14: Pouring Champagne Onto Rap Stars


00:00:00   Yeah, my default is not to ever accept any invitation to do anything social, so that

00:00:05   serves me well at WBC.

00:00:07   Hey, so you had an interesting week.

00:00:11   A little bit.

00:00:12   Anything happen?

00:00:13   Where's your car?

00:00:14   That's the interesting part.

00:00:15   I don't have it yet.

00:00:16   I might be getting it tomorrow or the next day or maybe this weekend.

00:00:21   It's the same BS.

00:00:22   Oh, it's in transit.

00:00:25   So yeah, anything else happen?

00:00:27   - Yeah, I guess Tumblr sold.

00:00:30   - So you hear?

00:00:32   - So I hear, yeah.

00:00:34   - Any thoughts on that?

00:00:36   - Yeah, I mean, I don't want to rehash my blog posts

00:00:39   too much, but I don't, I mean, what do you want to know?

00:00:43   Like, I don't know, like, where should I even begin?

00:00:46   There's a lot to cover there.

00:00:48   There's practical aspects of who they're selling to,

00:00:53   what they might be doing, why they might have sold,

00:00:56   this is good or bad, what this means for Tumblr, what this means for me, what this means for

00:01:01   you, what this means for the animated GIF format.

00:01:03   I mean, there's so many things that—

00:01:06   Alright, well how about this?

00:01:07   Where should I begin?

00:01:08   How about you start extremely selfishly and myopically, and you can blame me for this

00:01:13   when you get a lot of flack for it, and then we'll migrate our way out to whether this

00:01:17   is a good fit for the two companies.

00:01:20   Does that sound fair?

00:01:21   Yeah, that works.

00:01:22   works. So you've bought how many yachts, how many helicopters, and I do believe I speak

00:01:28   for John in asking when is his Ferrari arriving and when is my Aston arriving? Well, first

00:01:32   of all, I should also mention the other awesome thing that happened this past week, and that

00:01:36   is that my wife and I visited the Syracuse's at their house under that tree. He didn't

00:01:43   park under the tree, though. I warned him off. No, no, we visited the house. I stood

00:01:47   under the tree. Did you get bonked in the head? I managed to stay conscious and dodge

00:01:52   all the falling acorns. However, I did witness the destruction that they have caused on these

00:01:57   cars and I do agree with John that if he's going to park a car in his driveway, it would

00:02:04   be a shame if it was a really awesome car getting all those dents. However, I will also

00:02:09   say that one block away from John, I passed a brand new black F10 M4. I think it's a

00:02:16   black F10 M5 parked on the street.

00:02:19   - So that's where your car is.

00:02:20   - Yeah, right. - Somebody else has it.

00:02:21   - Exactly.

00:02:22   And there were lots of nice cars in John's vicinity

00:02:27   that were parked on the street.

00:02:30   And so I think maybe street parking might be good enough.

00:02:33   - Well, you can only do that for half the year.

00:02:35   You can't street park in the winter 'cause they plow.

00:02:37   - Oh, they don't allow it or you shouldn't?

00:02:39   - No, that's that you can't.

00:02:40   They don't allow it overnight anyway.

00:02:42   - Okay. - Yeah.

00:02:44   Although, how many acorns are there in the winter?

00:02:47   Yeah, you know, something could be worked out.

00:02:49   But you saw-- you weren't in my garage, but it's a small garage.

00:02:52   Like, I could wedge a car in there if I needed to.

00:02:54   But the thing about those cars, how they're both

00:02:56   covered with dents, for the most part,

00:02:58   all those dents were created early on before I got

00:03:03   wise to what was going on.

00:03:05   Certainly the ones on the Civic were all made before I realized

00:03:07   what was happening, because you just notice it.

00:03:09   And then the Accord, it's like, well, tried to minimize it,

00:03:12   I didn't care that much. If I had a fancy car, I would either park on the street all

00:03:16   the time or tuck it into the garage. In both places it would be totally safe, but the garage

00:03:19   would be tough because you can't pull the car into the garage with kids because then

00:03:23   they can't get out because they can't open the doors because the garage is too small.

00:03:26   So like I said, I would need an entire new house to go with the new car. Maybe like I

00:03:31   said, maybe one of those things like the apartments in Hong Kong or something where the car comes

00:03:35   up in an elevator and then you can look at it all day behind a big glass wall.

00:03:39   There you go.

00:03:43   So the visit was good though?

00:03:44   I am very jealous.

00:03:46   You and I had briefly colluded and I had thought about perhaps crashing your visit, but as

00:03:52   it turns out, I had a very busy week of going to prom amongst other things, or weekend I

00:03:57   should say, of going to prom amongst other things, and that's not a joke and it's

00:04:00   a story that I'm not going to bother telling.

00:04:02   But I was very disappointed that we couldn't, that Aaron and I couldn't join you guys.

00:04:06   That would have been really awesome.

00:04:07   But it was a good visit?

00:04:08   I mean, the original plan was that I would drive my new car there, and that would be fun.

00:04:12   New car didn't

00:04:14   get here in time,

00:04:16   and we were going to Massachusetts for other reasons,

00:04:18   so we figured, let's still visit the Syracuse's even though I had my old slow car.

00:04:23   You had to drive the crappy BMW. It was like torture, practically.

00:04:27   It's terrible.

00:04:28   God, first world problems.

00:04:31   We should probably move on from that topic.

00:04:34   So, let's talk about how you're filthy, stinking rich, and never have to worry about

00:04:39   money except you do.

00:04:40   Oh, God.

00:04:41   Because it's not quite that simple.

00:04:43   There's two things on this topic that were really good.

00:04:49   This is the link to one of them.

00:04:50   I'll paste it in the chat.

00:04:51   I'll put it in the channel.

00:04:52   It's by Dave Weiner from back in the year 2000, back when all the planes were supposed

00:04:57   to fall out of the sky and that one guy got a really overdue blockbuster bill accidentally.

00:05:03   So in the year 2000, it was basically an article about theoretically thinking about how much

00:05:11   money do you need to be set and be fine and be secure, and then how happy would that actually

00:05:18   make you in practice.

00:05:21   And he makes a number of good points.

00:05:24   If you don't spend your money totally irresponsibly, if you only buy things that you'll actually

00:05:28   use. So that rules out things like, you know, 15 different cars. You probably not going

00:05:33   to use 15 different cars. Only buy things you're going to use and don't be totally

00:05:38   crazy about it. How much money do you really need before you can just live off the interest

00:05:43   and be fairly secure? And his point is that it's probably lower than you think once

00:05:50   you start realizing, well, if you exclude things that you won't really ever use, then

00:05:56   It's not that much.

00:05:58   - Why would you exclude things that you won't use?

00:06:00   What's the whole point of being rich?

00:06:02   - Well, one of his points,

00:06:03   which I thought was hilariously true,

00:06:07   and I might need to think about it at some point,

00:06:11   he said, he's like, "Then we get more practical.

00:06:15   "Buying things like second houses, third cars,

00:06:17   "vacation homes, big things,

00:06:19   "that I wonder if most people would be comfortable

00:06:20   "actually maintaining.

00:06:22   "Three cars have to be registered three times a year.

00:06:24   your second home needs to be furnished and maintained even when you're not there.

00:06:28   You say you can hire people to do these things for you.

00:06:30   Ah, then you have to spend your time, spend your life dealing with employees.

00:06:33   Is this happiness?

00:06:34   It might not be as happy as you think.

00:06:36   And I think this is so true.

00:06:37   It's like, I just sold my fun car because I didn't like having multiple cars.

00:06:43   Like, it was so inconvenient in so many ways that I'd rather just get one great car instead

00:06:49   of having one decent car and one fun car.

00:06:52   I'd rather have one bigger fun car and just combine the roles and that's that's what he's saying here is like

00:06:58   You know if you if you start limiting yourself to like only things that you actually would feel comfortable maintaining

00:07:02   without being too much of a pain in the butt

00:07:05   then

00:07:08   You know then then a you don't need as much money as you think to reach that point and be

00:07:12   Money won't make you happy by itself the chat room got it the same thing

00:07:19   I was thinking. It's like you have to break through that barrier so that you can hire

00:07:22   people to deal with the people that you hire to maintain your other homes. That's the breakthrough

00:07:27   barrier of being rich. It's like, "Okay, well, no, I don't want to deal with the second house

00:07:31   and worrying about it and dealing with employees." You have to get all the way through to the

00:07:35   point where you can hire people to deal with the people that you hire. And then you just

00:07:39   have to hire maybe two, three good people and you're all set instead of having to deal

00:07:42   with incrementally as you buy more things having to hire more people to deal with it.

00:07:48   - I feel like that's a whole other level.

00:07:50   It's the same reason why there's this ancient

00:07:53   Jolan software article that talks about

00:07:54   enterprise software pricing and how there's

00:07:57   very little software priced between $1,000 and $50,000.

00:08:01   Because once you cross over that threshold

00:08:03   of $1,000 or so, you need to start sending salespeople

00:08:06   out to businesses and everything, and your costs

00:08:08   go up tremendously by having all this overhead

00:08:10   of convincing the business that it's okay to spend

00:08:12   this kind of money, it's the need to raise your price,

00:08:14   there's this big price gap.

00:08:15   I feel like similarly there's this big rich person management

00:08:20   gap where you can't-- it would suck

00:08:26   to hire a person to manage your vacation house for you.

00:08:30   And in my opinion, it also sucks to maintain a vacation house.

00:08:32   Like my in-laws have always had their regular house

00:08:36   and their vacation house.

00:08:37   And my mom has-- she used to have the same set up.

00:08:39   Now she's back to one house.

00:08:40   But maintaining two houses really does suck.

00:08:44   Like, my mom and my in-laws, they like doing it,

00:08:48   so that was fine for them.

00:08:51   Maybe it's fine for Merlin.

00:08:53   But I think the idea of maintaining multiple houses,

00:08:58   it's for the same reason why I didn't want two cars anymore.

00:09:02   Like, I just hate all that crap.

00:09:04   And you're right, yeah.

00:09:07   I guess the super rich will then have tiers of people that are maintaining them.

00:09:11   But A, that's really expensive. And so you have to

00:09:15   be substantially rich to even manage that.

00:09:19   And B, even if I got that kind of money, I don't think I'd feel good about

00:09:23   spending it like that. Like Tiff and I were talking

00:09:27   once the rumors started swirling about the Tumblr

00:09:31   thing on, I think it was Friday night when the rumors first came out, we started talking like

00:09:35   What if this is real?

00:09:36   Like, you know, what will we do if we get a chunk of money

00:09:40   from this?

00:09:42   And we were talking through it.

00:09:45   We're like, you know, I don't think we're really going

00:09:47   to buy anything immediately.

00:09:49   And I don't think we're really going

00:09:51   to make any substantial changes in our life.

00:09:53   You didn't tell her about the PCI Express SSD, I guess.

00:09:56   I told her about that last night, yeah.

00:09:58   It's installed for you guys.

00:10:00   This is how much I like you guys.

00:10:02   It's installed in my computer right now,

00:10:04   and I'm not using it yet because the transfer would have taken too long and I would have run over into this show

00:10:09   Yeah, so this is how much I like that

00:10:11   You decided to move your email and try to copy all your data at the same time

00:10:14   The email is a separate issue. I was actually deleting

00:10:18   80,000

00:10:20   notification emails from PayPal from various

00:10:23   Instapaper subscription things over the years because every time PayPal does anything they email you

00:10:27   Even if it's something like that where like an API would be a lot better

00:10:30   Nope, nope, somebody has to get an email.

00:10:32   Oh, god, PayPal.

00:10:34   Oh, they're so, so bad.

00:10:36   Please, I pray to the gods of programming out there,

00:10:41   don't let anybody ever use PayPal again.

00:10:44   By the way, this, I know this is off topic,

00:10:46   well I guess we'll come back to it when it's launched,

00:10:48   but this whole Square cache thing looks really interesting.

00:10:52   You see this?

00:10:53   - Yes. - The white thing

00:10:54   that your iPad goes into to make a point of sale?

00:10:55   - No, that's the register. - No, that's something else.

00:10:57   - This is, Square is apparently beta testing,

00:11:00   or by invitation only testing a service

00:11:03   where you can send anybody what appears to be

00:11:06   an ACH payment for 25 cents,

00:11:09   no matter what the amount of the payment is.

00:11:11   - To any email address.

00:11:12   - To any email address, and then they log in

00:11:14   and they claim it and then it gets deposited

00:11:15   into their bank account.

00:11:16   - You mean their fee is at 25 cents?

00:11:19   - Yeah.

00:11:20   And if true, that would make it substantially cheaper

00:11:24   than almost any other easy way to send amounts of money

00:11:28   larger than a few dollars. It would be very, very nice.

00:11:33   - Yeah, because Stripe does like 3% or 2.9% plus 30 cent

00:11:37   minimum or something like that. Everyone has a percentage,

00:11:40   so if you send someone 10 grand, all of a sudden it starts

00:11:42   to be spendy.

00:11:43   - Right, exactly. And so if you're buying something for

00:11:48   like $1,000 or $500 or something online, and if the vendor,

00:11:54   or if you are the vendor, if somebody's eating 3% off of

00:11:57   that actually adds up to be good money.

00:11:59   And for the most part, there really isn't a good way

00:12:03   to do big transfers like that, at least in the US.

00:12:07   I know the rest of the country, or the rest of the world,

00:12:10   has all these electronic payments in very common usage.

00:12:13   We really don't in the US.

00:12:15   Everything here is backwards.

00:12:16   And you can mail somebody a paper check,

00:12:20   which I don't even know if people in the rest of the world

00:12:23   even know what we mean by that.

00:12:25   you would spell it with a Q-U-E at the end.

00:12:27   (laughs)

00:12:29   And it's like,

00:12:31   I feel like the rest of the world looks at the way

00:12:35   we deal with money in the US with transferring money

00:12:37   the same way we'd look at our parents

00:12:39   if all they ever used were those vacuum tube things

00:12:41   and they never used ATMs.

00:12:43   Like it's just so backwards, anyway.

00:12:47   What else do you wanna know about Tumblr?

00:12:48   I forgot, I lost track.

00:12:49   - So you did not know in advance you were not briefed.

00:12:52   - That's correct.

00:12:53   And so, I can't, actually this is not for the show,

00:12:57   this is just for me.

00:12:58   What happens when you're sitting at home on a Friday night

00:13:00   and you see, holy God, the company that I have

00:13:04   at least a shred of interest in

00:13:06   is going to sell for a billion dollars?

00:13:08   Like what do you think?

00:13:09   How do you react to that?

00:13:11   - Well, I was very cautious in my emotional response

00:13:16   just because it wasn't definite.

00:13:18   You know, like I wanted, like,

00:13:20   'cause I didn't hear about it

00:13:21   in any kind of official capacity

00:13:23   until after the press release went out on Monday morning.

00:13:27   So I learned in the press,

00:13:29   the same way everyone else learned.

00:13:31   And--

00:13:31   - Did that bother you?

00:13:34   - Not at all, no, because, think about it,

00:13:36   Yahoo's a public company.

00:13:38   So if I knew in advance that could cause problems

00:13:40   with some kind of trading thing,

00:13:42   I don't wanna deal with that crap.

00:13:45   (laughs)

00:13:46   That's the last thing I wanna do,

00:13:47   is get into weird financial regulations

00:13:50   and putting myself at risk or anything.

00:13:52   So I'm very glad that I was just as informed as the public on this.

00:14:01   So I didn't want to mentally admit to myself that it was happening until I knew for sure

00:14:07   that it was happening.

00:14:08   And I'm still a little bit reserved in my head because the sale hasn't technically

00:14:12   closed yet.

00:14:14   Like I don't have the money yet.

00:14:17   That takes weeks or months of various paperwork and everything.

00:14:20   So I don't think I even know when it will close.

00:14:23   I know it's going to happen eventually.

00:14:27   So I think once I actually have some kind of tremendous bank

00:14:30   deposit, then it'll feel real.

00:14:33   Like now it feels almost real because it's been confirmed.

00:14:36   But over the weekend, it was really just like,

00:14:39   I think this might happen.

00:14:40   Because the reports, they were from all things D,

00:14:44   and there were multiple reports.

00:14:45   And that's a pretty good sign.

00:14:47   They're pretty well sourced.

00:14:48   And also-- and I wrote a little bit about this in the post--

00:14:54   from everything I know about David and Tumblr,

00:14:57   the reports sounded extremely plausible.

00:15:00   It was like O.J. Simpson's "If I Did It" book.

00:15:03   Please say you guys heard about that.

00:15:05   Yes.

00:15:06   It took me a second to realize what you were talking about,

00:15:08   but yes.

00:15:08   It was like, if they were going to sell it,

00:15:11   this is how it would go.

00:15:13   So I knew, looking at these reports, this looks real.

00:15:18   And so I was pretty sure that they were definitely negotiating this.

00:15:24   But just like everyone else, it was hinged upon the Yahoo board approving it, and then

00:15:28   I didn't know if Tumblr was going to approve it, because I didn't know what was going

00:15:31   on.

00:15:32   So I believed 100% that there were talks, but I did not know whether it would result

00:15:39   in an actual sale or not.

00:15:41   Because when you have a company that size, there's always talks.

00:15:43   There's talks all the time with people.

00:15:45   Right.

00:15:46   Now you didn't immediately start making a list of where you were going to buy a second

00:15:50   garage and what cars you were going to fill it with?

00:15:52   Well, no, that's the thing.

00:15:53   You know, like this great Dave Wonder article.

00:15:57   I don't really want to make any changes like that in my life because I've kind of been

00:16:03   lucky in when I've made money in my life, if I can say that without sounding too much

00:16:11   like an arrogant people.

00:16:14   I started out from a pretty modest background.

00:16:19   And so I always had a pretty good sense of money.

00:16:24   I always had to work for my money.

00:16:25   I always had to save my own money.

00:16:29   I always bought my own stuff with my money.

00:16:33   And that's why I have, like on my side, I have things like reviewing the best, like

00:16:36   trying to find the best headphones, trying to find the best light bulbs.

00:16:40   That's where that comes from in me.

00:16:41   That's the part of my personality that this all comes from,

00:16:43   is like trying to get a good buy,

00:16:46   trying not to waste money unnecessarily, stuff like that.

00:16:51   So it helped that then, with Instapaper

00:16:55   and for a while having two incomes

00:16:59   when I was doing Instapaper and Tumblr at the same time,

00:17:03   I started getting some extra money.

00:17:05   And because it happened gradually,

00:17:09   And because I had come up from that background,

00:17:11   I was never blowing money wastefully.

00:17:13   I was never like, I don't think,

00:17:16   I mean, at least excessively,

00:17:18   I was never being totally responsible about it.

00:17:21   And so now that I have more than that,

00:17:24   or that I will eventually have more than that,

00:17:28   like I'm kind of glad that I had those intermediate steps

00:17:33   because you see when people win the lottery,

00:17:38   And usually it's working class people who have never had excess money in their lives.

00:17:42   They win the lottery, and Merlin was talking about this in his show this week.

00:17:46   They win the lottery and then statistically so many of them are actually not very well

00:17:52   off a year or two later, or not very happy or they have problems.

00:17:59   So anyway, I think no matter what I ever end up making in my life, no matter how much money

00:18:04   I have or make in the future, I don't want to do things like have a day iPhone and a

00:18:11   night iPhone.

00:18:12   And by the way, I should point out, I got a really nice email from Dave Morin about

00:18:15   that.

00:18:16   Well, did you?

00:18:17   Yeah.

00:18:18   I never met the guy, but I've emailed him.

00:18:22   I've emailed with him a few times.

00:18:24   I really do think he's a decent person who just got caught with a terrible interview.

00:18:30   I don't want to say what he said because I don't know.

00:18:32   I think it was private, but it sounds like he was definitely

00:18:35   a victim of a sensational editor and writer.

00:18:39   That almost everything he said there was probably

00:18:42   taken way out of context.

00:18:44   And so yeah, he's not as bad as that sounds.

00:18:49   But anyway, so there's things like that,

00:18:55   that I think are just unnecessary and wasteful.

00:18:59   And no matter how much I have or don't have,

00:19:01   I think I will always think that.

00:19:03   And so like I already have most of what I want

00:19:07   because most of what I want is affordable

00:19:10   and I've been able to afford it.

00:19:12   So I don't really, like I don't,

00:19:13   this is why this is not really going to change.

00:19:15   Like I'm really happy that, you know,

00:19:18   we bought our house back when I was working at Tumblr.

00:19:22   So it was just on a, it was a good job

00:19:24   but it was still a regular salary job.

00:19:27   So we bought, you know, a mid-priced house for our area

00:19:31   and we didn't go crazy, we didn't spend like millions of dollars on some giant

00:19:35   mansion

00:19:36   and I feel like

00:19:38   if I didn't yet own a house and I suddenly came into a big lump sum of money

00:19:42   I might be tempted to spend a big chunk of it on a house

00:19:46   and now that temptation is gone because we already bought a house, we already have

00:19:49   this house

00:19:50   and the idea of moving

00:19:53   is so unappealing to me that

00:19:57   you know it doesn't really matter

00:19:59   You know, it doesn't really matter if we come into big sums of money at any point in our

00:20:04   lives from this point forward.

00:20:06   We have the house we want for the foreseeable future, so I don't need to blow all the money

00:20:14   on a big house or something like that.

00:20:17   You know, it's interesting to me that a dear friend of the show, David Smith, said in the

00:20:21   chat, and I completely agree with him, "Independence is the virtue I value most, some of which

00:20:26   money can buy, but moreover is about how you make choices."

00:20:30   And I think that's very true, and I would build onto that, that everything is relative.

00:20:36   And so I think to my—I mean, I make a decent living, we're very comfortable, and I think

00:20:41   to myself, "Man, it would be pretty cool to be able to go and just buy or lease whatever

00:20:45   a brand new M5."

00:20:46   I think that'd be neat.

00:20:48   It's arguably within reach, maybe, but it's still a stretch, if not a little bit outside

00:20:54   of the edge of my arm, if that makes any sense. Similarly, I'm sure there are people that

00:20:59   would say, "Man, I would love to have a lightly used 3-series." And then there are people

00:21:04   that would say, "Man, I would love to have a lightly used Accord or whatever." And I'm

00:21:10   not trying to say that we are ranked in any sort of way financially. It's just that everything

00:21:16   is relative and everything is a choice. And I think I speak for both of you guys, because

00:21:21   I feel like I know both of you pretty darn well—that we make choices about how we want

00:21:25   to spend our money in such a way that we're not really longing for more. Of course, everyone

00:21:30   always wants more money, but it's not the sort of thing where our lives would be demonstrably

00:21:36   different if any one of us had, say, double the salary that we have today. I don't know,

00:21:40   Jon, does that make sense? Would you agree with any of that, or am I crazy?

00:21:44   Mine would be different, but not in any important way.

00:21:46   Right, exactly.

00:21:47   But the unimportant ways would still be cool.

00:21:49   Oh, well, it would absolutely be cool.

00:21:52   Yeah.

00:21:53   Like, I think I always feel like I would be an excellent rich person, which is probably

00:21:59   why I will never actually be a rich person, because I think that's just, you know.

00:22:03   But like, when I see those stories of people who win the lottery and do foolish things

00:22:06   with money or like recording artists who blow all the money, you're just like, man, like,

00:22:11   you know, money was wasted on them because they had no idea what they were doing.

00:22:15   And just, you know, like, and I don't know what it is.

00:22:18   I don't know if there's any connection at all between the people who end up getting

00:22:22   rich and are smart with their money and the people who aren't.

00:22:24   I think maybe the only thing that I could come up with is that you mostly hear about

00:22:29   the people who get a lot of money and screw it up, whereas tons and tons of people get

00:22:33   a lot of money and don't screw it up.

00:22:35   And that's boring, so you don't hear stories about them.

00:22:37   So they just have a nice life and live within their newly expanded means, perfectly fine,

00:22:45   and that's boring.

00:22:46   hear about the person who gets a whole bunch of money and does something foolish with it

00:22:50   or whatever.

00:22:52   And I don't know if there's anything you can do with it.

00:22:54   The marker you said, "It's nice that you got money gradually so you could learn to deal

00:22:57   with it," I don't think if you got it all of a sudden you would have blown it anyway.

00:23:01   I think it's just a personality type thing.

00:23:05   No amount of training with gradual, because what you see with the gradual ramp up of money,

00:23:08   and I'm sure we've all seen this, is that someone graduates college or something and

00:23:12   they start their first job and they get a low salary and they get an apartment and they

00:23:15   they keep getting raises and they get a nicer apartment

00:23:17   and then they get married and get a better job

00:23:19   and have two incomes and buy a house.

00:23:21   That can just continue to creep up and creep up

00:23:23   where people, every time that people get

00:23:25   a little bit more disposable income,

00:23:26   they're like, oh, well now we can afford a better house.

00:23:27   Oh, now we can afford a better car.

00:23:29   Oh, now we can afford a better this.

00:23:30   And they just, they never are content

00:23:33   to live within their means and they just chase their income

00:23:34   to the point where they're like, boy,

00:23:37   I need to be making 300 grand a year

00:23:40   just to maintain my lifestyle.

00:23:42   And my wife needs to also make 300 grand

00:23:44   now our lifestyle requires 600 grand a year just to get by, just to pay for all the cars

00:23:49   and houses and private schools and fancy clothes and vacations that we're now accustomed to.

00:23:55   And any decrease in my income is now a sacrifice in my lifestyle. And that's the trap of gradually

00:24:02   ratcheting things, if you're not smart about your money, is that you just constantly, as

00:24:05   soon as you get some more disposable income, you want to upgrade everything in your life.

00:24:10   So that's like the more insidious version of the, "Oh, I'm just going to blow it all

00:24:13   on fast cars and women and be broken a month."

00:24:18   I don't know if…

00:24:19   I definitely know people who are like that, who…

00:24:21   They're living within their means, but always just.

00:24:23   And that is a foolish way to live.

00:24:27   I mean, with me, I also have, I guess, some person I have traits that keep this in check.

00:24:34   One of them is that I hate any kind of debt.

00:24:36   I really prefer to not have any debt if I can.

00:24:40   And fortunately for most of my life, I've been able to maintain that.

00:24:45   Actually, that's not entirely true.

00:24:48   I had a car payment back.

00:24:49   Anyway.

00:24:50   So, a tax shelter for your mortgage interest.

00:24:51   Right.

00:24:52   I want to keep that one.

00:24:55   But also, I have a pretty boring lifestyle by most people's measurements.

00:25:00   I don't go out and party.

00:25:02   I'm not going to be buying a $1,000 bottle of champagne

00:25:06   to pour onto rap stars or anything.

00:25:08   I don't know.

00:25:10   I'm still-- no matter how much money I ever have,

00:25:14   I'm probably always going to wear jeans and a t-shirt most

00:25:17   days.

00:25:18   Like, look at Steve Jobs, the way he lived.

00:25:23   He had a ridiculous car that he got a new one every few months

00:25:25   so he wouldn't have to have a license plate.

00:25:27   But he lived in a pretty normal house.

00:25:32   It was a nice house, but it wasn't like some kind of tremendous estate, you know, with

00:25:35   horses and tennis courts and everything.

00:25:37   It was like a regular house in a neighborhood.

00:25:39   He wore regular clothes.

00:25:41   He wore regular shoes.

00:25:43   You know, he had nice computers, but that's understandable.

00:25:47   And that's also not that much money, relatively speaking.

00:25:50   You know, like, I feel like, I feel like in the way that John, you say you'd be a really

00:25:56   good rich person, I think I'd be a pretty terrible one because I don't do any of those

00:26:02   things that you think of as rich people doing, and I have no desire to.

00:26:08   Like I don't intend to join a country club.

00:26:11   I would have to kick my own butt if I joined a country club.

00:26:16   I don't intend to even golf, although my wife actually enjoys golf quite a bit, but

00:26:24   I don't intend to do that myself.

00:26:28   The idea of even like-- I don't know.

00:26:33   I don't want to do anything that would cause

00:26:37   the rest of my working class family to think I'm a dick.

00:26:41   You know, if that makes sense.

00:26:43   The sensibilities of regular people

00:26:46   have been so baked into my personality

00:26:48   that I never-- even if I have the ability

00:26:51   to blow any amount of money on some particular thing.

00:26:55   I don't wanna do it 'cause I don't wanna do it myself.

00:26:59   I don't wanna know that I did that

00:27:01   and I don't want my family to find out

00:27:02   and like think I'm a dick for it.

00:27:04   - Yeah, and the thing that struck me was,

00:27:08   I don't remember what day it was,

00:27:10   but I noticed either Friday or over the weekend

00:27:13   or maybe it was Monday night,

00:27:15   one of you guys, either you or Tiff,

00:27:18   posted a picture from the restaurant

00:27:20   that the four of us have been to a couple times that's right near you.

00:27:25   And I thought to myself, you know, if I had had some amount of windfall, be that a thousand

00:27:30   bucks, ten thousand bucks, whatever, it doesn't matter, but some amount of windfall, I think

00:27:34   what Aaron and I would probably do is go to a nicer dinner, you know, a nice steakhouse

00:27:38   or something like that.

00:27:39   Not something absurd, not thousand dollar bottles of wine or whatever, or champagne

00:27:43   or whatever, or what have you, but a nice dinner.

00:27:47   Here it is that you guys have ostensibly just earned a some significant amount of money

00:27:53   Granted it's not there yet

00:27:55   But in principle you've earned a significant amount of money and here it is

00:27:58   You went to the same restaurant that the four of us have gone to I think every time if not every time we visited you

00:28:04   Then nearly every time and it is not a bad restaurant by any stretch, but it's an average American restaurant

00:28:09   It's a casual family pub, you know, like an entree is like 10 bucks, you know, like it's not yeah

00:28:14   And you know why we went there? Because we have a one-year-old.

00:28:18   They don't like them at fancy restaurants. We used to go to this place

00:28:22   like once a week, and ever since we had the kid, we now go there like once every five months

00:28:26   because I so don't want to be that guy whose kid is just screaming in the restaurant

00:28:30   and throws everything on the floor. I'm so afraid of being that guy that we hardly ever go out

00:28:34   to restaurants anymore. And so yeah, that's how I

00:28:38   spent that day. I didn't shower until right before we went to the restaurant.

00:28:42   I was in a crappy white t-shirt.

00:28:45   I swept my patio because they were flowers from a tree all over it.

00:28:49   Like I did, I'm a regular person.

00:28:51   I'm doing regular things.

00:28:52   My day-to-day life is not going to change.

00:28:55   Regular people shower before they go to work in the morning.

00:28:57   Well, okay, that's true.

00:28:59   Nicely done.

00:29:00   Do you want to do a sponsor?

00:29:02   But I see, I've been showering at inappropriate late times of the day for like a year and

00:29:05   a half now.

00:29:06   Yeah, unemployed people do that too.

00:29:08   Oh my god.

00:29:09   Why don't you do a sponsor and then we'll ask you about Yahoo and Tumblr.

00:29:12   Yeah, our first sponsor this evening, well I guess I don't know when you're listening

00:29:16   to this, but for the live listeners, our first sponsor this evening is Squarespace.

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00:30:31   Squarespace is everything you need

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00:30:34   - Cool, thank you for sponsoring them,

00:30:37   Sponsoring us for like the 95th time. Can you imagine how much the podcast world would suck if Squarespace didn't sponsor so many

00:30:44   Oh god, it would suck so hard. It would be terrible. They're seriously supporting like half the podcast industry

00:30:48   Yeah, it's absolutely true

00:30:51   And I don't know how they do it

00:30:53   But I'm glad they do and not just for this show for all the different shows that they sponsor

00:30:57   so I'm gonna I'm gonna

00:30:59   Start by asking John and I want to hear Marco you kind of wrap this up John

00:31:05   What do you think about the idea of Yahoo and Tumblr being one, sort of, but not?

00:31:12   Does that make sense to you?

00:31:13   Does that fit?

00:31:14   Is that a good marriage, if you will, or does that make no sense?

00:31:17   It makes sense in the cynical way that these acquisitions make sense in that Yahoo is clearly

00:31:23   like an intern around, I guess you'd call it, with the new CEO, bold new strategy, cut

00:31:30   the fad, reconcentrate on the good things or whatever.

00:31:33   So it's in the mode where it's trying to turn itself around.

00:31:36   And it used to be the hip, cool thing, but isn't anymore.

00:31:40   And it makes sense that it would be out there shopping for something that is hip and cool

00:31:43   and something that has a lot of users.

00:31:45   And Tumblr, on the other hand, is insanely popular, tremendous growth, but very little

00:31:52   but in a way of, you know, a ways to turn all that popularity into money.

00:31:57   They did, what are they, they sell premium themes and some sort of promoted post stuff,

00:32:00   but not the type of-- they have all these users,

00:32:04   and they want to monetize them, and they haven't quite figured

00:32:06   out how to do it in a way that scales

00:32:09   with the size of their business.

00:32:11   So they're more than happy to take Yahoo's money,

00:32:14   and Yahoo's more than happy to give it.

00:32:16   Like, what does Yahoo need?

00:32:17   Lots of users and cool and hipness.

00:32:19   What does Tumblr need?

00:32:20   Money, because it hasn't figured out

00:32:21   how to make enough on its own.

00:32:22   So in that sense, the marriage makes sense.

00:32:25   But then when I think about, OK, what are we left with?

00:32:28   Is this combination-- is Tumblr going to help Yahoo as much?

00:32:32   Certainly, Yahoo is going to help Tumblr with money.

00:32:36   But is it just like, OK, well, now we have a sugar day,

00:32:38   and we can continue to be Tumblr and continue to be cool,

00:32:40   but also continue not to make money?

00:32:42   That's not really a great outcome.

00:32:44   I mean, I guess that's kind of neutral for Tumblr,

00:32:45   but it's not great for Yahoo.

00:32:47   So I wonder how much Tumblr is really going to help Yahoo.

00:32:50   Are they going to figure something out together

00:32:53   to become more than they were individually?

00:32:55   And that remains to be seen.

00:32:58   I completely agree. I just don't understand how this really benefits Yahoo, or at least

00:33:05   in the near term, in any way other than, "Hey, look, that company, that website that all

00:33:11   the kids these days really like, yeah, that's ours, baby."

00:33:15   They get all the users too, though. Now all of those users are their users. When you have

00:33:21   that number, what does—maybe Marco knows—I saw some graphs on it. How many millions of

00:33:26   people are on Tumblr now?

00:33:27   I don't know. It's a big number. It's a lot.

00:33:30   And so even if those people are like, "Well, they're not Yahoo! Gossip of the Tumblers,"

00:33:35   you have access to them in some way. You have a shot. They're yours. They're captive.

00:33:40   And so if you come up with some great new idea for some new property or something,

00:33:43   or even if you just want to promote the new Flickr to them or something,

00:33:47   suddenly you can do that and you don't have to pay Tumblr to put one little, "Hey, check out the new

00:33:50   Flickr thing in the upper right-hand corner," everything. You can just do that really easily.

00:33:54   That's a stupid example, but having access to those people, it's like, "Oh, it is a

00:33:59   big deal."

00:34:00   If Yahoo tried to say, "We're going to make a new service, and it's going to become as

00:34:03   popular as Tumblr," good luck with that.

00:34:05   Just getting Tumblr, you get those people.

00:34:07   You still have to figure out how to make money from them, and how not to piss them off, and

00:34:10   all those other things, but at least they're there.

00:34:13   That equals a billion dollars, I guess.

00:34:16   Yeah, and a friend of the show, David Smith, just said, "300 million monthly unique visitors

00:34:20   and 120,000 sign-ups every day."

00:34:23   David Smith is basically our real-time follow-up guru whenever he's here.

00:34:26   Naturally.

00:34:27   Naturally.

00:34:28   But I agree, well I've said I agree like 13 times this show, which is not surprising,

00:34:32   but I agree.

00:34:34   Thank you.

00:34:36   I don't see how Yahoo can really capitalize on having all these users without ticking

00:34:43   off all these users in the sense that if I were a devout Tumblr user, and I do use Tumblr

00:34:47   and my blog that I write on once every seven years these days is on Tumblr, but that being

00:34:53   That being said, if I didn't really know the backstory and I just heard in the news,

00:34:58   "Oh, Yahoo now owns Tumblr," and all of a sudden I start seeing links to all these Yahoo

00:35:03   properties, immediately I'm starting to throw my hands in the air and saying, "Oh, they

00:35:06   sold out," and now I feel like I'm just another eyeball to shove to their other properties.

00:35:10   Well, they don't have to do it in a crappy way.

00:35:13   Think of the newly revised Flickr.

00:35:15   Flickr was a much beloved service that seemed to stagnate, and now they've revised it.

00:35:20   The revision is mostly getting a thumbs up.

00:35:22   Think about this.

00:35:23   All right, so wouldn't it be great if you could very easily post pictures from Flickr

00:35:29   to your Tumblr?

00:35:30   Does that hurt you as a Tumblr user?

00:35:31   No, now it's maybe easier for you to get access to pictures.

00:35:33   Maybe you didn't use Flickr, but you're like, "Oh, well, since it integrates so well with

00:35:36   Tumblr now, maybe I'll sign up for the Flickr thing."

00:35:39   And you suddenly become a Flickr user.

00:35:42   Flickr does have a business model, maybe perhaps not a great one or a self-sustaining one,

00:35:46   but it does have some way to collect money from you.

00:35:48   And it's kind of like a Halo effect type thing where you're like, "Oh, well, it was free,

00:35:53   and it's well integrated with Tumblr, and I'll sign up for it."

00:35:56   And now you start, "Yeah, Flickr's actually pretty cool," and you start using it.

00:36:00   You didn't feel like it was shoved in your face, but merely because they're under the

00:36:02   same umbrella, they can do deep, really cool integration that wouldn't be possible if they

00:36:08   were just talking to each other through an API over the internet as two separate companies.

00:36:13   That's one small example, but I think it is possible.

00:36:17   Think of it the way that all of Apple's stuff is integrated with each other.

00:36:19   It is possible to do integration in a way that customers see as friendly and beneficial

00:36:23   and not as shoving these other services in my face.

00:36:28   And then that makes me wonder, is it really worth a billion dollars for that potential

00:36:33   integration and that potential way of making these eyeballs look in these other directions?

00:36:40   I would guess Marco says yes.

00:36:42   What does that come out to per user?

00:36:45   like divide it up, like what is it?

00:36:47   The cost of, someone in the chat room knows,

00:36:49   the cost of acquiring new customers.

00:36:51   And you could do the math and like,

00:36:52   how many new potential customers did Yahoo just grab

00:36:55   under its umbrella and how much did it pay for each of them?

00:36:57   But, you know, things are worth what people are willing

00:36:59   to pay for them.

00:37:01   And so, you know, that's just how capitalism works.

00:37:05   So if someone was willing to pay a billion,

00:37:07   then it is by definition worth a billion.

00:37:09   - Yeah, and it's certainly, I found it refreshing,

00:37:14   Marco, I promise I'll give you a chance here in a second, but I found it refreshing, although

00:37:17   odd, that their press release was so self-deprecating.

00:37:20   As a self-deprecating guy, that made me happy to see somebody else kind of talk the way

00:37:26   I talk, but it was odd to see that in a press release.

00:37:30   I think the second—I tweeted something like the second line of the official press release.

00:37:33   This wasn't the thing that David posted on Tumblr.

00:37:37   It was the official Yahoo press release.

00:37:40   The sub-headline was "promises not to screw it up."

00:37:43   And I thought that was so remarkable.

00:37:44   That was awesome.

00:37:45   And it was awesome.

00:37:46   I thought it was awesome anyway.

00:37:48   And to me, that was a very good sign that they know not to screw it up.

00:37:56   But on the other side, don't you kind of by definition need to screw it up in order

00:38:01   to get any real tangible value out of it?

00:38:04   And Jon, I think your point a minute ago was a great counterargument that no, maybe if

00:38:08   just do a really good and subtle job of integrating with your existing properties, maybe you don't

00:38:14   need to screw it up in order to get your money's worth.

00:38:19   Maybe I'm just not imaginative, but it's a very big leap for me to see how you can really

00:38:23   get a billion dollars worth out of just integrating well with Flickr.

00:38:28   I know that was just a silly example, but does that make sense?

00:38:31   Yeah, well Tumblr is a little bit of a puzzle because Tumblr had a long time on its own

00:38:36   during which it could not figure out how to get its money's worth out of its tremendous

00:38:42   number of users.

00:38:43   I don't think that's true.

00:38:44   Twitter has the same type of situation here.

00:38:47   Not that they didn't get money out of them, but you feel like you should be getting Facebook-sized

00:38:53   money out of a Facebook-sized number of users.

00:38:56   Facebook is well over 300 million or whatever by now.

00:39:00   They got surely enough money to keep themselves going and everything like that, but it's just

00:39:04   like, "Man, this is just so many people. How do we get the money that we know is there?

00:39:09   These people like our product and they're using it, but they're probably not willing

00:39:12   to pay for it. There's just got to be something locked up in there."

00:39:15   Just didn't feel like Tumblr ever figured out how to get the amount of money that it

00:39:19   thought it should have out of there. Maybe Yahoo doesn't need that kind of money out

00:39:22   of these users because the users themselves, just having them happy and using something

00:39:27   that Yahoo owns is in itself worthwhile, so they don't need to get more money out of it.

00:39:33   I don't think you can just suddenly turn on the money faucet from Tumblr and say, "Now

00:39:38   we'll just bleed these people dry because that will piss them off and they will go running

00:39:42   away."

00:39:43   And you're never going to get that kind of money out of these people that you think you

00:39:47   should just because there's so many of them.

00:39:50   They're not going to pay to use Tumblr, not that many of them.

00:39:53   All right, Samarko, let us have it.

00:39:55   What do you think?

00:39:57   - Well, I should preface this first of all

00:40:00   with a tremendous disclaimer that

00:40:03   I don't have any inside information here, really.

00:40:06   I left Tumblr in 2010.

00:40:08   Even then, I hadn't gone to the board meetings in years.

00:40:12   I really wasn't that familiar with the finances

00:40:15   of the company or even the growth at that point.

00:40:17   I was focused entirely on just my job of, you know,

00:40:20   server stuff.

00:40:22   But certainly since 2010, I've had minimal contact with them.

00:40:26   with them. I see the people there, here and there, socially, but we don't really talk

00:40:31   business. I haven't really used Humber that much since then, because I wanted to write

00:40:38   my own blog engine and stuff like that.

00:40:39   So anyway, I should preface this a lot by saying that this is not based on any kind

00:40:43   of inside information of either company. I'm still a little bit nervous to even comment

00:40:48   on this, but I'll do my best to give you some kind of content without getting myself into

00:40:54   any kind of trouble.

00:40:56   I think in very general terms, I think that Yahoo has a lot of money, but they don't have

00:41:04   a lot of relevance, and Tumblr has a lot of relevance, and they don't have a lot of money.

00:41:15   I think ignore the dollar value for a while, because I don't think the dollar value matters

00:41:20   that much for looking at why these companies

00:41:24   benefit from each other.

00:41:26   I think Tumblr-- first of all, the discussions on whether

00:41:33   Yahoo's going to screw it up, I think

00:41:37   you have to consider, first of all, that the alternative is

00:41:41   not Tumblr existing as it exists now forever.

00:41:44   The alternative would be Tumblr screwing it up or Tumblr

00:41:47   not screwing it up.

00:41:49   And so you can look at something like Twitter, where Twitter had a similar growth pattern

00:41:54   as Tumblr, but about a year and a half before it.

00:41:59   And rather than get acquired in some kind of massive mega-deal like this, Twitter has

00:42:04   left it to just keep going independently and try to make a profit reliably and maybe eventually

00:42:12   have an IPO, who knows.

00:42:13   But you can look at what Twitter's had to do to pull that off.

00:42:18   And it's really angered a lot of people, us included.

00:42:22   So you have to consider also, you know, what if Tumblr didn't get acquired right now?

00:42:29   What would the next few years of Tumblr look like?

00:42:33   And the company was growing so quickly.

00:42:37   And as a result, of course, I'm sure, again, this is not based on inside information, I

00:42:41   I assume their costs were growing a lot too.

00:42:45   And, see the problem is right now

00:42:49   Facebook's IPO was a huge disappointment. Before that

00:42:53   Zynga's IPO was a huge disappointment. And there's probably been a few others

00:42:57   that I've forgotten about because they've been huge disappointments. Big consumer

00:43:01   web tech companies having IPOs have not done very well recently.

00:43:05   And so when your company gets really really big

00:43:09   to the point where almost nobody can afford to buy you anymore,

00:43:13   like Twitter is a great example.

00:43:17   When you think about what those companies have to do, if they have to keep

00:43:21   raising money from investors, those investors are going to have to start thinking about, well what's the exit plan here?

00:43:25   How are we ever going to get a return on this money? If we're going to be dropping

00:43:29   hundreds of millions of dollars into your company,

00:43:33   if the IPO market isn't very good, if our

00:43:37   If our possible outcome is what happened to Facebook,

00:43:40   with their crappy botched IPO,

00:43:43   then that's not very good for the investors.

00:43:46   So I think it's probably hard to raise money

00:43:50   when you're that big of a company

00:43:52   on any kind of reasonable terms.

00:43:54   And that's why I think we see what Twitter's been doing

00:43:56   this past year or two,

00:43:58   is trying to make a lot of money

00:44:01   as quickly as they possibly can.

00:44:03   So again, this is not based on inside information,

00:44:07   speculation, but I think it's probably worth considering whether Tumblr would have reached

00:44:13   that point, and if so, when? And now that Yahoo has bought it, if they were going to

00:44:21   be anywhere near that point, they probably wouldn't be anymore, or at least the pressure

00:44:25   would be significantly reduced and the timescale would be significantly more flexible. Not

00:44:29   to say that Yahoo has bottomless pockets, but you know, Yahoo can afford for this unit

00:44:35   of their business to lose money for a few quarters

00:44:38   or for a few years before it starts making money.

00:44:41   Whereas an independent company can't really do that

00:44:43   very well.

00:44:44   You can, but then it messes up your finances.

00:44:47   So this is not a great time to be a company like Twitter,

00:44:53   where the hope of an IPO making it big is pretty low.

00:44:57   And you're so big that nobody can buy you,

00:45:01   and you can't really raise money on good terms anymore.

00:45:03   So that's why Twitter kind of had to do what it did.

00:45:07   Twitter could be bought.

00:45:08   Twitter's not too big to be bought.

00:45:09   Well, I didn't say they're not too big to be bought,

00:45:11   but most people couldn't afford it.

00:45:13   Most people who were likely to want to buy Twitter

00:45:16   would have a really hard time justifying

00:45:18   that kind of purchase.

00:45:19   Well, I mean, at this point, Twitter

00:45:20   doesn't want to be bought.

00:45:21   Right.

00:45:22   Like you said, that was their decision.

00:45:23   So that's different than not being able to-- I mean,

00:45:25   Facebook did the same thing.

00:45:26   Facebook is the classic example where

00:45:28   Yahoo, speaking of, wanted to buy Facebook for tons of money

00:45:32   at various points.

00:45:33   And Zuckerberg said no.

00:45:36   And so that was his call, and it seemed dumb at the time,

00:45:40   but now Facebook is much bigger than they were then,

00:45:42   and it worked out for him.

00:45:43   Twitter seemed to follow the same playbook.

00:45:45   People wanted to buy them.

00:45:47   They said, no, we want to go to loan.

00:45:48   We're going to be the next Facebook.

00:45:49   And now we're waiting to see if that's the case.

00:45:51   Right.

00:45:54   Yeah, so anyway, I think you can make a pretty good case

00:45:57   for why Tumblr benefits from Yahoo.

00:46:01   because there's this whole set of massive financial pressures

00:46:06   that, not to say that all pressure will be off them,

00:46:11   but now they have a lot more flexibility in that,

00:46:14   presumably.

00:46:15   And plus, you look at what Tumblr has.

00:46:19   Tumblr has all these users and all this relevance

00:46:24   and all these cool people and all this hip content

00:46:26   being created, all this engagement,

00:46:28   and they don't really have much of an ad sales force yet.

00:46:32   Whereas Yahoo has a massive ad sales force

00:46:35   and they're kind of desperate for users of engagement.

00:46:37   So again, I think it makes a lot of sense

00:46:39   why these companies go together.

00:46:41   And then you look at it from Yahoo's point of view

00:46:43   and as an outsider, I look at Yahoo and think,

00:46:46   here's a company that nobody pays attention to anymore

00:46:49   and I think on their earnings call,

00:46:51   they said that their average demographic is getting older

00:46:54   and that's not good for ad money.

00:46:57   So you see this company kind of losing relevance.

00:47:00   And just like if Yahoo!

00:47:03   launches a new service, hardly anybody even talks about it.

00:47:06   Nobody blogs about it.

00:47:07   None of the geeks like us even try it.

00:47:11   And so they have to make drastic moves to get more relevance

00:47:16   and to get back on track.

00:47:18   They also need a social network.

00:47:21   Google has Google+, which might or might not be actually used.

00:47:24   But they at least have it.

00:47:25   They have some kind of database table somewhere with a lot of IDs in it, so they call themselves

00:47:30   users.

00:47:31   Facebook has itself...

00:47:33   Does Microsoft have anything social, really?

00:47:37   Xbox Live.

00:47:38   Okay, that's something.

00:47:39   It's not...

00:47:40   Skype, sort of.

00:47:41   Sort of.

00:47:42   Okay, they have a few pieces here and there.

00:47:44   Xbox Live's not a piece.

00:47:45   That's full-fledged social.

00:47:47   Yeah, a little bit.

00:47:48   I don't know.

00:47:49   I think it's...

00:47:50   Yeah, it's a little bit different.

00:47:53   But okay.

00:47:54   but they have some good pieces.

00:47:56   I think Yahoo needs something like that,

00:47:58   and so now they have it.

00:47:59   So you can look at all these things.

00:48:01   There's a lot of reasons why these companies benefit

00:48:04   from each other without even considering the money

00:48:06   aspect of how much they bought at four.

00:48:09   Because how much they bought at four,

00:48:10   I have no idea what that's based on.

00:48:11   You have no idea what that's based on.

00:48:12   It doesn't really matter, honestly.

00:48:14   It matters to the shareholders, but it doesn't really

00:48:16   matter to the world how much Yahoo paid for it.

00:48:20   It would be fun to see the slides, though,

00:48:21   because you know there is a slide that says,

00:48:22   project the value of our people over this amount of time, this amount of money, so we

00:48:26   feel that buying this company, you're buying their future. You know there's a BS graph

00:48:31   explaining why 1.1 billion is the number and it's not 1 billion and it's not 900 million.

00:48:37   But all those are, and all those graphs along the x-axis, the thing at the left edge is

00:48:43   like the current year and everything else is the future. So it's just projections of

00:48:47   fantastical future that may or may not come to pass.

00:48:50   But it will also keep in mind too,

00:48:52   there's also a lot of value here,

00:48:55   not just, there's value to Yahoo in buying

00:48:59   this particular social network/publishing thing

00:49:02   because they didn't have a social network

00:49:03   and there aren't that many that are meaningfully sized

00:49:05   that they can afford.

00:49:07   So that's one big problem that they have,

00:49:08   why they really kind of need a Tumblr.

00:49:10   One reason why Tumblr might have needed Yahoo in particular

00:49:13   to be the buyer if they were going to sell

00:49:16   is that Yahoo is in this place of humility and change

00:49:20   progress. And I know David pretty well. And David is not somebody who wants to be told

00:49:27   what to do with his product constantly. He's going to want his own say. And from all the

00:49:31   reports it sounds like he and Marissa Meyer see eye to eye a lot and he's locked in to

00:49:37   work for them for a little while and she was apparently promising some kind of autonomy

00:49:44   or at least giving him a good amount of authority.

00:49:47   So it matters who buys you.

00:49:50   If you look at one of the reasons why

00:49:53   you might want to sell to Yahoo instead of, say, Google,

00:49:57   it's because Google has not shown

00:49:58   that it's a very good acquirer.

00:50:00   There's so many things that get bought by Google

00:50:02   and then either get stagnated or they get shut down

00:50:06   or the people get annoyed about internal stuff and they leave.

00:50:10   So it matters who buys you.

00:50:12   And if you care about your future happiness

00:50:14   and the future health of your product,

00:50:16   you've got to make sure you sell it to somebody.

00:50:18   I had the same thing with Betaworks, right?

00:50:20   You've got to make sure that you sell it to somebody

00:50:22   who you trust to be decent to work with

00:50:25   and to do well by the product.

00:50:28   You can't just sell it to anybody

00:50:29   willing to pay a good price.

00:50:30   - Yahoo would have been much better off, though,

00:50:32   buying the Tumblr as it existed several years ago.

00:50:35   Like, what you really want, ideally,

00:50:38   is to buy the hip new thing

00:50:40   just as it's kind of breaking.

00:50:43   Because I almost feel like Tumblr--

00:50:45   not that Tumblr's time has passed, but Tumblr has already

00:50:47   gotten to the point where you need to spend a billion to get

00:50:50   it, right?

00:50:50   Because if you look at the graph of their user growth,

00:50:52   you would have really loved to have bought it

00:50:54   before the little knee in the graph, right?

00:50:57   Right.

00:50:58   And then you'd feel like you got in on something

00:51:00   at the ground floor, and it just takes off while you have it.

00:51:03   Where the worst case scenario for Tumblr

00:51:04   is it's massively popular now.

00:51:06   It was a big thing.

00:51:07   Everyone has a Tumblr.

00:51:08   It's really popular.

00:51:09   and then it just tapers off,

00:51:10   like you bought it at the top of the market.

00:51:12   - Like draw something.

00:51:14   - Well that was an example of also being bought

00:51:17   by a terrible acquirer that everybody hates,

00:51:19   that screws everything up.

00:51:20   - That's why we can laugh at it,

00:51:21   because who cares if Zenga loses money?

00:51:24   Like there's such horrible people who run that company,

00:51:29   like nobody cares if they lose money.

00:51:31   - Yeah, I mean in this deal,

00:51:33   like you had to think in this deal,

00:51:34   Marco's stake in Tumblr aside,

00:51:37   would you rather be Yahoo that now owns Tumblr,

00:51:39   Or would you rather be the investors or employees of Tumblr?

00:51:41   You'd much rather be Tumblr.

00:51:44   It's hard for me to look at this in any way other than that the Tumblr people got the

00:51:47   better half of this deal.

00:51:48   But see, I don't know.

00:51:49   I really do think that…

00:51:51   I think Yahoo needed this too.

00:51:53   I think both companies are doing quite well as a result of this.

00:51:57   But Yahoo now has to deliver, whereas Tumblr made an amazing product that got really big,

00:52:02   that got sold on terms of where it seemed to be very favorable to them, and they are

00:52:07   a success story no matter what happens from now on. And Yahoo, it remains to be seen.

00:52:12   Their future is still to be written and the pressure is now on them to, as they said,

00:52:16   not screw it up.

00:52:17   Yeah, that's certainly true. But just looking at who got their money's worth here, it looks

00:52:23   like a pretty good mutual benefit. Anyway, speaking of business terms, our second sponsor

00:52:30   This is actually pretty cool.

00:52:32   This is, our second sponsor is Windows Azure Mobile Services.

00:52:37   Now, because you're all probably nerds like us,

00:52:40   you've probably heard this advertised in other nerdy podcasts

00:52:43   and other nerdy blogs, but this is interesting.

00:52:45   Windows Azure Mobile Services by Microsoft, yes, Microsoft,

00:52:50   they make it faster and easier to build a cloud-powered iOS app.

00:52:55   So it's basically a cloud platform.

00:52:58   You write the code in JavaScript, actually.

00:53:02   I believe they have a Node.js interface, as well as, I believe,

00:53:06   a couple of other languages. Sorry about not knowing that offhand.

00:53:10   That wasn't part of the script, but I've heard it, so it was pretty cool.

00:53:14   They take care of the glue code necessary for storing data in the cloud

00:53:18   and authenticating users via Facebook or Twitter, and even sending

00:53:22   Apple's push notifications. And if you've written push notification code

00:53:26   and having to deal with all those various certificates

00:53:29   and everything, you'll know that this is great

00:53:32   to have somebody else do this for you.

00:53:35   So anyway, mobile services, you can add push to your app.

00:53:38   It's a single command, push.apns.send.

00:53:40   You can see the API.

00:53:41   It's pretty awesome.

00:53:45   You shouldn't need to build your own massive server

00:53:48   infrastructure if you don't want to.

00:53:50   It's nice to have options.

00:53:51   We've talked about this in the show in the past.

00:53:53   And one of the people who's blogged about this before,

00:53:55   who we talked about is Brent Simmons.

00:53:57   And Brent Simmons actually is kind of a spokesperson

00:53:59   for Windows Azure Mobile Services.

00:54:02   He did a few videos for them.

00:54:05   You can see, if you go to the site,

00:54:06   go to windowsazure.com/ios,

00:54:10   and you can go see Brent talking in videos,

00:54:13   showing you how to do this and what this can do.

00:54:16   It's pretty awesome.

00:54:17   We think of Microsoft as being this company

00:54:21   that we as Mac people can kind of ignore,

00:54:24   but they're getting into the server business

00:54:26   and the services business pretty well.

00:54:28   And this is, I'd say this is really worth looking at.

00:54:31   I've checked it out myself and it looks pretty interesting.

00:54:34   So anyway, if you're looking to build an iOS app

00:54:36   or to connect an app you already have to the cloud,

00:54:39   take a look at Azure Mobile Services.

00:54:40   You can get started today for free.

00:54:42   So go to windowsazure.com/ios.

00:54:46   And thanks again to Windows Azure for sponsoring the show.

00:54:50   - Remember when it used to be like,

00:54:51   when these things like EC2 and other services

00:54:54   came out and it was like, "Oh, well, this is great. I won't have to set up my own server

00:54:58   and I can try this thing." But people go, "Yeah, but if you ever want to be a real player

00:55:02   on the internet, you have to do all this yourself." Now all the real players use EC2.

00:55:05   Right. And now, I was just reading recently some tweet or something saying that Netflix

00:55:11   has something like 20,000 EC2 instances. There's no one like, "Oh, you have to... Well, if you

00:55:16   want to play with the big boys..." Netflix is a big boy. They're like a third of all

00:55:19   internet traffic at night or something, whatever that stat was. They're running an EC2.

00:55:23   So back in the '90s, you get Marc Andreessen or whatever

00:55:27   saying, in the future, we're all going to buy computing services

00:55:31   sort of like at retail and buy compute and storage

00:55:36   in the cloud.

00:55:36   And like, yeah, yeah, yeah, right?

00:55:38   And then without us noticing that it's basically happened,

00:55:41   so things like Windows Azure and everything,

00:55:44   I think a lot of people who are at least people who are my age

00:55:46   look at it and are like, that's fine and everything,

00:55:49   but I really want to--

00:55:51   my iOS app is going to be like a serious app, so I'm going to do this myself because those

00:55:56   things are just for people who are just starting out. No, the biggest companies in the world

00:56:01   are using these type of retail infrastructure services. If they're good enough for Netflix,

00:56:08   believe me, they're good enough for your iOS to-do app.

00:56:11   Yeah, I feel like a lot of this, we talk a lot about this stuff in development whenever

00:56:15   technologies move up the stack and get further away from the bare metal in some kind of way.

00:56:21   You see it with languages going from assembly to C to higher level stuff and memory managed

00:56:27   stuff.

00:56:28   There's always these arguments about, "Oh, this new thing is only for X small segment

00:56:33   or only for new people to programming," or whatever.

00:56:38   And then you see those things always slowly become mainstream because you start realizing,

00:56:45   Well, these days it really isn't worth it for almost anybody

00:56:47   to write assembly language.

00:56:50   And stuff like server-side stuff,

00:56:52   you see it's already almost not worth it for anybody

00:56:55   to co-locate a server, to actually buy a physical server

00:56:59   and put it somewhere.

00:57:00   That's worth doing for almost nobody.

00:57:02   And even dedicated servers now.

00:57:05   I mean, I've been a huge dedicated server fan for years

00:57:08   and years and years, just leasing a dedicated server

00:57:10   somewhere that the hardware is maintained by somebody else.

00:57:14   Even that, though, is really hard to justify today,

00:57:16   because VPSs are so good and cheap.

00:57:19   And now you have all these other platforms.

00:57:21   You have Azure, you have things like Heroku for Rails,

00:57:24   and you have EC2 at a lower level,

00:57:27   and things that are built on EC2, like I think Heroku.

00:57:31   But you have all these new cloud app platforms

00:57:35   where you don't even have to manage server instances anymore.

00:57:38   You don't even have to manage virtual servers anymore.

00:57:40   Even these things are getting abstracted away.

00:57:43   And it's gone way beyond tinkering hobbyist territory to the point where, as John, you

00:57:48   said, there's a lot of serious stuff that's built on this. And it's no longer just for

00:57:55   newbies to programming, but it happens to be really nice if you are a newbie because

00:57:58   you don't have to deal with all this crap.

00:57:59   Well, it seems to me like with every movement up the stack, all the old-timers say, "Oh,

00:58:06   you whippersnappers and not having to worry about memory management. Oh, you're a bunch

00:58:10   of wimps. And then eventually everyone realizes, you know what? Worrying about memory kind

00:58:15   of sucks. And I don't want to do that either.

00:58:18   Exactly.

00:58:19   And so this is just another example of that. And Azure in particular, Gruber posted a linked

00:58:26   list post earlier tonight about how if you think of, and I'm heavily paraphrasing, but

00:58:32   if you think that Microsoft needs to go forward and it needs to do so in arguably two categories,

00:58:39   One is services and one is devices.

00:58:42   Well, you could easily argue that Azure is the services component, and as a hopefully

00:58:49   decent segue into our next topic, the Xbox is very likely going to be the device that

00:58:54   brings Microsoft into the post-PC era.

00:58:57   So John—

00:58:58   Now wait, which—are you talking about the Xbox One, the Xbox 360, or the Xbox One?

00:59:03   Yeah, exactly.

00:59:06   I'm talking about the good one that's 359 less than the previous one, but it's still good.

00:59:12   In fact, it's supposed to be better.

00:59:13   I like the Xbox one, despite what Jon thinks about it. I think it was a great system.

00:59:18   The first Xbox one.

00:59:20   The Ferrari love Ferrari.

00:59:22   [laughter]

00:59:23   Yeah, they could have called it the Xbox U.

00:59:25   [laughter]

00:59:26   It could have been worse.

00:59:28   By the way, before we get into that, do we want to talk about the Wii U's abysmal performance at all?

00:59:34   What, that it hasn't sold any of them? Yeah, like, they're having major problems over there.

00:59:38   Well, John has one, but nobody else, right? Yeah, I think John has the only one. Yeah, I was thinking maybe it'll be a collector's item.

00:59:42   That actually is decent. Like a virtual boy.

00:59:46   I did notice in John's living room that not only did he have the two

00:59:50   Wiis of course still set up, because I believe you mentioned on Hypercritical, second to last episode,

00:59:54   why you're keeping the old Wii for some kind of controller issue, but then on top of your TV

00:59:58   you had both sensor bars perfectly stacked on top of each other, centered exactly.

01:00:02   That is not surprising.

01:00:04   Yeah, it would be nice if you could share them, but you know, as stacking throws off

01:00:08   the balance, I liked it better when I was just one.

01:00:11   I'd deal with it.

01:00:13   First of all, problems.

01:00:14   Yeah, now, the Wii U, Nintendo just built the wrong thing, so it's a bummer for them.

01:00:21   But the one thing, two things Nintendo has going for it.

01:00:25   One, it is owned by people who are not hasty and foolish and like they're not at the whim

01:00:35   of like greedy shareholders who if there's one bad quarter it's time to sell the whole

01:00:38   company and start making you know fried dough instead or something right?

01:00:42   And two, they have a lot of money in the bank.

01:00:44   I don't know is Nintendo privately held?

01:00:46   Someone in the chat room can tell me.

01:00:48   But it's not like you know in US companies where like you know Apple for instance, oh

01:00:52   "Oh my god, your profits didn't grow at the rate you said they were going to, and now you're doomed and you need to change something."

01:00:57   And everyone panics and everything, and they get slammed, right?

01:01:00   That's not the way it works. I mean, if that was the way Nintendo would have sold to a larger company years ago, if they thought it that way.

01:01:07   But they don't. They're sort of, you know, very proud, in it for the long haul, not likely acquisition targets, and have money in the bank from all the good years.

01:01:15   So, hopefully they weather this storm, do terribly this generation of consoles, and

01:01:22   come out the other side with some better ideas.

01:01:27   So what do you think about the Xbox One?

01:01:29   The second Xbox One?

01:01:30   The Xbox One 2?

01:01:31   Is that what we're calling it?

01:01:32   Well, you know, we're at the top of 3, but you can't say...

01:01:34   It's the third Xbox.

01:01:35   Just say Xbox...

01:01:36   3 sounds like 360.

01:01:37   Yeah.

01:01:38   You're gonna say Xbox One.

01:01:39   That's easy.

01:01:40   Oh, yeah, that's very easy.

01:01:41   Really easy.

01:01:42   Yeah.

01:01:43   You can pull an apple and call it the Xbox Two.

01:01:45   John showed like a, you know, it was a Bing search I think, but like a Google image search

01:01:48   or whatever for Xbox O-N-E, and all you see are pictures of Marco's beloved, bloated,

01:01:53   black and green thing.

01:01:54   That system was awesome.

01:01:55   Yeah, but anyway, that's what comes up, because it's like, "Oh, I see you're trying to type

01:02:00   Xbox One."

01:02:01   Well, that's this thing, right?

01:02:02   John, don't get them started.

01:02:04   Don't do it, man.

01:02:05   Don't do it.

01:02:06   So for your framing, for your framing of this topic, with the whole, you know, like, you

01:02:10   the future of Microsoft being devices and services. The only reason that framing comes up,

01:02:16   I think, is because Microsoft has done so badly with its desktop Windows and the mobile space,

01:02:23   like Windows Phone or whatever. Because that's where I go, "Oh, well, okay." So Microsoft has

01:02:28   shown that they've kind of—people are losing interest in the desktop in general, and so

01:02:32   Microsoft's strength there is no longer interesting. And in mobile, Microsoft has

01:02:37   has flailed for years and continues not to get traction despite the fact that they have

01:02:40   a reasonably good product.

01:02:42   So it's like, everyone's looking elsewhere.

01:02:44   Okay, well, so never mind about that stuff, Microsoft.

01:02:47   What else have you got that might be good?

01:02:49   Xbox, you're selling a lot of those.

01:02:51   Those are good.

01:02:52   And Azure, that's really good.

01:02:53   So it's like the younger products that are actually doing well, pushed to the forefront

01:02:58   mostly by their complete failure to make a crack in the mobile market and the diminishment

01:03:03   of the desktop market.

01:03:05   So that's, I guess, a positive spin on it, is that those are the future of the company.

01:03:09   But I see it as a negative.

01:03:11   It's like, man, shouldn't they be right in there slugging it out with Android and

01:03:16   iOS instead of a distant third or whatever they are?

01:03:19   That's kind of sad and depressing.

01:03:21   Yeah, but do we know, to go back just a moment, do we know that Azure is making money?

01:03:28   Like Xbox, I think it's probably safe to say they're making some good money off that.

01:03:32   But is Azure making money, or is Xbox, Windows, and Office basically carrying all of Microsoft?

01:03:37   Well, Azure looks like an investment, kind of like EC2, where in the beginning, you're

01:03:42   investing in the future thinking like this business of retailing services is going to

01:03:46   be a good one.

01:03:47   And by all accounts, Azure is a good product, and people like it.

01:03:51   And it is providing something that...

01:03:54   That market is not that crowded.

01:03:55   How many people have the ability to provide what Azure provides?

01:03:58   You can't just start a startup in your garage and provide what they do.

01:04:02   Because especially in their case, it requires such tight integration of like they control

01:04:05   the OS and like the meta platform that weaves it all together.

01:04:08   And you need data centers and you need all that stuff.

01:04:12   Amazon bootstrapped its thing by having a very successful, very, very high revenue,

01:04:17   if not high profit online store.

01:04:19   And that let them build EC2 because it helped them build their thing.

01:04:22   Azure, I'm sure, has been funded by all the profits from Office and Windows and all the

01:04:26   other places.

01:04:27   Microsoft makes their money.

01:04:28   investment in the future. So I don't think Microsoft is like, "Oh man, when is Azure

01:04:31   going to make money?" I think they are just like, "Just make the product better, get people

01:04:35   to use it because this is clearly a thing that people want and very few other people

01:04:39   are providing it. So if we can make a good product in this space and there's only two

01:04:43   or three other people in that space, we feel good about it." So I think they're okay with

01:04:46   that.

01:04:47   Okay. So is the Xbox One Two Two One, Xbox, the new Xbox, is that any good? Does that

01:04:56   excite you at all or not so much?

01:04:58   It's kind of boring that all of the predictions about what the current generation of console

01:05:04   would be came out to be true, but that's the world of the internet, we guess what everything

01:05:08   is and we're right. The spec leaks and all that stuff. So it's exactly the box everyone

01:05:13   thought it would be, it's got the specs everyone thought it would have, the speculation of

01:05:18   why does it have these specs. Way back when I was like, why does it have 8GB of RAM when

01:05:25   The PS4 supposedly has four.

01:05:27   This is when people thought the PS4 was going to have four, before the actual announcement

01:05:31   that it also has eight.

01:05:32   And I said, "Oh, well, the reason that the new Xbox is going to have eight is because

01:05:36   it's not just going to be a game console.

01:05:37   They're going to also want to integrate all sorts of home entertainment and TV-type functionality

01:05:41   in it."

01:05:42   And that totally made sense because Xbox, it's not the most popular Netflix platform.

01:05:48   I think the PS3 is actually more popular than it.

01:05:50   But like, Microsoft likes to sell you stuff through the Xbox.

01:05:53   They'll sell you, you know, you can rent movies and I don't know if you can buy movies and

01:05:56   music and all sorts of other things.

01:05:58   I believe you can.

01:05:59   Watch your Netflix.

01:06:00   Like, it is, it's a gateway to do things that are not gaming.

01:06:03   So it made perfect sense that Microsoft's next console would go further in that direction

01:06:08   because why wouldn't they?

01:06:09   Like, they have a popular service that people like that they can sell you things through

01:06:14   and that, you know, and it also happens to play games.

01:06:17   They would clearly go forward with that.

01:06:19   So like I said, as it turned out, both the PS4 and the Xbox One have the same amount

01:06:24   of RAM, but as predicted, the Xbox One does tons of TV stuff.

01:06:30   Integrated TV experience with Skype overlaying on the side of your television and being able

01:06:35   to have an electronic program guide and all sorts of other things.

01:06:38   And that's what, like this, whatever this was, press conference thing, that's what they

01:06:41   were promoting.

01:06:42   They said, "We'll tell you more about the games at E3," which is the gaming-focused

01:06:45   conference.

01:06:46   "Today we're going to tell you all about all these great TV features."

01:06:49   And they did.

01:06:50   And, I mean, if you look at the thing, the thing looks like an HDTVO.

01:06:53   Like, it's a big rectangular square looking thing.

01:06:56   It does not look like a dedicated gaming system, because it really isn't.

01:07:01   It's a game console that also does a whole bunch of other things as well.

01:07:04   I'm kind of happy that the snail phase of console gaming is over,

01:07:10   I'm hoping is over, where everyone had to make their console shape like some weird thing.

01:07:15   Because boxes you can stack on top of each other, but if everything is shaped like a snail,

01:07:19   you gotta find some place to wedge the things in, like if it's sideways or vertically,

01:07:22   but you can't put two 360s. A 360 and a PlayStation 3 and, well, the Wii is kind of still box-shaped,

01:07:30   all on top of each other. So hopefully the PS4 is also rectangular-shaped.

01:07:33   Then we all have a fighting chance of sticking the things in our home entertainment centers.

01:07:37   But for the most part, because it's what everyone predicted, now it's kind of like a wait-and-see

01:07:44   type thing. Okay, well, can you sell millions and millions of these things? Because if you

01:07:47   can, and if it works as advertised, now you have a successful game console and a way to

01:07:52   sell stuff to people through your little gateway. And that sort of leaves the ball on everyone

01:07:58   else's court. They're saying, "Okay, well, you tried to do Google TV and it sucked and

01:08:01   no one bought it, so tough luck on that." There's these rumors about television stuff

01:08:06   and you have Apple TV, but so far, there's no apps for that and the things you sell through

01:08:12   it are you sell things from the iTunes store and you have Netflix, but it's not quite the

01:08:16   same thing as it could be where you're taking over the entire television and providing a

01:08:20   program guide and being a gateway for everything else.

01:08:25   The Xbox One has HDMI input.

01:08:28   If you had to express its philosophy in terms of one hardware feature, that's what it would

01:08:32   be.

01:08:33   It doesn't just send a signal to your television where you can see the output.

01:08:35   It takes input.

01:08:36   It wants to be the center of your television watching experience.

01:08:41   Did you see the supercut that somebody did of the press conference where it was like

01:08:47   a minute and a half long and it was just every time they said the word TV or television,

01:08:50   and then it was every time they said sports, I believe, and then it was every time they

01:08:55   said Call of Duty and it lasted like a minute and a half and it was hysterical?

01:08:58   Yeah, I was trying to watch the actual thing before I saw the supercut.

01:09:02   Oh, well now, spoiler alert.

01:09:05   Yeah, but, like, if you're a gamer and you're watching it, "Oh, tell me about the games,"

01:09:11   But Microsoft clearly thinks that the gaming part of it is only perhaps equally important

01:09:20   to the non-gaming parts of it.

01:09:22   And from my perspective, as someone who hates all boxes connected to TV, the Xbox One comes

01:09:29   maybe 50% of the way to what I've always wanted and the box that no one will ever make, because

01:09:37   it doesn't make any sense economically for them, but it would be great for me, is my

01:09:40   my omnivorous box where I want it to take all the millions of places that entertainment

01:09:46   can come to me, send them all into this one box, and provide me with a single unified

01:09:51   interface to all those things. So I don't have to change 50 different inputs and have

01:09:55   seven different remotes and deal with all these different services. I just want something

01:09:59   to paper over that mess for me.

01:10:01   Actually, modern home theater receivers almost do that.

01:10:05   They don't paper over it. They just provide you a way to automatically switch inputs and

01:10:08   and do all this other stuff.

01:10:09   I wanted to provide a single, unified, really nice interface

01:10:13   to hide the fact that these are totally disparate services

01:10:16   owned by competing companies that hate each other

01:10:18   and that have varying degrees of competence

01:10:20   in creating their hardware and their software.

01:10:22   Just hide all that from me,

01:10:23   because you want to solve the meta problem of,

01:10:26   wouldn't it be great if you didn't have

01:10:27   a billion different sources for this crap

01:10:28   and they didn't all suck?

01:10:29   It's like, okay, well, we can't solve that.

01:10:31   How about this, how about this?

01:10:32   Everything all still sucks,

01:10:33   and there's a bazillion wires behind your TV,

01:10:35   but they all go into this one awesome box

01:10:36   and it makes it look beautiful,

01:10:37   Google TV kind of tried to do that but sucked.

01:10:40   And Xbox One does half of that.

01:10:44   It tries to say, "Okay, well, if you want to watch TV, don't go through your TV.

01:10:47   In fact, your cable box input is going to go into the Xbox One.

01:10:51   Just talk to your Xbox One or use the remote on your phone or whatever.

01:10:54   Just say what you want to watch and we'll switch to it."

01:10:58   That's good.

01:10:59   You're trying to unify the world of crap I have.

01:11:00   I have a cable thing that I have to pay for.

01:11:02   I pay for Fios TV and it goes into the back of my Xbox One and it lets me control watching

01:11:06   TV.

01:11:07   But no DVR functionality in the Xbox One.

01:11:10   So if you want to watch something that's not on right now, what if I have a DVR?

01:11:14   Well, could you go to the DVR back into the thing?

01:11:17   Well, now you don't really have control of the DVR through the Xbox One, and so now you

01:11:22   have to at least have two inputs for live television and then your recorded stuff.

01:11:25   Netflix, they're subsuming as an application, but what if you use a different streaming

01:11:29   service?

01:11:30   What about the Amazon streaming service?

01:11:31   What about Hulu Plus?

01:11:33   Like, they're not—it's not—Xbox One is not omnivorous.

01:11:37   It's a picky eater.

01:11:38   It will take a couple of select inputs and unify them in a particular way, but I can't

01:11:42   imagine anyone who's in the market for an Xbox One, especially who's going to buy

01:11:45   it on launch, who is not still going to be switching inputs to get the things done that

01:11:49   they want to get done.

01:11:50   So it's a step in the right direction, but the lack of time shifting in particular makes

01:11:56   it a nonstarter for me.

01:11:57   Like, it's not going to unify my life.

01:12:01   The thing that struck me about what you just said is that when you were describing this

01:12:05   omnivorous box that consumes all these different services, for a flash I felt like you were

01:12:10   describing the Apple TV.

01:12:11   And I know I'm oversimplifying it.

01:12:12   I know Apple TV doesn't consume traditional terrestrial TV, and it doesn't play games

01:12:20   or arbitrary apps that you may want it to do.

01:12:22   But to a large degree, I almost feel like the Apple TV is trying to do exactly that.

01:12:27   If you look at the fact that it has Netflix, it has Hulu Plus, it has MLB TV.

01:12:31   if I'm not mistaken, has NHL TV.

01:12:33   It has all these different things,

01:12:35   and it's one interface that will expose all of them.

01:12:40   - But that's like a quarter of the stuff, though,

01:12:43   because the vast majority of my television that I watch

01:12:46   comes through my stupid bundled, quote unquote, cable,

01:12:50   even though it's Fios subscription.

01:12:52   I pay for all these premium channels,

01:12:54   I pay for HBO, I pay for Showtime, and all that stuff,

01:12:57   and the Apple TV doesn't even have an input, a video input.

01:13:00   It is purely an internet play.

01:13:02   And that's what I was talking about.

01:13:03   Well, the real solution is not to have all the programming

01:13:06   spread all over the place and have these stupid cable TV

01:13:09   cartel bundling deals that just force you

01:13:11   to have all these channels.

01:13:12   Yes, that is the real solution.

01:13:13   The real solution is to get rid of all

01:13:15   these huge entrenched interests with infrastructure

01:13:19   and contracts.

01:13:20   But it's not happening.

01:13:21   It's hard to get rid of them.

01:13:23   So in the interim, while we're waiting for the world

01:13:25   to realign, it would be nice if someone

01:13:28   will make something that would just

01:13:31   tackle the incredibly hard problem of taking in all

01:13:34   these things and unifying them and providing me

01:13:37   a better experience.

01:13:39   And maybe that's just never going to happen.

01:13:40   Maybe the Apple TV is the only possible play.

01:13:43   It's like, if it's not on the internet,

01:13:44   you deal with it yourself.

01:13:45   But if it is on the internet, we'll try to bring it through.

01:13:47   And the Xbox One is like, OK, well,

01:13:49   we'll have our own internet services

01:13:50   we're going to sell you.

01:13:51   And we'll resell Netflix and everything through you.

01:13:53   But I don't think they have a deal with Hulu.

01:13:55   I don't think they have a deal with Amazon.

01:13:57   and they'll take in your cable box's output, but I don't think they have any control over your DVR,

01:14:03   and I'm not sure how they integrate if you have a DVR with your cable system, and it's just one more complication.

01:14:09   It's not a simplification of anyone's life, I don't think, especially with all of the gestures and voice control and stuff like that.

01:14:19   So what you're saying is you want a company to take something that's extraordinarily complex,

01:14:26   make it really, really simple, and make it pretty. Do we know any companies that may be interested?

01:14:33   Back in 2005 or 2006, I'm like, "Boy, you know, Apple, you know, TiVo has really fallen down here.

01:14:40   I would love it if you would make something like this." But then Steve Jobs went to the

01:14:43   All Things D conference, and I think it was 2008 or something, and someone in the audience asked

01:14:47   him a similar question and he said flat out, "We're not going to make that thing because

01:14:52   the business model makes no sense." And I agree with him. His reasoning was perfectly sound.

01:14:56   Like, that's the reason this thing doesn't exist. One, because it's super hard. And two, because

01:15:00   in the US anyway, it can't be done with all these cable companies are not going to give you

01:15:08   their programming and the cable companies buy the programming in these big bundles that you

01:15:12   can't afford to match the price of if you're going to sell this thing to people. It's just

01:15:16   It just can't be done in terms of the money.

01:15:20   So it's like, well, why would we ever make that?

01:15:21   We would lose money on it, and it would be really hard to make work right.

01:15:25   And we would be basically trying to usurp the value from companies that hate us and

01:15:29   that have the ability to screw us by changing how they do things.

01:15:32   You know what I mean?

01:15:33   So that's why that box doesn't exist, right?

01:15:35   That's why TV is a big mess, and that's why we're all hoping for something better.

01:15:39   So this Xbox thing is a move in that direction, but I don't buy the simplification they were

01:15:47   trying to sell.

01:15:49   The reason there's a "1" in Xbox One, I'm assuming, is because in some meeting when

01:15:53   they're talking about the name, they're like, "Well, what about..."

01:15:56   I know this is crazy, guys, but "What about Xbox One?"

01:15:59   Everyone said, "What do you mean?

01:16:00   The first Xbox, people call that a..."

01:16:01   "No, just listen, listen.

01:16:02   Because this is one box that will unify your entire television experience, right?

01:16:06   You'll be able to do video conferencing, browse the internet.

01:16:09   at Netflix, play games, watch live TV. OneBox does everything. That's where I assume the

01:16:13   one is coming from. I haven't finished watching the press conference thing, but I assume they're

01:16:18   going to lean on that. And it falls short of fulfilling that dream. It is not OneBox

01:16:22   to do everything. You will still be changing inputs just because the world of content that

01:16:28   you watch on your television is so Byzantine that it's almost impossible for OneBox to

01:16:32   do everything for you.

01:16:34   Yeah, I guess the point I'm driving at is even though it doesn't make business sense

01:16:40   to potentially get an antagonistic relationship with content owners, it doesn't make business

01:16:44   sense to try to conquer all these disparate systems.

01:16:48   On the other hand, you take a company like Apple that is used to selling what most would

01:16:52   consider expensive products, and if Apple said to you, John, for $1,000 or for $1,500,

01:17:00   we will make all those devices, the TiVo and the Netflix and all that, they will all be

01:17:06   consumed by this one box. And by the way, you can run apps on it. So no, you may not

01:17:10   be able to play Halo on it, but you'll be able to play, you know, Real Racing on it.

01:17:15   Would you pony up $1,000 for that, $1,500 for that? And I know I'm oversimplifying.

01:17:19   Well, I think that's the wrong question. I mean, because I don't think Apple could

01:17:21   actually do, like, if you think about what Apple's really good at, Apple's really

01:17:26   good at editing what's possible, deleting options,

01:17:30   saying no to things to make something that's overall great,

01:17:34   but limited in some way.

01:17:38   And those limits make it great, or enable it to be great

01:17:42   in other ways.

01:17:43   With the TV business, the TV industry, whatever this is,

01:17:48   if you say no to anything, you're out, you're irrelevant.

01:17:52   And so imagine, it'd be like if a cable company

01:17:56   launched without supporting ESPN.

01:17:59   There's nothing, there's no way that's going to succeed.

01:18:02   Right, and so like people aren't used to not having

01:18:06   everything with TV. Most people have

01:18:10   cable TV and they have a billion channels and if they want to connect

01:18:14   anything else to it, they just plug it in and that's fine. If Apple were to come

01:18:18   together and say, "Here's a box that does 80% of that. No one's going to buy it." Or,

01:18:25   people already will buy it, but only people who want just what Apple provides. That's

01:18:31   what they already sell. That's the Apple TV.

01:18:33   That's the play of your Apple, is you want to shift the value away from these cable packages.

01:18:40   Cable companies have not so much monopolies but duopolies, but there's maybe one or two

01:18:44   choices for cable companies, and they have all this money and infrastructure, and they're

01:18:47   They're hard to displace, but if you could—their worst nightmare is to become dumb pipes for

01:18:52   internet connections, and that's what Apple wants to do and all these other companies.

01:18:55   Like, we'll just shift the value away from those premium channels and towards content

01:19:00   that's available over the internet, because the internet is free for everybody or whatever.

01:19:05   It's not tied up with these—so if we can just get House of Cards made in Netflix first,

01:19:10   and if we could have Netflix on our box, then we've got House of Cards, and that's popular

01:19:14   content, right?

01:19:15   "Well, that's, you know, they can get HBO Go, and finally we can airplay it to our television,

01:19:20   but still you need a cable subscription to get it."

01:19:22   Like, they're trying to pull the value out of the hands of the cable companies into the

01:19:27   realm that they control, rather than trying to say, "Okay, well, we accept the fact that

01:19:31   right now cable companies have this valuable content, and you have to deal with watching

01:19:35   one thing in one place and one thing in another, so let's try to make a box in front of it."

01:19:38   And Mark was right, that's not the Apple philosophy.

01:19:39   Apple philosophy is not, "This world is a big mess, and we will try to hide that from

01:19:44   you."

01:19:45   envision a new world that isn't a mess, and we're just going to go there.

01:19:50   And yeah, we'll be out there ahead of you, and not a lot of people will follow us, but

01:19:52   hopefully we'll be able to slowly draw the value out of that ecosystem, and then one

01:19:58   day cable companies will wake up and realize, "Hey, wait a second.

01:20:02   If we don't have House of Cards or whatever the popular Netflix thing is, we're screwed,

01:20:07   and people don't want to buy our cable package because they say, 'Hey, what about that popular

01:20:09   show that I like?

01:20:10   Oh, that's only available over some internet TV thing?'"

01:20:14   It's a battle between the same thing with Apple and the phone carriers.

01:20:18   Everyone wants the carriers who suck at everything to be dumb pipes, except for the carriers

01:20:24   themselves.

01:20:25   So, cell carriers, cable companies, none of them want to be utilities where you just,

01:20:30   "Oh, we just bring you the internet over a pipe."

01:20:32   And every other company in the entire world says, "Please, just be a company that brings

01:20:35   you fast internet over a dumb pipe, and let everyone else compete with content with apps

01:20:39   and channels and stuff like that."

01:20:41   So in this transition stage, we just all suffer.

01:20:44   And I don't know who's going to win that battle,

01:20:46   but I really hope it's not the carriers and cable companies.

01:20:50   Going back to the Xbox One for a second,

01:20:52   one conversation I'd love to have

01:20:54   is just the timing of this and kind

01:20:58   of the generational aspects of this.

01:20:59   Like if you look, the Xbox 360 came out in 2005.

01:21:05   And if you just think about what kind of world this was in 2005,

01:21:10   Think about, I said on Twitter,

01:21:12   that was before Tumblr was started.

01:21:15   So it seems like Tumblr's been around for a while,

01:21:18   but yeah, the Xbox 360's been around longer.

01:21:23   And that was before the iPhone came out.

01:21:25   That was before the entire smartphone revolution.

01:21:27   Smartphones existed, but only rich business people

01:21:30   had them because they were really expensive and they sucked.

01:21:33   So it was such a, that was so long ago

01:21:36   that this system was in a vision.

01:21:38   This was before Netflix streaming existed.

01:21:41   It's before almost any streaming service for video existed,

01:21:44   I think, certainly before many people used them.

01:21:47   And it was before all of these massive changes

01:21:53   in how we entertain ourselves, how we get our video content,

01:21:57   how and where we watch videos and play games.

01:22:00   And that's what we've been using all this time.

01:22:04   Like, that's the game console type.

01:22:06   That's how game consoles have been designed for a long time.

01:22:10   And Microsoft has been pretty good about jumping on stuff

01:22:16   with the Xbox that they need to jump on quickly and well.

01:22:20   Like Xbox Live was the first good online play service

01:22:23   for video game consoles, and might still

01:22:25   be the only good one.

01:22:27   I don't know if the PlayStation ones gotten better,

01:22:30   but certainly Xbox Live is really good,

01:22:32   and people love it, and people use it all the time.

01:22:36   and then you know once once you get netflix on devices streaming

01:22:41   the xbox was on that and they they had that very early on

01:22:45   and it is very very common if you think about

01:22:48   you know how people are

01:22:50   are entertain themselves now how many people are are getting these things

01:22:54   using the three sixty as

01:22:56   a netflix streaming device

01:22:58   is an extremely inefficient use of the hardware

01:23:01   and

01:23:02   you're sitting there, you're hearing the big fans,

01:23:04   and it's drawing God knows how many watts,

01:23:06   and it's slowly burning itself out,

01:23:08   so you get to the red ring of death,

01:23:09   and Microsoft has to replace it or you sue them.

01:23:10   Like there's all these, this whole mess of using something

01:23:14   of that power level to do something relatively simple,

01:23:17   like what Netflix is, but people are sitting there

01:23:20   for hours a night doing that.

01:23:22   And so obviously, like the previous type of console

01:23:26   was designed in a way that doesn't really mesh

01:23:29   with how people do things in this day and age.

01:23:32   And this has been a very long console generation.

01:23:37   So it's interesting to see Nintendo with the Wii U

01:23:40   attempted to modernize it a little bit

01:23:43   and just didn't really go far enough

01:23:45   or just didn't do it well enough or in a compelling enough

01:23:48   package.

01:23:50   I think Sony has done pretty well with the PS3.

01:23:53   And it looks like the PS4 is going to be really interesting.

01:23:56   But we don't know how they're going to execute yet.

01:23:58   I would say Microsoft looks like they're

01:24:00   in the best position to take the next eight years

01:24:04   and actually have this console be strong, be relevant,

01:24:08   be well liked, be well bought. I would say looking at these three

01:24:12   we don't even know that much about the PS4 yet, but just looking at

01:24:16   like for instance, there was this great hardware analysis today

01:24:20   on AnandTech, which we'll into in the show notes as well

01:24:24   about the Xbox One announcement

01:24:28   and what it means. And they were comparing it to the PS4 announced hardware, and it looks

01:24:32   like in general the Xbox One will have way less GPU power, but will then also almost

01:24:40   definitely run way cooler and quieter as a result.

01:24:44   Well, I mean, the thing about the power usage is that the Xbox One is meant to be turned

01:24:51   on all the time. Exactly.

01:24:53   Right, and so they wanted to have lower idle power, whereas the PS4 is still, for the most

01:24:59   part, a pure gaming console.

01:25:00   And the PS4 has a super low power mode where it looks like it's basically off, kind of

01:25:05   like power an app on a Mac, but it still does stuff like download updates in the background

01:25:09   and stuff.

01:25:10   So the PS4 usage pattern is you go to use it, you turn it on, you do stuff, you turn

01:25:13   it "off," and it's not really off, but it's basically completely dead silent, no fans,

01:25:18   anything like that.

01:25:20   And that's its sort of mode to be like, oh, well, the overall power usage, I think, for

01:25:23   your PS4 will be lower because you have it in that fake off mode most of the time, whereas

01:25:28   the Xbox One is supposed to just be on all the time, like on, on.

01:25:32   Any time a television is on, that thing is on, because aren't you supposed to be watching

01:25:35   your television through it?

01:25:36   So it can't be like the PS4, where it's in some super-duper low-power mode.

01:25:41   It's always got to be on in at least some state.

01:25:43   And both of these things, as the AnandTech article said, are made with modern system-mounted

01:25:46   chips that have power gating in the GPU as well, where they just turn off execution units

01:25:50   and cores that are not running. So they should all have much better, not idle power, but

01:25:55   power when they're not being asked to play a game.

01:25:57   Well, but the Xbox One has this mid-level thing where it has this stripped-down OS for

01:26:04   lower power stuff, like watching streaming video. And I think that's an acknowledgment

01:26:10   that the way people use these things really often these days is not for playing games

01:26:15   for hours and turning it off and that's it.

01:26:17   It's like maybe playing a game for a little bit, but then every night watching an hour

01:26:22   of Netflix.

01:26:23   That's such a common use case now that I feel like it's really, really smart for Microsoft

01:26:28   to be optimizing for that.

01:26:31   Like Sony's background mode seems like it's more for downloading game content.

01:26:34   Yeah, but the thing is basically off at that point.

01:26:38   It's like auxiliary chips are doing all the work, whereas the Xbox One, the whole system

01:26:41   on a chip is powered up and the thing is on.

01:26:43   It's running the two OS's plus the hypervisor and everything all the time,

01:26:47   and if the game OS, you're not playing a game, the game OS is not doing anything interesting there,

01:26:50   but it's all, you know, on. Everything is powered up and running,

01:26:53   you're just relying on the fact that you can shut down like

01:26:56   six of the eight cores without currently being used,

01:26:59   and if you're not doing anything with the GPU, most of that is in idle state as well,

01:27:02   so you're getting your power down, but it's not the same as

01:27:05   the PS4 which has auxiliary, it might even be like an ARM chip or something,

01:27:08   some other little wimpy chip on the motherboard

01:27:11   that runs and does the little wimpy background stuff when the thing is basically off?

01:27:15   Yeah, I don't know.

01:27:17   I feel like...

01:27:19   you know, time will tell, but I feel like

01:27:21   history will look back on the Xbox One's design as being smarter than the PS4's

01:27:25   design for how people actually use these things.

01:27:28   It's like someone said on Twitter today, or maybe it was in a Tech article, it basically

01:27:31   depends on whether you think

01:27:33   the console for high-performance... the market for high-performance game consoles

01:27:38   has peaked or not. Because if it peaked, then it's a smart move not to make one that is

01:27:42   like super duper powerful, but instead start going off in the new direction, which is to

01:27:46   this TV box. But if it hasn't peaked, the PS4 is a better game console if all you hear

01:27:49   are better games, right? And that's the bet Microsoft is making, that games are not enough

01:27:55   anymore, that having a super duper awesome game console is not a sufficiently compelling

01:27:59   product and that you need to have something else. And by having something else, people

01:28:03   will more than forgive the slightly lower game performance because of all this other

01:28:08   stuff.

01:28:09   I think that definitely remains to be seen because I think both of these devices, because

01:28:14   the Xbox One is not as simplifying and as unifying as Microsoft thinks it is, I think

01:28:19   it will still appeal mostly to not just hardcore gamers but kind of like geeky type people.

01:28:25   Like I wouldn't...

01:28:26   I would give my parents an Apple TV, but I would not give them an Xbox One.

01:28:28   So I think both of these things are going to end up targeting game console type nerds

01:28:35   and early adopters, and in that race between them, I think it seems like it's probably

01:28:42   going to shake out exactly like this console generation did.

01:28:44   That Microsoft's going to win and they're going to sell more, but that Sony will do

01:28:49   pretty well, and I don't think the television integrated stuff will save Microsoft and give

01:28:54   them sort of a runaway success and just bury the PS4.

01:28:57   We all just agree that Nintendo is screwed.

01:29:00   Yeah, I think you're right about that too.

01:29:02   I don't see Sony having as rough of a time as Nintendo at all.

01:29:06   Because obviously they have a big following.

01:29:09   Although, so does Nintendo.

01:29:11   I think Sony is making almost the right kind of system.

01:29:14   And I think it will be good enough to be successful.

01:29:17   I think Nintendo, unfortunately, is still making the GameCube.

01:29:20   There's also execution.

01:29:22   How many people are nervous about getting the first Xbox One?

01:29:25   all the poor red ring people. It's totally unfair because of all the companies in the

01:29:30   world, the one that is probably the most careful about heat in its game console is probably

01:29:33   Microsoft for this generation.

01:29:35   Yeah, because they've lost so much money on the 360 warranty repairs and stuff.

01:29:38   Yeah, so you think. But the past generation is like, "Well, Sony made this insane machine

01:29:44   with this crazy CPU, and they should have been the one overheating all the time, but

01:29:49   their hardware has been really reliable." You can say, "Well, I guess Sony really knows

01:29:53   how to make consumer electronics. So right or wrong, coming into this generation, I feel

01:29:58   like I have so much more faith in the reliability of whatever the heck the PS4 hardware is going

01:30:02   to look like. Maybe we'll all be proven wrong and maybe the PS4 will be the thing overheating

01:30:06   and screwing up. But going into it, I think Microsoft has a lot to prove, especially considering

01:30:13   how humongous and ugly and mutant this thing looks. It just looks like it should overheat.

01:30:19   certainly will not, right? But it's just like, "Oh, you know, Xbox is huge, LOL."

01:30:23   - Law. All right, with that, let's wrap it up. Thanks to our two sponsors,

01:30:29   Squarespace. Use coupon code ATP5 to get 10% off at Squarespace. And Windows Azure Mobile

01:30:36   Services. Go to windowsazure.com/ios to learn more about that. Thanks, guys.

01:30:40   [music]

01:30:40   Now the show is over, they didn't even mean to begin

01:30:47   'Cause it was accidental (accidental)

01:30:50   Oh, it was accidental (accidental)

01:30:53   John didn't do any research, Marco and Casey wouldn't let him

01:30:58   'Cause it was accidental (accidental)

01:31:01   It was accidental (accidental)

01:31:03   And you can find the show notes at ATP.fm

01:31:08   And if you're into Twitter, you can follow them

01:31:13   @C-A-S-E-Y-L-I-S-S

01:31:18   So that's Casey Liss M-A-R-C-O-A-R-M

01:31:22   Auntie Marco Arment S-I-R-A-C-U-S-I-C-Racusa

01:31:29   It's accidental, accidental

01:31:33   They didn't mean to accidental accidental tech podcast so long

01:31:42   Alright, titles. I do like David Smith's leading title, "Champagne to Pour onto Rap

01:31:50   Stars." I like it. It's a little long, though. I don't understand why you're pouring it on...

01:31:55   like the rap stars don't pour it on themselves. It's a joke, John. I know, but it's like...

01:32:01   It's not the emotions yet. Why would you pour it on the rap stars? Oh, you're so hypercritical,

01:32:07   man. Who would you pour it on? God. Oh, lordy. I gotta hang up. It's really expensive. I

01:32:12   wouldn't buy it.

01:32:13   God, I love you so much.

01:32:14   It was like $1,000 a bottle.

01:32:15   Nothing is worth $1,000 a bottle, except printer ink, I guess.

01:32:20   Precious printer ink.

01:32:22   John, I love you so much.

01:32:26   I cannot wait for June.