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All right, Ben, David, thank you for making the time to chat with us. We've started this tradition right around March when COVID hit and we started doing kind of a weekly coffee break and we have a lot of customers, investors, and guests that we find interesting to hear from on the show. So we're very, very excited to hear from you. We spend a lot of time in Modern Treasure working with different businesses. So a lot of the content of your podcast is something that there's lots of fans and followers on. So I wanted to pass it over to kind of the co-hosts
for today, Jenny and Andy. So maybe Jenny, we can start with you. Sure. David, Ben, great to have you. Big fan. Jenny Johnston with Modern Treasury team, obviously, helping drive bank partnerships for the team. Andy, over to you. Hey, Ben and David. My name is Andy. I'm an engineer here at Modern Treasury, but I also run a podcast of my own. It's called Business Logic, and you can download it wherever you get your podcasts. I started listening this week. It's great.
Oh, thank you. I appreciate that. That actually means a lot. Yeah, I was actually largely acquired, inspired. So, you know, that's so awesome. It's an honor. It's an honor to be talking to you, too. It's worth acknowledging that this is not the first reverse interview that acquired has done. Apparently, you two had one in January of 2020.
The world's changed just a little bit. Is that all it was? Yeah. God, I thought that was like three years ago. Yeah. Yeah. I think we've all aged a little bit more than a year since then. But it seems like appropriate then to do another one now. So we're going to talk, I guess, about the recent stuff that has happened in the last year or so. But before we do, I thought it'd be cool to start at the beginning and basically get the origin story of Acquired. So in as much detail as you two can recall...
How did this show come about? Who had the original idea? Who pitched who? The more details, the better. I guess before diving into that, first of all, thank you all for having us and taking time out of your day. You guys are unbelievably interesting and fast-growing company, so it means a lot to be able to talk to all of you. Show of hands, who's listened to the show, to Acquired?
Oh, that's actually everyone. Okay, cool. I just wanted to make sure that I wasn't like explaining something totally irrelevant. David, do you want to tell the origin story? I think I probably have done it more in the past. Sure. We can see who recalls better. Also love the Friday shirt, Ben. It's the second time you've been... It's cold in Seattle, so you got to feel tropical somehow. Yeah. Love it. Also totally echo what Ben said. Thank you guys. This is so cool. This is the first time we've done...
Something like this with a company. This is super cool. So thank you. Origin story. Ben and I met at a Passover dinner. Is that right? Yeah. At Greg's house? Yeah. In 2014 or was it 13? 13. I think it was 14. 14. I don't know.
It was somewhere around then. I was still a business school student at GSB. I was coming back to Madrona, the VC firm in Seattle I worked at before school, and I had signed to come back, but I was still in my second year. I was up visiting, and unbeknownst to me, Greg Gottesman, who hired me at Madrona,
Madrona and is now Ben's partner at PSL, was recruiting Ben to come join Madrona as well and help start Madrona Labs, which in many ways was sort of the precursor to PSL. So we met at a dinner at Greg's house and we hit it off, kind of became fast friends. And then when I showed up after school back at Madrona, I think pretty quickly thereafter, then
Ben joined to help start Madrona Labs. We just, you know, we hung out all the time. We would get drinks. We would talk about...
tech stuff. We both, uh, hopefully it comes across in the show. Like we genuinely love this stuff and talking about it and research. Like we did it anyway, not to the degree we do now. Um, and then in early 2015, Ben, which is definitely the smarter one of the duo, or at least the more prescient one came to me and said, Hey, I think podcasts are
kind of going to be a thing. And I'm really interested in the industry. And I think we should start one and to see what happens. I was not predicting that it would become a thing. Like, I didn't think I realized there was gonna be a million and a half podcasts by 2021. It was only that, like, I listened to a lot of podcasts, and I thought they were interesting, which is
to pull forward a playbook theme. When you're founding something, you generally are like aware a problem exists, but you're not really aware that like, oh my God, I'm on the tip of this unbelievable wave. We shouldn't oversell any Oracle-ness that was a part of that. Well, it seemed Oracle-ness. I mean, I was like,
I don't listen to podcasts. I mean, I remember downloading some on my iPod in college in like 2006. This seems like an old industry, not a growth industry. So it took Ben about, well, like nine, 10 months from the first time we had the conversation until we actually recorded the first episode. I dug up the emails recently. Like we pretty much had it sketched out. I pitched you on two different concepts and I'm really glad we didn't do the other one. It was...
I either wanted to do, let's do a podcast about companies where the acquisition actually went well, or companies who have managed to create multiple unrelated billion-dollar innovations. Because I had this sort of working thesis that even the best entrepreneurs or best companies sort of have one in them. And anytime that people have multiple billion-dollar business lines, it's because they're leveraging existing assets.
Also, I should say, I don't think I could have described it in that way. I don't think I had the business acumen in 2015 to describe it that way. But I was like, I think it's super rare that Microsoft has like Office and Windows or that Apple had like the Mac and the iPhone. There's like 3M has sort of done this in material science. Yeah.
but there's not really companies that have two big things. You look at these Dropboxes or Zooms or Slacks, everyone sort of has one thing. And we would have just kind of run out of episodes very quickly. So I'm glad that we didn't pursue that one instead. But you're right, it did take us eight months from the email that lays out, here's how we sort of think each of those podcasts could go to then actually diving in, starting it. Recording. I should also say too, Ben's
transformation, I would say on, on this show that you still have all your old skills too. But yeah, when we started, you know, Ben, you were a PM and like being a PM is great. I'm sure we have many PMs here, but you've come to really own the analysis and the business analysis on the show. And, uh, just watching your growth from like a computer science major who had worked at a, as a PM. And if anything, I was the investment banker. I was like, ah, I don't want to do that. I'd rather do the story. And you know, you've just, uh,
grown so much doing this. It's been awesome. Well, thanks. All right. We've talked a lot on one question, so let's turn it back to the real host to keep going. It's pretty wild to think that that was 2015, which was...
Funny enough, the same year that Serial came out with Sarah Koenig. And for millions of people, that was kind of their first podcast. So just that kind of really puts in perspective how not a thing podcasts were at the time. So that was then. What about today? What are the headline numbers? Maybe you give us a sense of the scale of listenership, the size of the community, whatever vanity metrics you want to share.
The best way to think about it is monthly active listeners, where it's the number of unique listeners
People who have downloaded an episode over the last 30 days is 100,000. Done 150 regular episodes and maybe 50 LP episodes. There's about 2,000 people who are acquired limited partners who are part of our sort of paid subscription program that brings you closer to the show to do Zoom calls like this once a month with folks in the community. We have a Slack that's like 6,000 people and about 10% of the members are active in any given month.
Is it month or week? It's probably month. I think it's month. The most common behavior in the Slack is you get excited, you join, and then you're in too many Slacks. And it's not one of the three that you actively participate in. But maybe you'll, you know, click the icon every once in a while. But there's totally a core group of, I don't know, three, four hundred who are like, that is the place that they go to talk about technology, which is really cool because we've gotten to know a lot of them. And not coincidentally, most of them are LPs, too. So we get to, like, interact more on Zoom and in other ways with them.
So those are sort of the headline numbers. It all didn't really happen until like three and a half years into the show. It was mostly like podcasting into a void for a while. The only thing that kept us going was that we were learning and that we really enjoyed getting better at doing the podcast. We were not getting the dopamine rush of social media hits the way that we do now of new people discovering the show. It was a lot of the same people who were, frankly, people who knew us personally. So I think absent the past,
passion, and the enjoyment of getting better at the craft, we did not have external indicators saying, hey, like lean heavily into this thing until fairly recently. It's a bootstrap business in every way. Yeah. But at what point did you both look at each other and say, ah, this is working, we should throw even more time and resources into this? Like most things, it was a gradual process. And then a sudden process. I think it was the first two years.
We did get featured a few times, and that was great. Pocket Casts, I don't know if they still are, but they were the biggest podcast client on Android. They featured us a few times, which was great. They're an Australian company, great folks. So we have a bunch of Australian listeners still as like a nice core base there from that. You know, I think the first moment for me where I was like, wow, this might be more than I realized was...
probably our first meetup in San Francisco that Preet, so Preet Anand, who's become a great friend and was sort of our first like acquired super fan. He works at Lyft. He runs insurance and safety at Lyft. And
And he'd been a founder in the past. He kept pinging us in Slack and was like, hey, you guys need to do a meetup in San Francisco. Like, I think there are a lot of people that want to beat you guys. And we're like, no, I don't know. We did it. We did it at Founders Den, right? I think. In Soma. It was crazy. There were a lot of people there. And so that was the first time I was like, whoa, wow.
this is interesting the way I'll summarize it is like analytics tell you a story with a data point and you're like cool we got x hundred downloads today or now I think it's like if we haven't released an episode in like three or four weeks we will get like four or five thousand just like
downloads, like people listening to some episode we've released. And that number has worn off on me now. Every number has basically worn off on us now because there's numbers. But when you show up and then there's real people and you're like, oh, these aren't just downloads that are accidentally happening and no one's listening. These are people who want to say like, oh, on this episode, I have something to say about this point that you made. And you're like, oh my God, you listened to that episode where we had that point that we made? And there is a compounding
that comes from people listening to multiple episodes, getting hooked, and then forming that sort of like, it's a weird one-way relationship in some ways, unless you've actually ever met the person and then you can kind of feel comfortable with it, but formed a one-way friendship. And I think showing up to the meetup or the multiple live shows that we've done and meeting so many people that we didn't know until we got to meet in person, but felt like they had a relationship with us, we were like, whoa, there's like totally something here beyond
And then a bunch of the people who showed up there work at companies we were covering and or, you know, we're VCs like, you know, had interesting perspectives. And it was like, wow, this is an amazing community. Dimitri, am I remembering right that you were working in the WeWork across the street from Benchmark when we did our first live show and you popped up like right when we were doing soundcheck, right? Yeah.
That's right. Yeah, I think Matt and I were there. I think it was just the three of us at the time we were on the sixth floor that we work and the second floor had like that auditorium thing. And you're doing the episode on Venmo, which I think was your first San Francisco. Yeah, first live show. Yeah, just for a last year period. But yeah, but that was a super fun.
Yeah. So it's stuff like that where you're like, oh my God, there's real people. Like as humans, I think there's a high recency bias. So you forget about old relationships and there's a high multiple occurrence bias, but we kind of carry every person we've ever met as a notion in our head of like,
how I show up in the world or who is aware of me and who am I aware of? And the podcast got to a point where that became asymmetric, where I think David and I both realized like, whoa, more people know of us than we know of them. And like, well, it sounds like, duh, it's very strange to feel it. And once you start feeling that, then I think you change, at least I changed the way I was thinking about the show into more of like, huh, I'm
I guess we kind of can scale this because we keep putting in the same amount of energy, but that asymmetry of people who are aware of us and what we do in the world keeps growing. And from a human physiological perspective, it's weird. And I don't know if it's something you should lean into, but from like a project and a business and a thing that you want to exist in the world, you definitely should lean into that.
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Yep, Vanta is the perfect example of the quote that we talk about all the time here on Acquired. Jeff Bezos, his idea that a company should only focus on what actually makes your beer taste better, i.e. spend your time and resources only on what's actually going to move the needle for your product and your customers and outsource everything else that doesn't. Every company needs compliance and trust with their vendors and customers.
It plays a major role in enabling revenue because customers and partners demand it, but yet it adds zero flavor to your actual product. Vanta takes care of all of it for you. No more spreadsheets, no fragmented tools, no manual reviews to cobble together your security and compliance requirements. It is one single software pane of glass.
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Like Vanta's 7,000 customers around the globe. And go back to making your beer taste better. Head on over to vanta.com slash acquired and just tell them that Ben and David sent you. And thanks to friend of the show, Christina, Vanta's CEO, all acquired listeners get $1,000 of free credit. Vanta.com slash acquired.
Maybe staying on the community point is clearly something that you have been able to unlock. Tell us more about the LP program and who came up with the clever marketing of a subscription model being called an LP program. All right. So David approached me saying we should do a Patreon. David, I'll hand it over to you. There's such a fun story behind this. So
God, when was this? Summer 2018? Is that right? Sounds right. I think. Yeah. So the podcast industry is such this weird thing. Like it's existed since 2005. But in 2015, you know, we were like, podcast? What's it like? I've never, you know. And then fast forward to 2018 and there's still like monetization was...
miniscule. I mean, we did our first advertising sponsorship deal with SVB in 2017, I think. 2016 or 2017. You know, it was great. We love working with SVB, but it was out of Min Lee in Seattle, the market manager. It was out of his community budget. His personal Seattle budget. Yeah. And also, we should say, I remember trying to start a podcasting infrastructure company
at PSL in late 2015. So I did a bunch of market analysis on this. And the advertising market for total spend on podcast ads was $40 million in 2015.
You can't even kegger your way to that being venture scale in five, maybe 10 years. It's just such a small base that we threw in the towel on the project because we were just like, there's just no market here. Sure, dynamic ad insertion might unlock something, but the way that the podcast ecosystem has evolved, you have...
And some would argue it's for the better because advertising has quote unquote ruined the web, but you can't run JavaScript in an audio file. And so you don't really know what downloads get listened to. You do in some clients, but not others. People listen to a ton of different clients. You as the podcaster don't control the user experience, nor does your podcast host. It's this like bifurcated ecosystem of a bunch of different players in the value stream all doing what they can. And it gets the round trippable data and the features that you can control as a producer and
Down to where it actually gets listened to ends up being the lowest common denominator of what's shared across the entire ecosystem Which is effectively the RSS spec back and so like you get no data You get no information on who's listening you get no email addresses nothing So how do you build a real business and a real ecosystem on top of that morass? Yeah, so we got to kind of summer 2018 and
We saw usage. We did these meetups. We were like, wow, like we have a thing here. And we're also looking at the whole industry and we're like, God, advertising is just is lagging. Like there might be a different way to do this. So we saw Patreon podcasters were starting to use Patreon. They were doing bonus shows through Patreon.
we thought about that and, and, and it was two lenses. It was one, would it make sense for acquired to do a Patreon? You know, whether it's right or not, we don't want to appear like we're like, does it destroy the cache of acquired? If we're out there saying like, please, sir, like, you know, holding out the tip jar, it can be a great business model, but it felt antithetical to what acquired was sort of talking about with the scale businesses. And, you know, the, the, we wanted to own our audience and, you know, all sorts of stuff. So, um,
We thought, well, what if we could take that essentially business product model,
build it natively in-house ourselves. But then the other piece of it was like, maybe a lot of podcasts would want this. So it really was a co-project of like, the LP program was the first MVP for what became Glow, which is the company that powers it that Ben and then shortly thereafter, Amira, who joined within PSL to build that and they still...
We don't power us in many other podcasts to this day. If you would have asked me this in 2018, when we were building glow and then starting the LP program on top of it, I would have told you that the key unlock was pay for value. We wanted this to be a subscription like the New York Times, not like tip your favorite creators.
We made 50 episodes so far of VC fundamentals and how to price your product and really nuts and bolts, hardcore value delivery for people who are listening to Acquired and want to get better at their craft, whatever their craft is. In talking to lots of LPs, a lot of them are doing it, one, for support. Like, hey, we just produce Acquired for free and we want to help you guys do that, which is funny because I was so against...
it being a support value proposition. And the second one was feeling in some way closer to the show. So we've decided really to lean into that closer to the show. We're still producing tons of episodes and plan to continue doing that. But we changed all the merchandising and marketing to be much more around the show only gets better if we're able to get tighter feedback and
the show for us is most rewarding as a vehicle to interact with listeners and have community and have relationships form in our community outside of us. So if we can kind of be a mesh network rather than a hub and spoke, I think it was David that threw out Slack for the first time and I was...
Like many acquired things, one of us throws it out, the other one doesn't love it, but we try it anyway because that's the culture that David and I have and it goes well. Culture with the two of us. We love tracking the Slack DMs because I don't DM that many people, neither does David, but there's tons and tons of DMs happening in our community Slack, which is
awesome. Like that's, that was kind of the goal that, you know, that we introduced the idea of book clubs so people can be on zoom calls with us. Then the author is what we talk about the book that we read. We introduced the LP calls. So once a month we get together with people and we've just tried to lean as hard as we can into how do we build that tighter relationship, not just with us, but with everyone who listens to the show, who can learn from each other. And then the only other thing I'd have real quick, then we could go to the next question, but, um,
Like as somebody thinks it's startups, we were just wrong about everything. Like the advertising market in the past 12 months has finally woken up. Like I,
I don't know. Ben may know better than me, but like the podcast advertising market is going to be a multi, multi-billion dollar market in short order if it isn't already. So that was a fundamental change to our business too in the past year. I think it just hit a billion dollars and a lot of what's to thank for that is consolidation. So you're seeing the Spotify's of the world and some of these, um,
hosts who then start to grow further and further in their capture of the value chain to do, hey, we're going to handle your ad sales and we're going to handle your ad insertion. And we're going to, as we own more and more of it, we can instrument more and more of it to provide end-to-end data, which then makes it more valuable for the advertiser, for the podcaster, maybe at the expense of the listener experience, though I don't really think we've seen that yet, but that would sort of be the counterargument.
So between the LP subscription and the show sponsor, which I understand is tiny for season eight, you kind of have two revenue streams going for you. So acquired as a proper business and you two are very well practiced at analyzing business models and their moats. If you had to introspect and analyze what makes the acquired model really great and maybe even independent media generally, how would you think about that?
Oh, this is such a fun question. Should we do powers? Should we do great? Yeah, let's start in playbook. So there's a thing that like, Ben Thompson is the best in the world to talking about this, but I'm going to steal it from him because there's just no better articulation than what he has sort of put out there. But it's the idea that the internet favors technology.
two things. And it's not obvious from the get-go because you would think the internet just democratizes everything. But what actually happens is you have massive amounts of centralization because in a zero marginal cost, zero distribution cost business, you can have these aggregators show up. So, you know, Facebook,
Spotify is trying to become one in podcasting. The New York Times is that in media and journalism. We just released the New York Times episode. They have like five times the number of subscribers paying for the New York Times as the next paper on down, which I think is the Washington Post like returns to scale happen in a big way on the Internet.
And that's largely because if you have a fixed cost business like media is, you know, it costs a certain amount to produce it. The greater an audience you have, the greater you can amortize the cost of the content. So, you know, content gets better as you have more audience because you can afford to spend more on the content and your profitability just grows as you get bigger and bigger and bigger because your costs of production really don't grow that much, but your audience can scale dramatically. So that's the... Just like Netflix. Yeah, that's the head of the curve.
But the magical thing about the internet is like, and this one I think was a Patrick O'Shaughnessy thing when we had him on. It's a game of niches where you can say, hey, I'm being weird about this thing here on the internet. Come be weird with me. And there might only be like five people in your town who are weird in the same way you are, but there's like a ton of people on the internet. That's the thing that just keeps smacking David and I in the face of like, if you would have told us when we first started, like you can totally get your biggest audience ever. Why?
once you move to three plus hour episodes where you are super indulgent and esoteric and and just like give the full his like i would have been like no that's not people don't like podcasts that are that long and certainly that'll hurt our audience numbers but it hasn't my wife jenny keeps being like you guys are ridiculous like why do you think anybody would listen to you
And I'm like, well, I don't know. Every time we go longer, we get more listeners. There's a quality element to it. But I think the more that you can specialize or have an opinion or be known for something or occupy a niche in online media, the more you can sort of win because people who want that now know where to find you. And I think if you're going to be vanilla on the internet, then you better be huge and vanilla because otherwise it's not going to work.
I think the other thing that maybe it's just recency bias, we haven't done the New York Times episode, but that I think has become clear to me, probably been too, is like, we're a media business.
And media businesses are great businesses, just like newspapers, you know, they sell advertising and they sell subscriptions were the same cable. This is why the cable industry was amazing. It was even better. It was like the iPhone version of this where they were sold a lot of advertising on cable networks. But then you're paying for every cable channel out there in your cable bundle, whether you realize it or not, like you were talking about Fox News on the New
Pretty much everybody in America who has linear TV is paying two bucks a month for Fox News. That's a lot of money. And they're selling a lot of advertising. It's a $5 billion business, Fox News. With 50% EBITDA margins. Which makes it 3% bigger than the New York Times by revenue. And let's see, I think the New York Times has like 10% EBITDA margins. So it just blows it out of the water in profitability. That was a massive discovery for me doing that episode.
We have the same dynamics at a much smaller scale, but we make content, we do what we love, and we sell advertising and we sell subscriptions. I want to get indulgent on one thing here where David said the media business is a great business. The media business is like the software business, right?
It's like it's precursor and it's still the second best business model only to software and when you think about it like Software has this magical thing where there's zero marginal costs, but so does content So does media software is edge is that it has the ability to be used over and over again Where like if you type a word that is just a word that someone reads they're not gonna want to read that word many times You'll read a book two three four times, but that's kind of it. So
it. But if you write a word and that word is executable in software,
that can be used hundreds of thousands of times. And so it has this... Yeah, you guys are a better business than us. Yeah, it has this second vector of reusability where the one dimension that it moves in is zero marginal cost, but the other dimension that it moves in is repeatability over time. So of course, you have to maintain software and fix stuff and add new features to compete. But if content is N, then software is N squared. But very few businesses are even N. So...
Media is great. Well, we hope to someday have the same fandom that you've attracted, acquired over here at Modern Treasury. You record, you got to start releasing these, build your own content. Exactly. We're trying. If you've seen our journal, that's at least how I found Modern Treasury was coming through the content channels. Oh, cool. This is becoming a thing. Like, look at, look at Figma, look at Notion, look at like all these, you know, leading edge software companies. They're building content, they're building community, and that's their good market strategy. Ooh.
Ooh, okay, wait, continuing to indulge on that point. I do think that content is the most under-invested high return thing that startups can do for getting to market. I'm sure many people here have thought about this more than me, so I'd actually like to hear if people have other thoughts, but all coin-op customer acquisition, you know,
social media, search. You have to have it as a part of your mix eventually, but all the value has been arbitraged away. These platforms are 10 or 15 years old. People understand how to use them. There's no more like corners where you can go exploit it and then go get a bunch of customers in a way that's super scalable and you're not paying the toll to get them. I think content done well, and especially community done well, which in some ways is like
If content is N, then community is N squared. It is like the most underinvested go-to-market strategy, and probably because the returns take a while to show up, and it's hard. It's hard to do well and build not only the right set of people or one person who's good at content or good at community, but then they also need to have that Venn diagram of also...
being knowledgeable about your domain and your company. So a lot of times, that's why it's founders at first, but founders don't necessarily come from a content writing background or a content structuring background or an SEO background or any of that. That's a huge secret weapon for startups right now.
Outside of content, we also are having an explosion of other independent media channels or just channels for people getting into the conversation and sharing their expertise, whether that be Substack, whether that be Clubhouse. And they're just absolutely growing like crazy right now. How would you describe how they fit into your ecosystem and as well where they might be going and the effect that they might have on business? Yeah.
Oh, can you guys help us? We're trying to figure it out real time. We have no idea. We have no idea, but a lot of opinions.
This is an area where David and I are playing to our strengths. Neither of us are efficient writers, and we could probably get more efficient by investing a lot in it, but we basically have sworn off Substack or a meaningful email newsletter. We have taken the step of turning our episodes into bullet points on the playbook, but that's about as far as we're going to take it. We also do transcripts for folks that want that, but...
Over and over again, people are like, oh, turn your episodes into blog posts. Or if you're not going to do an episode on a company, at least do a post on it in kind of the acquired style. We probably could bring on people or franchise the brand or do something to make that work. But we've just decided that's just not our bread and butter and there's going to be something left on the table and that's okay. The way we're thinking, at least right now, about Clubhouse is...
If you think of Acquired as sort of a funnel where you've got the top of the funnel right now is like social media or referrals or someone browsing Apple podcasts. And then mid funnel is, hey, I'm actually listening to the show. I like it. Bottom of funnel is deciding to engage deeper with us by either becoming an LP or going to a meetup. There's other mid funnel activities like joining the Slack community.
you know, at the bottom of the funnel, that's where we do our deepest community stuff. Like that's where we engage on zoom with our LPs. So in some ways, when I see clubhouse, I'm like, well, I should say also that the other dimension of this, I think is kind of unique to us. Why I love our businesses. The true, true bottom of the funnel for us is, um,
We meet people, awesome people through this community and we invest in them, you know, either we personally or Ben through PSL. Or they join one of our companies or we if they're also an investor, we get to co-invest with them or maybe we'll work for them someday. But like it is the bottom bottom of the funnel is building the relationship that you then get to like have a 10 or 100 X larger value thing you get to do together at some point.
So Clubhouse is interesting or like this audio community medium is really interesting. So I'm like, well, that's the thing that we do with the people that we already have the tightest relationship with. It feels sort of strange to go and do it with people that may not even listen to the show at all or know about the show. And the thing that we're sort of realizing is maybe the Clubhouse type thing is actually a great like ultra top of funnel. You know, it's the same reason why a lot of podcasts cut up their podcasts into clips and throw them on YouTube to just like
get in the algorithm. I think Dave and I are looking for like, what's the sort of lightweight snackable way to discover us and acquired on a clubhouse or on a Twitter spaces that might then lead you to want to engage with us in deeper ways, but as a, as kind of a different thing, that's more also native to that medium. I have been looking more closely at Twitter spaces too, because obviously like we're pseudo established on Twitter, not huge followings. In fact, I think our reach, uh,
for podcasters is wildly disproportionately weighted toward people subscribed to the podcast feed and actually fairly few social media followers relative to the podcast presence but the way i've been looking at twitter spaces recently is it shows up in the top for people who follow you it's an engage with existing rather than capture new audience opportunity whereas clubhouse feels more like a you know roulette wheel to me where you go in there and like who knows what's going to happen
Ben and David, this has been super fun and super insightful. I feel like we could go on and on, but we want to reserve some time for you to do what you do best and ask Modern Treasury whatever questions you might have. Before we do that, I think it'd be cool to have a lightning round of questions. And that's pretty self-explanatory. Just a few questions, answer as concisely as you can. That's going to be a challenge. Yeah. Apple, Jeff Bezos, no, $5 trillion.
Oh, darn. Well, that was fast. Okay, first one. So what will happen first? Does Ben move to San Francisco? Or does David move to Seattle? I've already lived in both places. My wife's family's here. So I don't think we're leaving. I'm doubling down on Seattle in a big way with PSL and PSL Ventures. So I think neither are likely.
What about your favorite character that you've ever covered on Acquired? Characters, literally any human being you've talked about could be, you know, Henry Raymond from New York Times, Satoshi Nakamoto, anyone. It's pretty hard to be Elon Musk. He's like probably the most interesting person we've ever covered. It's cliche, but things are cliche for a reason.
I'll answer a slightly different question of favorite guest, I think, is a tie between Nolan Bushnell and Trip Hawkins, neither of which are among our more popular episodes. But these are literally people who invented not just in the gaming industry, but in Atari's case, like the computing industry. And Nolan is such a character. Oh, my goodness. So those were fun. What about the company that each of you wishes most that you had founded?
Bonus points if it was one that was featured on Acquired. Mine is Webflow because I get it so through and through and I would have gotten it 15 years ago also. No one but Vlad could have really founded Webflow the way Webflow is, but that's just a company that I think has got so much running room ahead of it and it's a company that just sings to me in its value proposition.
I'll pull forward a soon to happen episode, Berkshire Hathaway, which we're going to cover later this season, right before the annual meeting for a bunch of reasons. But the biggest one is I have literally zero like negative beyond negative desire to be a CEO, manage anyone, manage an organization. So if I had to start a company, I think Warren and Charlie have a pretty good on that front.
When it comes to recording the show, do you prefer sitting or standing? And this is a question for the both of you. I stand to force brevity, which obviously doesn't happen, but it means that like, it's good to have some counterforce to our lengthiness. I stand for energy. Brevity is not my strong suit. Lastly, what is your favorite podcast that is not acquired?
Oh, this is fun. We just went on Jason Calacanis' twist yesterday and said there, and it's absolutely true. My current favorite is All In. Like,
I mean, that's worth a whole nother discussion if you guys want. But like what they have done with all in and built in a short amount of time is nothing short of incredible. And the show rocks. It's great. Previously, my favorite podcast was a fun show called Wizard and the Bruiser, which is like acquired for like nerd history. All right. I have to the most entertaining podcast I listen to that is regularly awesome. And I know they've had a kerfuffle recently, which is a shame is Reply All.
And the podcast that I listen to every single episode of is dithering because it is the side of my brain that is the apple nut and has been for 20 years combined with the strategy part of my brain, which I feel like I've sort of come into via acquired over the last five years. And Ben and John at dithering are just great together. Wonderful. Any questions for modern treasury?
A lot. We're going to ship this as an LP episode. So first of all, who wants to take a stab at telling me, who's only looked at your website for 30 seconds, to understand what you do? Enlighten me. Give me the Modern Treasury pitch. I guess I'll jump in. So Modern Treasurer is a payment operations platform. And so when you think about payment ops, it's this funny...
thing that exists in every single company and there hasn't been products around it. There's things around it like accounting and there's things around it like the bank portal and so on, but not something that actually kind of stitches it all together into a software experience that makes sense. And so that's kind of what we think about all day is if you think about a payment for whatever reason that a company is sort of initiating a payment, that travels through the whole system
And there's different teams inside of these companies that interact with it, whether it's the customer service team or the accounting team or the controller who has to release a payment or all those sorts of things. There really hasn't been a single product for that. So there's lots of ways to look at it. But at the end of the day, like all those people who are spending their day looking at the mechanical payments of what makes up these businesses is what we spend our time thinking about the kind of the magic view and the magic experience for.
Let's dive right into strategy. How do you think about the things that you should own inside of modern treasury versus say, hey, we're a horizontal platform that plugs into all these other systems and we're okay with existing pieces of software and companies owning other parts of that experience?
I think the number one way that we think about that is in the FinTech world, we're very much on the tech side of FinTech. So we are not in the flow of payments. And the moment you step into the flow of payments, there's lots of other implications to that, both to you as a company from like a legal and regulatory perspective, but also in the way in which you interface with banks and others. And so we just want to be like the best software for this.
that clarifies a lot of things. So when you think about getting into the flow of funds, that actually becomes in a way more vertical by definition. And so when you think about companies that are doing that, each one of them owns, at best, owns either some vertical industry or some kind of use case versus a product like Excel. Excel is not a B2B thing or a B2C thing. It's just this thing that everybody can use. And that's how we think about payment ops. If you were to...
be in the flow of funds, would you have to have a banking license to do that?
I don't know that you'd have to be a banking license because I don't know that you'd have to necessarily be the one issuing depositary accounts. But, you know, we were at the Venmo episode. I mean, that's an example of a company where they hold some of those funds. And so there's a bunch of implications on that. Those funds aren't sitting at Venmo Bank. They're sitting at some bank that, you know, we all know the name of, but it could be a number of different banks that they work with. So we, in some ways, we think that, you know, there's 3,000 banks in the U.S. There will, you know,
By and large, just as maybe the Berkshire Hathaway answer is like, if you really think about it in 50 years, there'll probably be something like 3,000 banks. Like we're not going to make a bet about how they all change, but like fundamentally things aren't going to change that much. But the software to kind of work on top of them is something that will continue to evolve and change much faster.
I remember, Davichi, talking to you about having coffee, physical coffee a few years ago when you guys were first starting out and wondering to myself completely wrongly how many applications, companies, services out there could need something like Modern Treasury. Obviously, it's a lot. And that is, I assume, cheap.
changed hugely over the short life of the company thus far. What was your thesis going in about what the market was and what's happened over the past couple of years? So one thing that has changed quite a bit, I'm not sure that it's past couple of years or last five years or something, but commerce on the internet used to be very much a credit card thing.
Like if you go back 15 years ago, people were afraid of putting their credit card number into a web form. By and large, the startups that were being started were e-commerce, retail, subscriptions, things like that, travel. If you look at the companies that are over the past five years, all of a sudden you have companies that are innovating in real estate and in health insurance and education. And those are all things that aren't really credit card things. You buy these things over ACH, wire check, et cetera. And so like all of a sudden, the earliest companies in that space, things like
Airbnb and Uber and even Coinbase and others, they really had to build a lot of infrastructure for something that the e-commerce companies never needed. The internet is starting to mess with
parts of the economy that never were messed with 15 years ago. And so all of a sudden, there's a lot more kind of commerce on the internet means a whole different thing from a payment system perspective than it used to back in 2010. Even Glow, who we were talking about earlier, right? Like anybody who's not just taking payments, which you could do with a credit card, you know, wouldn't need payment ops, but dispersing, right?
I just have to imagine that there had been exponentially more companies doing that than there were a few years ago. And now we're like earliest clients were, you know, health insurance, you know, startups and real estate brokerages and, you know, things that aren't really e-commerce, but very much have this problem. And it's a very horizontal problem for them. It's not really specific to how a real estate company works. What customer verticals do you have now? What are your biggest ones?
I mean, going back to the Excel comment, we don't think of it as verticals, really. I mean, we have certainly like pods of companies that are in the same area. So like I mentioned, real estate is a big one. Kind of investing fintech is a big one. So whenever you have to deposit or withdraw from an investment app, some sort of retail investing app that might exist out there, people might be-
there's certainly more kind of esoteric things around insurance and so on where people are, you know, buy now, pay later, things like that. All of a sudden, there's like lots of different versions of that. But again, from our perspective, the way we think of it is an ACH is an ACH, a check is a check. Like you have to be able to account for it. You have to be able to answer customer service kind of
support questions when if you imagine calling a company up and saying the payment that you're supposed to get didn't arrive in time, what is the person on the other side of the phone actually looking at? And how are they making sure like, hey, are you kind of full of it? Are you actually have a real problem? Or is there like, is it going to clear tomorrow? Is there like a refund on its way? Like what is what is happening? I see. So it's almost like it makes debugging easier for the person who's trying to figure out like customers claiming something. I have to figure out where it broke and if it broke.
Yeah. On an investing side in the venture industry, like think of the capital call process. Like there's, you know, there's not a lot of technology in that. It'd be the heebie-jeebies. Or even the capital deployment process. It is mind bending to me that I release a wire and then like it's not immediately showing up in the company's bank account. So there is this no man's land period where it's like, okay, cool. Like call me in an hour if it's not there yet. Like really? That is how this works? Yeah.
Yeah, that's right. And you talked a lot about this on the Bitcoin episode about the first half hour is all about the ACH kind of system and how all this stuff was really innovated on in the 50s and 60s. But this is like what computers are supposed to be good at. So it's kind of strange that we just, as a society, sort of stopped investing in it sometime around 1980. And then we're still just dealing with the same... Is that regulatory capture? Are there forces at play causing us not to innovate there? I think there's an element of that, but part of it is also just...
There's other areas that people are investing in. There's probably like the plethora of banks probably makes it a little bit harder for any one single one of them to invest heavily in it because they don't, you know, it's not like that. There's a lot of coordination as a problem here. So some of it is maybe captured, but some of it is also just like the complexity of you read about, you know, smaller countries like Estonia having like, you know, fast payments and it's like, well, fine, but like, how big is that versus the U S and when you think about the U S financial institutions, um,
that's just a much larger problem to solve. Estonia also got to start from scratch with everything in 1990. Like they vote with a SIM card. It's awesome, but totally starting from scratch. You know, you brought up Berkshire Hathaway. I think there's an element of this, which is kind of like, you know, they invested in the Burlington Northern Santa Fe, like, and part of the reason why they invested in or their thesis was nobody's going to build another railroad in, you know, 2021 or whenever 2015, whenever they invested in it. So I think there's an element of that as well. I mean, I think
It's hard. I mean, we're seeing real time payments, RTP being one of the new kind of payment rails that people are starting to use. That's sort of an alternative to ACH and wire and so on. Fed now is something that Federal Reserve is proposing. So we very much think it will happen in the next five years, but it is definitely a long time coming for the U.S.
All right. I have a question that is probably going to take focus away from Dimitri. What does go-to-market motion look like in a company like this? How do you decide who you're going to go after as a customer? How do they find you? How much person power do you have to throw at closing them? How self-serve is this? How self-serve can this be? I'm curious about all those things.
I should take that one. There's a bunch. The first and most important is content. So when you guys were talking about the uniqueness of content for startups, I was nodding very vigorously. We write a lot about like the secret underworkings of how money really moves in America. Most of the money in the US, 76%, moves over ACH wire paper check, like cash and credit card live in as consumers, but like most of the American GDP goes this way.
So writing about that and like the nitty gritty of that, the technology of that, the analysis of that, we love doing that. That's one way we get our story into the community. And then there's actually seven different motions for us in GoToMarket. It looks like a
sort of traditional enterprise software go to market, heavy lead on content. We do some paid, we do sales. We have a lot of community and network building. We also have a channel through our banks, our wonderful bank partners. So lots of different things going in parallel. Let's zero in on content. Like who comes up with the ideas for what you should write about? And how much of that are you like, hey, this is really core for us to do in house versus, hey, we can work with a great set of external folks to help us get this done.
Sorry for my barking dog. We write everything ourselves. We're nerds about this. We're readers and writers by culture. We read the history of payments as most of us read that as part of our onboarding. And there's like a famous book in the industry written by a consulting shop called Glenbrook called Payment Systems in the US. Like everyone reads it cover to cover. And if something piques your interest, you dig in and write more. There are certain things we care more about and sort of emphasize more.
But I would say it's still organic and authentic to who we are as a startup and less of a program. And I think that's why it's working. Because sort of like your content works, you guys love what you do. Your exuberance is infectious. The way you interview is very real.
We hope that's the same thing we're hitting with our writing. Just to add to that, there's also like a feedback between what our customers are telling us and the content we're writing. And so the more customers we talk to, the more ideas we get in terms of what we can cover in our content. Who makes the decision to be the purchaser of Modern Treasury at a company?
Great question. There's sort of two characters in the story. One character is a developer of some kind or a product person like you used to be, or someone in the technical organization that is trying to bring a product to life or scale a product or lives in an old school business and is trying to create efficiency about the movement of money. It's an insurance company, financial services. There's a lot of industries involved.
So there's a whole way that we sell and talk to a product or technical focused buyer. And then there's a second person and they live in the finance organization and their name is controller or accountant or CFO. And they really like that we're technically aggressive and innovative and we serve the technical teams, but their job is to control money, to track it, to tag it, to book it, to be responsible for it on behalf of the organization.
And although most of our sales happen to one lead or the other, every sale has both. Like we have to check both boxes. And I think that's one of the really great insights of our founders is that they were the technical team, but they were always giving answers to their finance team when they built this, when they were in-house at Lending Home. And so that's sort of one of the core insights of the product is that our features are offered to both.
right? You could like ship it all day in the API and never log into anything. You could also live in an operational environment and be clicking and approving in an application. And so our sales reflect that. Literally just yesterday, we had Jake Saper from Emergence Capital back on the LP show. We'll release that probably next week or the week after. The big thing we talked about was this idea of...
being built for jobs to be done instead of for personas within a company. Like you guys seem just like such a beautiful example that you're not building software for finance people. You're not building software for developers. You're building software to move money that requires both finance people and developers. And, and,
I would imagine you guys know better than me that communication and workflows pre-modern treasury across those personas within a company were maybe more difficult than they are now. Couldn't have said it better.
I'm going to use air quotes here for those listening at home. That's typically called a complex sale and something that you want to run screaming from when there's multiple two, three, four people who have to say yes in order for your software to get purchased. And if we're moving into a world where that's kind of always going to be the case, how have you sort of handled that with getting multiple decision makers over the line?
Sure. Maybe I'll answer, then I'll hand it to Matt. It is a complex sale. It involves like an education and consulting process. But like I said, when talking about content, we love this stuff. So that part of the process doesn't feel onerous. That's where we're getting really deep with how a company really works or how a product is supposed to work. And we get to help them scope and learn about the nitty gritty of moving money to bring that thing to life.
We also have a whole part of our go-to-market that is self-serve, that allows the long tail of the internet to try things out, to not go deep. Maybe it's before they have a CFO and they're earlier in their cycle. They can click and log in and sign up. So maybe Matt could talk a little bit about the product division on that side.
I guess we think about our API as a product, the API docs are a product and we spend a lot of time thinking about how do you make that really easy as a developer to get through and build an integration. So building the developer tooling you want, it's really easy to stand up an integration because for developers to get to a yes, you want to be able to build something and make sure that it works.
and have the confidence to tell the other part of the company, "Yeah, I can build against this and move money and it'll scale with me and I can debug things and so forth." And so minimizing reasons they say no. Same thing on the finance side. We invested a lot in controls. So things like setting up custom approval rules, roles-based access control,
Just the stuff that you kind of have as a checklist when you're evaluating modern treasury and making sure it's really easy to understand the product. Yeah, I think it's just understanding really well what do you need to get a yes from both people at the start and investing in both those experiences. And there's that natural pull on our roadmap where we're building one product, like you said, but do we build the features that make developers' lives easier or finance lives easier? And we have to balance those two constantly. Yeah.
I think it's a huge feature as well in some ways. I think good fences make good neighbors. And sometimes we can go inside of the same company and tell the other person in the same company how the other team is thinking about things. And that actually is very helpful sometimes in the sale process because we become the experts. I mean, part of why we do these coffee breaks, part of why our sort of weekly realities, we just go get to like nerd out and understand how different businesses work.
at a very mechanical level. But I actually think from a go-to-market perspective, that gives us a certain amount of confidence to be able to have like a strong opinion about why we are the right answer. And if we're not the right answer, we know why not. We can kind of address that in the product side. But if you're not sort of in the trenches, like doing down scalable things, trying to actually help
customers like fix their problems, then I think eventually your product becomes a little bit too templatized and like not quite right. There's lots of sort of LTV and CAC things that you can think about and throw at it. But at the end of the day, like you sort of have to do that scalable things and that's okay because that actually is what gives the product the magic feeling that hopefully we can get to.
That's great. Well, I at least have to jump. So I want to say thank you so much for having both of us and taking up one of your valuable customer slots to have Dave and I come in. Thank you guys. Thank you all for also so many of you in the organization giving us your time. Come back for coffee anytime. Oh, love it. Hopefully in person at some next time I'm down in San Francisco, or maybe Dimitri and I up here and then everyone else in SF. We can do it in person up here. All right. Thanks so much.
Cheers. Thank you. Bye.
