Special Acquired x My First Million

In this crossover episode of Acquired and My First Million, hosts Ben Gilbert and David Rosenthal join forces with Sean Puri to delve into the entrepreneurial journey of buying and revitalizing the once-popular social network Bebo. Sean, formerly the CEO of Bebo, recounts the unique experience of acquiring the company out of bankruptcy for $1 million after it was previously sold for $850 million, highlighting the challenges and strategies involved in such a venture. The discussion also explores the broader theme of company exits, often less glamorous but more common than acquisitions. Additionally, the episode touches on the value of leveraging existing assets, like an 80-million-person email list, despite its limitations. The second part of the show shifts to brainstorming startup ideas and discussing tech trends, with a candid conversation about the potential of SPACs and an index fund for them. The episode concludes by addressing the importance of following smart friends into emerging areas of innovation, such as climate change solutions and DeFi in cryptocurrency, and the intriguing concept of buying profitable businesses as an alternative to the high-risk venture capital game.

• The podcast episode is a crossover between Acquired and My First Million.
• The hosts are considering whether to release the episode on both feeds.
• Ben Gilbert suggests recording first and deciding later based on how the content fits each podcast.

"Yeah, I think we should record it and see what fits. But like by default, I think it'll definitely work on our feed. If you guys feel good about it on your feed, I think great. Just dual purpose it."

This quote explains that the episode will likely be suitable for both podcasts, but the final decision will be made after recording.

• The episode is hosted by Ben Gilbert and David Rosenthal.
• Sean Purie, the guest, has a background with Twitch, Bibo, and Blab IM.
• The episode is divided into two parts: the story of Bibo and startup ideas and tech trends discussion.

"This episode is a crossover between acquired and the my first million podcast, a podcast from the hustle for business builders, schemers, and dreamers."

This quote introduces the crossover episode and the themes it will cover, including a focus on business and technology.

• The Acquired podcast has a community for listeners to engage with tech news, strategy, and ideas.
• Pilot, an accounting firm for startups, is a sponsor of the episode.
• The hosts emphasize the importance of outsourcing non-core activities like accounting.

"You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls where we talk with all of you directly, and of course, our book club and Zoom calls with the authors."

This quote highlights the benefits of joining the Acquired podcast community, including in-depth discussions on company building and investing.

• Michael and Xochi Birch were the original founders of Bibo.
• Bibo was a social network that became popular in Europe and New Zealand.
• The company was sold to AOL for $850 million but later written off as a loss.

"So the quick version is, built a social network called Bibo got really popular, but it became clear to him that Facebook was going to win this war."

This quote summarizes the rise of Bibo and the decision to sell it due to the dominance of Facebook.

• Michael Birch approached Sean Purie to buy back Bibo during its bankruptcy.
• The purchase was made for $1 million, with the idea of using Bibo's assets for new products.
• Bibo's email list turned out to be less valuable due to outdated contact information.

"We go buy it back for a million dollars. And so we go to this crazy ass auction I can talk about, but buy the company back for 1 million."

This quote describes the process of repurchasing Bibo for a fraction of its original sale price.

• The team decided not to revive Bibo as a social network but to use its assets for new ventures.
• They created a viral video to announce the acquisition and rebranding.
• Bibo's technology and team were eventually acquired by Twitch due to their developments in esports and streaming.

"And then a couple of years later we now sold it again to Twitch. We got acquired by Twitch and which is owned by Amazon."

This quote marks the final sale of Bibo and its incorporation into Twitch, highlighting the end of its independent journey.

• Blab was a video chat platform with public engagement features.
• The platform faced challenges in content creation and user engagement balance.
• The decision to shut down Blab was based on the inability to solve these core issues.

"Blab had 4 million users and was growing, and some people loved it and used it 8 hours a day. And I got death threats."

This quote illustrates the passion of Blab's user base and the difficult decision to shut down the service despite its popularity.

• Differentiating between a company being bought versus being sold.
• A "bought" company is highly sought after, similar to Instagram during its acquisition phase.
• A "sold" company is one that actively seeks buyers and positions itself as a solution to potential buyers' problems.

"We were sold, not bought. Bought is your Instagram. You're hot. You're the next big wave. Everybody recognizes it, and people are banging down your door trying to buy you."

This quote explains the distinction between being a company that is actively pursued by buyers due to its high demand and attractiveness in the market ("bought"), versus a company that must seek out potential buyers and convince them of its value ("sold").

• Understanding the strategic priorities of potential acquirers.
• Aligning the selling company's offerings with the buyer's top strategic needs.
• The importance of identifying how a smaller company can solve larger companies' problems.

"I approached a bunch of companies and I understood, I, through kind of conversations, was able to suss out what are things that are important to them, what are their big top three strategic priorities as a company? And then is my little company an answer to any of those problems?"

This quote emphasizes the strategic approach taken by the speaker to understand what potential acquiring companies prioritize strategically and how the speaker's company could be positioned as a solution to those needs.

• Seeking advice from experienced entrepreneurs ("deal doulas").
• Learning from others who have successfully navigated company sales.
• Applying learned strategies to one's own company sale.

"I asked six entrepreneurs who had done this before. I was like, hey, how the hell do I do this? And they gave me some tips and they became what I call my deal, doulas."

The quote highlights the importance of mentorship and guidance from entrepreneurs who have previously experienced the process of selling a company, which the speaker refers to as "deal doulas."

• Understanding the market leader's challenges and strategic goals.
• Recognizing opportunities for original content and technology to address market needs.
• Positioning one's company as a timely and valuable acquisition for market leaders.

"So I realized that Twitch really needed original content and it needed content that it could control its cost better and drive a ton of viewership."

This quote conveys the speaker's realization of a market opportunity where Twitch, as a market leader, needed original content and technology to control costs and increase viewership, positioning the speaker's company as a solution.

• Persuasion and strategic positioning are key in selling a company.
• It's not about convincing buyers to do something they don't want; it's about aligning with their existing goals.
• Personal connections and proving oneself as a valuable leader are crucial in acquisition discussions.

"It's about finding out what they already want to do. Positioning, cutting away the fat of our story into just being the solution for that, and then connecting on a personal level and saying, would you want me as one of the senior leaders of your company, would you want me kind of on your extended exec team?"

The quote illustrates the nuanced approach to selling a company: understanding what the buyer already seeks to accomplish and presenting oneself and one's company as the ideal solution, including the personal aspect of being seen as a potential executive team member.

• The process of selling a company mirrors raising venture capital.
• Importance of creating competition among potential buyers or investors.
• The goal is to have multiple parties interested in the deal.

"Strikes me we don't have time to go into it, but that process is the exact same process of raising money from venture."

This quote draws a parallel between the process of selling a company and raising money from venture capitalists, highlighting the strategic similarities in creating demand and competition for the deal.

• Importance of documenting the sales process for future reference and to aid others.
• Recognizing the value of creating content to guide less experienced entrepreneurs.
• Acknowledging the rarity of the skill set required to sell a company effectively.

"I kept every email I sent and things like that because I was like, I want to help the next entrepreneur who's going to be like, me needs this."

The speaker discusses the foresight in documenting the company sale process, intending to help future entrepreneurs navigate similar situations.

• Starting a podcast as a safe and creative side project.
• The impact of the sales process on reigniting creativity and idea generation.
• The importance of focusing on the task at hand without getting distracted by new ventures.

"The funny thing is, when you're running your company, you just get so worn down, you're so tired over time... And then as soon as the sale process started, my creativity muscles just started firing again."

This quote reflects on the personal experience of the speaker, where the process of selling their company led to a resurgence of creative energy, which was channeled into starting a podcast.

• The value of sharing experiences and ideas across different platforms and shows.
• The importance of storytelling in the context of business and entrepreneurship.
• Leveraging different perspectives to create a richer understanding of the entrepreneurial journey.

"We'll talk about a side project idea I have been kicking around what our smart friends are dabbling in on the weekends and a bit more on spacs."

The quote suggests an exchange of ideas and experiences between the speakers, indicating an upcoming discussion that encompasses side projects, trends, and insights from their network.

• Bill Gross's EPAI framework: Entrepreneur, Producer, Administrator, Integrator.
• Understanding one's strengths and identifying the right partners at different stages of a company's growth.
• The role of personality types in team dynamics and company development.

"Every company needs these four personalities, and they come in a certain order. So he's called ePai."

This quote introduces Bill Gross's EPAI framework, which outlines the necessary personalities for a successful company, emphasizing the importance of understanding one's role and when to bring in complementary skill sets.

• The discussion opens with a concept for a database of internet speeds at different locations to aid remote workers and travelers.
• The need for reliable internet has become crucial due to the increase in remote work facilitated by platforms like Zoom.
• The idea is to create a trusted source for people to know the quality of internet connectivity in various accommodations.

"It's basically solving the problem of I need great Internet because everything is done through Zoom. And so when I'm out and about, I need a trusted source to know where my Internet is going to be good versus okay, versus whatever I have."

This quote underlines the essential need for reliable internet as remote work becomes more common, highlighting the core problem that the proposed database aims to solve.

• Speaker B identifies the cold start problem in creating such a database, as it would initially have no entries.
• The suggestion is to make data entry simple and over time, gather enough data to reach a minimum efficient scale.

"Yeah, I mean, it's this classic cold start problem of like, what a useless website you've created. Ben, there's zero entries on here, so you got to figure out some way to sort of bootstrap that cold start problem."

This quote addresses the challenge of starting a platform with no initial data and the need to find a way to encourage early contributions to overcome this hurdle.

• Speaker A discusses whether to build the database based on Airbnb's inventory and the insufficient information provided by Airbnb regarding Wi-Fi quality.
• The conversation shifts to different interpretations of the initial idea, including outdoor coworking spaces with good Wi-Fi and a service to enhance Wi-Fi for Airbnb hosts in exchange for data.

"Would you literally build it based off of what Airbnb inventory is? So Airbnb tells you, does it have Wi-Fi or not? Which is kind of like, yes, if it doesn't have Wi-Fi, just take it off the site. If it has Wi-Fi. Okay, that doesn't tell me if it's going to work for what I need."

The quote points out the limitations of Airbnb's current Wi-Fi information and the potential to offer a more detailed database that assesses the quality of internet service.

• Speaker C emphasizes the acute timing and market need for such a service, as evidenced by the personal experiences of the speakers and others they know.
• The pandemic has shifted the importance of good Wi-Fi from a nice-to-have to a necessity for remote work.

"I think it just speaks to the timing and the need for this is so acute right now."

This quote reflects the urgency and relevance of the idea in the current climate, where reliable internet has become a critical requirement for many.

• Speaker C suggests that the project could start as a simple product and potentially expand into a network of recommended places with good Wi-Fi.
• There is a discussion about monetizing through affiliate links for Airbnb and VRBO listings.
• The concept of using the platform as a growth hack for creating a network of rental properties is also discussed.

"You could stand this up on webflow and do a little bit of other no code stuff in the background, maybe a little bit of code that you add over time. This could be a wedge into something more interesting, though, right?"

The quote suggests a practical approach to launching the platform and hints at the potential for the project to evolve into something larger and more significant.

• The conversation turns to the creativity that arises from ambiguous ideas, leading to multiple interpretations and potential ventures.
• Speaker B shares an anecdote about a website he created that randomly generated startup pitches, highlighting the power of limited information to spark creativity.

"I guess this is moving to a different idea, but I love that we wrote down Wifi site for Airbnbs and there was three different ideas that came out of that purely because there's insufficient information."

This quote illustrates how a simple concept can lead to diverse ideas when individuals apply their creativity to fill in the gaps.

• The speakers discuss the concept of an index for SPACs (Special Purpose Acquisition Companies) and the potential investment opportunities it presents.
• There is curiosity about the mechanics of starting an index and whether a platform could be created for individuals to curate their own public equity indexes.

"So hear me out on this. And I don't know how long the opportunity exists to do this, but at least for the moment."

The quote introduces the idea of an SPAC index, acknowledging the temporary nature of the opportunity but recognizing its current relevance.

• Speaker B observes that many intelligent individuals with resources are turning their attention to tackling climate change.
• The discussion acknowledges the increasing real-world impacts of climate change and the need for innovative solutions.

"My smartest friends who have means are working on climate problems right now."

This quote highlights a trend among knowledgeable and capable individuals to focus their efforts on addressing the pressing issue of climate change.

• The speakers explore the concept of index funds, the licensing of brand names, and the business model behind stock exchanges.
• There is a discussion about the potential for creating a platform similar to AngelList but for public equities.

"Who's paying for that license? Who pays to be able to put the Dow Jones, is it like CNBC has to pay to put the Dow Jones index on the screen or know exactly the."

The quote raises questions about the business model of index funds and the licensing of financial data and brand names, which is a significant source of revenue for companies like Dow Jones.

• Increased frequency of fires in California has created a need for specialized companies to address this issue.
• Traditional insurance coverage for fire is becoming scarce in California, indicating a market gap.
• Addressing the symptom (house burned down) rather than the root problem (fire prevention) is less painful but not a complete solution.

"om past history of like, there's a terrible fire in California once every 30 years. It's like, no, happens every year now. So like, okay, let's deal with this problem. And that's going to be a great company." "But there's a serious. You can't get insurance for fire in a lot of places in California anymore. So this is a serious problem." "You're not solving the fire problem, you're solving my house burn down problem. And I'm shit out of love, which."

The quotes highlight the shift from infrequent to frequent fires in California, the difficulty in obtaining fire insurance, and the distinction between solving immediate versus underlying issues. The discussion indicates an opportunity for new companies to fill the insurance void and address fire-related problems.

• Ecommerce businesses face difficulties in obtaining insurance.
• Insurance companies are hesitant to underwrite ecommerce businesses, especially those with products manufactured in China.
• There is a gap in the market for providing ecommerce insurance, potentially for platforms like Shopify or new entrants.

"Also, speaking of insurance, I tried to get insurance for an ecommerce business I own. And dude, you can't get ecommerce insurance." "So they would just email me. They'd be like, unfortunately, we can't find any underwriters that will underwrite for this business."

The quotes reveal the speaker's personal struggle to secure insurance for an ecommerce business and the lack of underwriters willing to take on such businesses. It suggests a business opportunity for companies to specialize in ecommerce insurance.

• The importance of building relationships and networking is emphasized over formal education.
• The speaker regrets not spending more time with peers who were working on projects outside of class.
• The speaker's acquaintances from college are now successful entrepreneurs in Silicon Valley.

"I think the thing you said is really, really interesting. It really resonated with me when you said, if your friends are going to Denny's at two in the morning, just go with them." "So, step one, have smart friends that actually do this kind of thing. And I think if you just do that, you're 90% of the way there."

The quotes stress the value of being in the company of smart friends and the potential long-term benefits of informal social interactions. The speaker suggests that much of success comes from the networks one builds rather than solely academic pursuits.

• Solar installations offer tax benefits and can be a smart investment to reduce tax burden.
• There is a concept for a marketplace to facilitate investment in solar projects, which would provide tax credits and income.
• The speaker is interested in larger scale solar investments that go beyond personal property.

"So one of the best simple ways to reduce your tax burden is to do a solar installation, right?" "Seems like there's a business there."

These quotes discuss the financial advantages of investing in solar energy and the idea of creating a marketplace to connect investors with solar projects. It suggests a business opportunity to help investors benefit from green energy initiatives.

• The trend of buying profitable businesses and building upon them is noted among the speaker's acquaintances.
• This approach is seen as less risky than starting from scratch and trying to find product-market fit.
• Financing for acquiring businesses can be favorable, such as through SBA loans.

"But a lot of my smart friends are going down this path of, hey, I'm going to buy and then build rather than play the lottery and hope I find product market fit with a brand new invention." "You can buy a million dollar business with an SBA loan."

The quotes illustrate the strategy of purchasing existing businesses and enhancing them, which is considered a more secure route to wealth creation than starting new ventures. The discussion includes practical advice on financing options for acquiring businesses.

• Crusoe, a clean compute cloud provider, is highlighted for its performance and environmental benefits.
• Crusoe locates data centers at stranded energy sites, using power that would otherwise be wasted.
• This approach offers cost savings to customers and reduces environmental impact.

"Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, et cetera, and uses that power that would otherwise be wasted to run your AI workloads instead." "Energy is the second largest cost of running AI after, of course, the price you pay Nvidia for the chips."

The quotes describe Crusoe's business model, which leverages unused energy sources to power data centers for AI workloads. It emphasizes the dual benefits of cost savings and environmental sustainability, presenting an innovative approach to energy consumption in the tech industry.