Episode 4: Bungie (with Xbox Co-Founder Ed Fries)

**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** (0:54)
Yeah. 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. Hey guys, it's Ben. The audio in today's show is a little degraded since we recorded from Skype, but we're super pumped about the show nonetheless. Bear with us and we'll get the kinks worked out for future shows.
Hello and welcome to episode four of Acquired, the podcast where we talk about startup acquisitions that actually went well. I'm Ben Gilbert.

**David Rosenthal** (2:19)
I'm David Rosenthal.

**Ben Gilbert** (2:21)
We're here today to talk about the Bungie acquisition by Microsoft.

**David Rosenthal** (2:26)
And most importantly, we have a very special surprise for everyone. This is our first episode with a special guest, and we have a really incredible one for you guys. Joining us today is Ed Fries, who was at Microsoft during the acquisition, and actually was the person at Microsoft whose group led the acquisition of Bungie. So we're very honored to have Ed with us today.
He was at Microsoft from 1986 to 2004, led the acquisition of Bungie, and among many others. And today, he's a prolific angel investor and startup advisor and board member in the game space and others in technology, which is how we got to know him. And we're totally honored to have Ed with us today.

**Ed Fries** (3:17)
Thanks.
I didn't realize that was your first guest. That's exciting.

**Ben Gilbert** (3:22)
Yeah, we try to keep that part secret.

**David Rosenthal** (3:26)
Now everybody knows.

**Ed Fries** (3:26)
You guys are all pros. I know.

**David Rosenthal** (3:28)
It's good.

**Ben Gilbert** (3:30)
David, you want to do the acquisition history and facts?

**David Rosenthal** (3:32)
Yeah.
So most people are probably familiar with Bungie, the creators of the video game franchise Halo. The company was founded in the early 90s by two undergrads at the University of Chicago, Alex Seropian and Jason Jones. They made a few games mostly for Mac actually during the 90s, including hits such as Minotaur, The Labyrinth of Crete and others. Then they had their first breakout success with a game called Marathon at the end of 1994, and then had a couple of successful sequels and other projects that came out of that. Ben, you have a fun personal history with.

**Ben Gilbert** (4:18)
Yeah. Actually, my dad was a reviewer for the Mac users of Delaware of Marathon in the real early days before it came out, and then as the trilogy unfolded, and he sent me some pictures last night, we actually have the collector's edition box set of the Marathon trilogy for Mac.

**David Rosenthal** (4:37)
Pretty cool.
That was Bungie for most of the 90s. Then in the late 90s, in 1999, they unveiled to great fanfare their next project after Marathon, which was a game that they were calling Halo. They actually unveiled it at a Mac World keynote in the summer of 99 and it was introduced by Steve Jobs himself. They continued working on it for another year, and then in the summer of 2000, there was a twist and Ed steps in.