Episode 1: Pixar

**Ben Gilbert** (0:00)
This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (0:05)
So Crusoe, as listeners know by now, is a clean compute cloud provider, specifically built for AI workloads. NVIDIA is one of their major partners, and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (0:30)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (0:36)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. and uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (0:55)
Obviously, it's a huge benefit for the environment and for customers on costs, since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. And these lower energy costs get passed on to customers.

**David Rosenthal** (1:10)
It's super cool that they can put their data centers out there in these remote locations where quote unquote energy happens, as opposed to the other hyperscalers such as AWS and Google and Azure, who need to build their data centers close to major traffic hubs where the Internet happens because they are doing everything in their clouds.

**Ben Gilbert** (1:27)
Yep. If you, your company or your portfolio companies would like to use the lower cost and more performant infrastructure for your AI workloads, go to crusocloud.com/acquired. That's C-R-U-S-O-E cloud.com/acquired, or click the link in the show notes.

**David Rosenthal** (1:53)
Is it you? Is it you?

**Ben Gilbert** (2:01)
Welcome to the first episode of Acquired. I'm Ben Gilbert.

**David Rosenthal** (2:04)
I'm David Rosenthal.

**Ben Gilbert** (2:06)
And we're your hosts. We've recorded a pilot before this, but I'm not sure I'm comfortable letting that see the light of day. So this is our first real episode for the world to hear. We're going to start with a little background on ourselves. We'll talk about what the point of this podcast is. And then we'll get into the nuts and bolts of the first episode.
So I guess I'll start. I'm Ben. I'm the co-founder of Pioneer Square Labs here in Seattle, where we come up with companies and start them, prototype them, see if they work and spin them out.

**David Rosenthal** (2:40)
I'm David. I'm a principal here at Madrona Venture Group. We're an early stage venture capital firm in Seattle. We invest in technology startups that hopefully one day go on to be an acquirer or be an acquirer.

**Ben Gilbert** (2:57)
Yeah. So it's funny. This podcast was something David and I were thinking up well.
We were out drinking and...

**David Rosenthal** (3:06)
It was all a good podcast start.

**Ben Gilbert** (3:09)
And we kind of came to the conclusion of like, all right, let's try and make a list of companies that have been acquired where it was actually beneficial for the acquirer. And I think that there's so many examples of the opposite, of like, boy, that was a huge write down. That was embarrassing. Or my God, that was an interesting valuation for someone that had no revenue. We'll see if it ever pans out. And I think that it's worth going back and highlighting really interesting tech companies that were acquired and ended up being kind of a one plus one equals three situation where it was actually a good investment in the future.

**David Rosenthal** (3:46)
I agree. And also interesting, perhaps, what could companies operating either as startups or independently take from why or why not those companies worked. With that, should we hop into our first episode?

**Ben Gilbert** (4:01)
I think we should. So the company that we have chosen as the acquirer is Pixar. And the company that obviously acquired Pixar was Disney in 2006 And this isn't a typical straight, obvious technology acquisition.
There's a lot more to this, the storytelling aspect and the entertainment media production. It's really not a straight tech company when you look at it. And I think that's kind of what's going to make this a really interesting first episode.

**David Rosenthal** (4:33)
Totally. And Ben and I were chatting about this before we started recording. All of that is true, and yet I think you could view Pixar as like the first example of software eating the world. So we'll get more into it. So we're going to break this episode and potentially all future episodes into a couple sections. So first, we're going to talk about the acquisition history and the facts. Then Ben and I are each going to put the acquisition into a category. What do we think was kind of the key piece of it and why the rationale behind why the acquiring company purchased this acquisition target? Then we're going to talk about what might have happened had history been different. What if this acquisition hadn't gone through? And finally, we're going to assign each acquisition a grade. So let's start with the history and the facts. So January 2006, Pixar is a publicly traded company. Disney announces that they are acquiring it for $7.4 billion, estimated roughly 45 times estimated Pixar earnings for that year.