Interview: Hamilton Helmer & Chenyi Shi on How to Build an AWS-Like Second Business

**Hamilton Helmer** (0:00)
Oh, I'm sorry, before you keep going, is this going to be a question of is this a scale economy or network economy?

**Ben Gilbert** (0:05)
Yes.

**Hamilton Helmer** (0:06)
Oh, damn. Go for it, Chenyi, because I don't know the answer.

**David Rosenthal** (0:10)
We've stumped the experts.

**Ben Gilbert** (0:29)
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

**David Rosenthal** (0:37)
I'm David Rosenthal.

**Ben Gilbert** (0:38)
And we are your hosts.
Eight years ago, I pitched David on an idea for two different podcasts. One was on grading technology acquisitions that became Acquired. The other idea was to do episodes on companies that managed to create two separate multi-billion dollar innovations. Our hypothesis is that most companies have really one big founding insight and that the rest of the company's history is just drafting on that. Well, Hamilton Helmer and Chenyi Shi, friends of the show, coincidentally have been exploring literally exactly that idea, and they've been asking questions like what percent of the profits of the biggest companies in the world came from a second business line. They have a new framework, in addition to Seven Powers, to help founders answer the transforming question. If I were to expand the scope of what my company does, how should I go about it?

**David Rosenthal** (1:35)
And this is a particularly interesting time to do this episode with them, because I feel like a bunch of the companies we've covered recently on the show, this has been like a key part of the story, whether it's Amazon and AWS or LVMH and how all the businesses, LVMH itself, have been transformed over the years. And even particularly I'm thinking about Nintendo and our Nintendo series and going from like a supplier for the Yakuza to dominant video game console manufacturer.

**Ben Gilbert** (2:05)
Yep. And David, I can say, you and I have already recorded this interview with Chenyi and Hamilton and like we address exactly that. So listeners, this is a really fun one to do. And having Hamilton and Chenyi on, it just concretizes a lot of the very abstract thinking that we sort of banter about on the show, but never quite crystallize. They crystallize it for us. Yep. Well, if you want to go deeper, you can become an acquired LP to come closer into the acquired kitchen. We have bi-monthly zoom calls, and we just announced that we'll be asking our LPs to help us pick future episodes. So you can join at acquired.fm slash LP. Subscribe to our second show, ACQ2, formerly the LP Show, which is now public for expert interviews with founders and investors. Search ACQ2, no space in any podcast player. Join the Slack. There's now over 15,000 smart, thoughtful, kind members of the acquired community. At acquired.fm slash Slack, it's pretty cool. But I will say that only represents like 5-10% of you who listen to Acquired every month. So for the rest of you who haven't joined, come join us in the Slack. Without further ado, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only.

**David Rosenthal** (3:23)
Hamilton and Chenyi, welcome back for the third time to Acquired.

**Hamilton Helmer** (3:29)
Our pleasure. This all is great to be here.

**David Rosenthal** (3:32)
The Acquired audience has grown so much since the last time we did this together. We thought it might be fun first to humanize the seven powers a little bit, and do a little background of what is this thing that we talk about on every Acquired episode, and how did the two of you come to be world experts in this?

**Hamilton Helmer** (3:49)
Yeah. Delighted to do that. As I've said, I think on other episodes, my understanding as an economist is that ground zero for economic vitality is the strength of the entrepreneurial sector. So there's a famous economist called Joseph Schumpeter who sort of posited that, and it was different than sort of normal economic theory at the time because it was very dynamic and not sort of mathematical. And so I believe that very strongly. And of course, Silicon Valley is a center for that. So the thing that really interested me was, can I contribute to that in any way? Is there anything that I can do that helps with that? And my discipline is sort of business strategy. And so there's a real question about, is there anything useful that business strategy can add to that sort of creative, dynamic effort of all these people?
And I'll cue it up with an example that I used to use in my class at Stanford sometimes, which is that if you can imagine me holding up two devices.