014. Let's just taking a moment to acknowledge how ridiculous it is that five months after launch, they had a 1,000,000 total participants in their video conferencing and then 18 months after launch continued to accelerate to 10 million participants by June of 2014. I mean, this company was growing like a weed from date one

true, but they were completely under the radar people wouldn't even know what Zoom did. And that's because there were not selling to I t. They didn't have the bell boards. It was more of our grounds up adoption. People were using Zoom even when their companies were standardised on different technologies, and that's just because they wanted a better experience. We saw a lot of that where people were just using Zuma. It's like I don't tell anyone, but I'm not gonna schedule ah call with with

one of the other thing That was Google for search when I worked at Microsoft. And then it was Google for docks. When I worked at Microsoft Way, worked out of the office to him. Ben, I did. Well, I did a lot of competitive research, right, So Santi catch us up. So emergence leads a $30 million round in the company. They continue Thio grow very well. What it growth and then would love future funding. Look like between then and the I po

we when we invested, this was back in 2014. The company was mostly s and B. So the next big challenge we had was going out from S and B to mid market on an enterprise on. We did that. Probably like 2015. Ah, we started getting some mid market and a few enterprise customers, and that's when we saw that this was not just an S and B product, but big companies were willing to standardize on Zoom. And again we were not raising capital. The company has been profitable for for a while, as you can see India's one. But then we got approach preemptively by Sequoia and Erica always and had an admiration for that firm. And they were good partners. They did a good process. Are we ended up partner with them, and after that we we never raised more capital. It's amazing. And I think we never touched the Sequoia money either.

It is such a ah, such a difference from other, um, other companies that are appealing has here absolutely.

We've had another company back in the days. A company called Viva System. Yeah, that went through a very

similar Is it correctly only raised $7 million they only raised it

from emergence. Yeah, and the only used less than half that on there now 20 plus 1,000,000,000.

It's crazy. I think we should look

for those types come in. And actually, what's also interesting is that the founder and CEO of Eva Systems is now on the board of Zoom. Uh, when we invested in the company, we knew that we needed some of that enterprise. D n A. So Peter Gassner joined the company. And that's why you see a lot of similarities in the way Zoom scaled compared to

how does that work? Is he when the company was private? Is he like the outside independent?

Independent? Yeah, God. And he's an independent with a lot off enterprise knowledge and a lot off company building knowledge. You don't just want to have a lot of investors on the board. You want people who build real cos

yeah. So before we switch to the Hypo, there's probably a lot of people out there, and I know I'm thinking it to sort of pattern matching off of that comment you made, we started SMB. In fact, I remember when we had Scott Dorsey on and he was talking about exact target. They started with his email marketing software that sold the sales force, and their initial customer was a dry cleaner. That was right there in Indianapolis on around the corner. Got about that started with small business and ended up scaling up to be, you know, everything from small business s embiid enterprise midmarket. They became a tremendous enterprise company, and I was always shocked that Oh, my gosh, This software they originally selling to dry cleaners at some point, like you consult a Nike and Microsoft as an enterprise, SAS investor is that typical? Like this thing that zoom went through and being ableto flip the switch and move from SMB to enterprise, would you suggest people go about that strategy and building their businesses?

What's nice about that strategy is that you focus on the end user because when you're selling to an S and B or a V S B, everyone cares about the money that they're paying you about the experience. So if you can convince an S and B to buy your product and use it, then it's gonna be hard to create that customer love when you move into mid market and enterprise. So I believe it's a great strategy to get that customer love early on. But

it's not easy. Yeah, it's gotta be a trying moment for the company, doing the first few enterprise customers and really understanding those pain points.

Yeah, and and then making sure that you not only serving the end user, but the CEO will have his or her opinions about how to integrate into the platforms they're using on. They'll ask about security and they'll ask about compliance. So you need to have that figured out. And that's why early on I remember conversation with Eric where he said, Oh, we have this big customer that wants to standardize on Zoom But I told them that we're not ready on the contract. Value was much bigger than what we were getting from other S and B's, but he was right on that. Sometimes what you're like when they were not ready like readyto aside, great seals from okay, CEOs that they know when to say no, and that's probably harder done saying yes. But if you're building a big company, those initial experiences that you're going to get with mid market or at a price could end up killing you because if you're not ready, you might become a now outsource development shop for that animal, and that might kill the rest of the business.

One. It's cool with the strategy. My favorite customer stat from from the S one who is uber I forget where uber started with with Zoom. But it grew and grew and grew over the years to the point where uber now does according to the zooms s 1 14 million meeting minutes a month on zoom across the organization like Think about that, that's that's crazy. But that's like growing with the company. And you're starting with you just small teams with an uber and using it to communicate and then, like next step is like get some bigger paid plans. Next step is talk to the CEO, and next thing you know, the whole company is standardized on Zoom. That's the way they

collaborate. I need not only gross with the companies, but it also changes the way companies run. I believe that zoom is changing the way we work on. I can see it in some of our biggest customers, and I also see it. Hear it emerges. When when I first started here Emergence. Most of our investments were here in the Bay Area Last year, 60% of our new investments are outside of the Bay Area, so bringing us back to this pursuit of happiness, I believe that Zoom is democratizing on globalizing the pursuit of happiness because it's enabling people to realize the dreams regardless of where they are.

Yeah, all right, I'm gonna take us quickly through the i p o. So post emergence investment in ah, essentially calendar year 2016 the company does 60 million in revenue. Is cash flow positive doesn't use the emergence Investment the next year in 2017 does 150 million in revenue. 2018 does 330 million in revenue, with 51 million in operating cash flow and files to go public in March of 2019 of this year. That's net income. Positive, folks. Not a loss. Just the first time you hear. Let's talk about that. This yeah, that plays well with public market investors. It turns out that does.

The IPO price is the evening of April 18th at $36 a share above the range, which had already been raised during the road show. That equates to a $9.2 billion market cap, and then it closes the first day of trading, as we heard at the very, very top of the show. Ah, on Thursday, April 19th up 72% to $62 a share, or a $16 billion market cap. What was that day like?

It was an exciting day. And the question that I gotta ask the law was did you guys feel that you were leaving money on the table by pricing at 36? But this is very in line with how Eric runs Zoom. He was inviting new people to join our journey. Those new investors were gonna be our new partners, and he wanted everyone to be happy. So not just existing investors or people selling. So it was pretty much in line with the type of company that we want to build. Make sure that we attract the right investors on that. The right investors believe in what we're building. Long term. I came back home and I described this to my wife, and it felt like like when you get married, just date for a long time, you start building and making sure that you're ready for that big day. Then you have that big day you sell a raid with your friends and family, then you go back home and you need to start dealing with the rest of your life. You have

a merry instability together

through this and that. So that's a face that worrying we're still building were self focusing on making sure that our customers are

happy. All right, David. So let's dive into the playbook. Well, one, I'll just highlight again real quick, You know, as we started at the top of the show, just the power of immigration and, like grit and people wanting to build things and come here and do it here in Silicon Valley Inn in America. What a shining example Zoom is that, and you are to Sunday having amazing um, but I also want to say you sound to you mentioned this. I want to highlight it again in the beginning part of the episode, every big market or most big market sitting, they go through cycles of disruption and cycles of innovation,

and I think it's so easy to forget that you look at the video conferencing market and you're like, Well, that's done, you know it's big, but it's done and these big markets. They're always going through these cycles, and and you need to know where you are in the cycle. Yeah, that's a great point. I've got a couple. One is on the product side. So I opened this episode with. So what's going on with this company? What makes it so special? I want to talk about the product side, and then I want to talk about what's going on with the business.

So on the product side, we danced around this, but basically what you have is something that people thought was a solved problem. Which David you alluded to. It's not. People thought it was a commodity. And, uh, Santi, as you alluded to it wasn't so. It was actually good experience for an essential piece of doing business that had a mandatory network effect built in. And I think when you mix those things together like that, products gonna grow like that's gonna do very well. And so when you look at the business impact on that, what's going on with the company now? When Jake Santi's partner here at AA Emergence joined us on the Limited Partners show,

he made the comment that what We like to look for his triple triple double double in ah, in SAS companies that you know the first few years we 1st 2 years. Well, it's great to see a triple 2nd 2 years. It's great to see a double, and it sort of gets smaller after that. Zoom is still a massive growth story. They grew over 100% so more than doubling year over year last quarter, and that's eight years after the founding of the company. So this is still ah, superstar growth story. The payback period when Zoom pays to acquire the customer right now is is averaging around nine months, and that's an implied payback period from reading the Essman for reference drop boxes about 16 months and Doc, you signs about 30. So when you look at the efficiency of spending marketing dollars and getting that back from revenue wildly, wildly efficient and so that leads to a business that is cash flow positive that is now dead income positive, Um, and you can just sort of see in the stock price why everyone just believes that this is such a amazing business.

That's an advantage that we have. We've been doing enterprise investments for the last 15 years, so we've seen a lot of this company. So when we see those underlying metrics on when we do those cohort analysis, we can see which companies air doing incredibly well on. We can also help shape that, because now, with a lot off capital available, some companies are not even focusing on doing the right thing. They're just spending a lot of money and focusing on growth at any cost. But ultimately and Zoom has shown us this market's care about profitability, they do care about growth. But profitability is also important. So that's why having seen this movie play out in the past, we can also help a lot of entrepreneurs focus on the right metrics. And a lot of entrepreneurs have no idea how those metrics stack up against other companies, and they're a lot of things that they could do on, even if they don't do it early on because they just want to focus on growth. You need to understand at scale. What are you going to change to make sure that you continue growing on you continue delivering and building value?

Yep. All right. Moving the grating. So the way that we do this for AIPO episodes that just happened is rather than, ah, sort of issuing your grade, we say what makes it an A and what makes it an F and what makes it somewhere in the middle over the next five years? Right, right. And so has history plays out. You know, I think execution wise. Totally an A plus. You can. I'm sure people will quibble and have quibbled over should they have priced higher. And the company have been able to raise more money versus, you know,

sharing the profits with the new investors. Love the company philosophy there on on sharing with the new investors and the upside. The thing that will make this an a plus five years from now is in doing this financing event in doing an I, p. O. And, of course, great to get liquidity for all existing shareholders, are they able to use that that new cash generated or do something with either the AIPO proceeds or what it means now to be a public company to really grow into this really important collaboration company in the world, You know that that the stock that all investors believe that it could be this $26 billion company. And so I'm super optimistic about that. I think the thing that that would paint this as a negative picture would be if, um, if you know that that it turned out that the real business was just the video conferencing and there wasn't this this additional value to be gained by being, ah, Zoom customer or if they hit some ceiling on growth and they didn't continue growing in the in the way that they could and the TAM actually ended up being smaller. Personally, I don't think that's gonna be the case, but I think as you're looking at at zoom over the next five years, those would be the things to look at

on. On top of that, what I would add ISS that the key driver that's gonna help us deliver results is making sure that our customers are still happy. That's why the NPS score is critical for us on. We keep tracking that score because that means that we're doing the right job on If we keep our customers happy, then our employees are gonna be happy. Our investors are gonna be happy. Our partners are gonna be happy on. The second thing that we need to make sure that we continue to focus on is making sure that we attract the right people. We talked a little bit about the people who succeed at Zoom on. Those people are not just rock stars, but they're people committed to the mission and vision of the company. And we need to make sure as we scale as we hire more people as we expand internationally that we keep on attracting the right people into

them. Well, put my pleasure. All right, David. Carve outs. Yeah. We haven't done car routes in a while to get back at it. So I went and saw on excellent movie this weekend with myself and four other ah folks from the P S L team. Largely engineers at a deep appreciation for the history saw the documentary General Magic. Oh, man. I tried to convince Jenny to go with me a couple of weeks. She was up for it, but I could tell she wasn't, like, really up for it,

so I mean, it was incredible. I have some issues with the immense amount of drone shots and sort of random pictures of California water. But it was so well done. And for listeners who are wondering, what is he going on and on about General Magic was a company that David and I have mentioned on a couple episodes that in the early nineties was formed to basically invent the smartphone and they went public. They were, Ah, they had a spinout from Apple. It was technically a spinout from Apple, and we're gonna have to do an episode. It was led by Marc Pariah at the Founding Engineers were Andy Hertzfeld and Bill at consents of the original Macintosh team. Susan Care was there and then you really start to dig into all the people. It's Tony Fidel. He was like this, like crazy,

long haired in turn Andy Rubin. So when you look between Tony Fidel and Andy Rubin like, there's what the 98% of the smartphone market ended up being, you know, co created by those guys at different cos it's Kevin Lynch, who was Ah, I think, was the CTO of Adobe and now leads the Apple Watch team, these Apple senior vice president of something technology. There's Twitter CTO. There's a former C two of the U S government to Barack Obama. I mean the immense talent that came out of this plucky company that by all accounts wildly failed. Like they they went to put in a big way, but not only the storytelling but the ambition and correctness of their vision. But just, you know,

as as Santi alluded to the timing, is really what matters in these things far too early. But one of the things that really special to is they had a ah documentarian shooting a lot of footage while they were building this thing. And so they just had immense, immense old VHS tapes. I guess it certainly looked like that to drawn to create the documentary. And so it's like the early days of Alibaba. Oh, it's It's so wild. I mean, it's a bunch of hippies on the floor barefoot, building computers together like it's that's all. The all the whole company meetings are like sitting on the floor. It's great we'll link to it in the show, notes listeners, If you have an appreciation of ah,

of technology history and are a nerd about sort of apple stuff, smartphone stuff. Early days of a lot of the roots of Silicon Valley today. Definitely. Check it out. It's touring right now. It is a ah, um, an independent documentary. I assume it'll be available online at some point if you if you miss it on the tour. But, uh, super super fun to go see I can't wait to watch this. Well, speaking of, ah,

truly, truly excellent recommendations that Ben you have made to me on carve outs past Dissect season for the Dissect pack Ice Season four is Tyler Flower Boy by Tyler the Creator, and ah, so good has been one of my favorite albums of recent years for a long time. And, um, coldest is such a great job dissecting it on, uh, if you are into music at all, and even if you're not, if you're into acquired type podcast about anything, you will love this season that I guess the way that we try and dissect company's called Die Sex Music both lyrically, what on earth is going on with this track in this artist? But then also from a music producer perspective and dissect the actual track piece by piece? And it's Yeah, not to stop for a music producer perspective,

but I also really love is like from the music theory perspective, too. Like, why do these cords work here? And, like, what is like, what is Tyler doing with, like, you know, stepwise motion? Here it's It's very cool. That's awesome. I haven't listened to season. I got to do it. I listen to the Kanye Season and,

uh, also truly excellent. All right, bring it home. Let's bring it home. All right with that, listeners, Thank you so much, Santi. It's been a real pleasure. Can't imagine having done this episode without you. And, um, so fun to get to have this conversation together.

Thank you very much. This is a lot of fun.

Yeah, well, listeners, if you aren't subscribed and you like what you hear, you should will be continuing to cover all of the big upcoming tech I pose. And of course, if you want to hear ah, sort of deeper insights on SAS investing from Santi's partner Jake, or dive into any of the other company building topics you should consider becoming an acquired limited partner at globe dot FM slash acquired or clicking the link in the show notes. And with that, thanks to our amazing sponsor Perkins Kui and we will see you next time.