Season 3, Episode 8: Netflix (Part 1)

**David Rosenthal** (0:00)
Yep, it's so funny, all the reviews of the iPad, people were like, you can't hook up USB storage to the iPad. I'm like, I haven't used a USB thumb drive in like five years. I don't care.

**Ben Gilbert** (0:15)
My biggest complaint is the lack of scuzzy.

**David Rosenthal** (0:22)
That's a teaser quote right there.

**Ben Gilbert** (0:35)
welcome to Season 3, Episode 8 of Acquired, the show about technology, acquisitions, and IPOs. I'm Ben Gilbert.

**David Rosenthal** (0:43)
I'm David Rosenthal.

**Ben Gilbert** (0:45)
And we are your hosts. Today, we are talking about a company that somehow, somehow, David, we have not covered on the show yet, Netflix. And we're breaking this one into two parts. Today, we'll be covering the founding of the company up through the IPO and the waning years of their DVD business. And then next episode, we'll pick up at the takeoff of streaming and original content. So David, I could not believe this when diving in, that the Netflix IPO was 16 years ago and it was founded 21 years ago.

**David Rosenthal** (1:14)
Yeah, crazy. All these fang companies, they're getting old.

**Ben Gilbert** (1:19)
I know. I mean, I just, I did not realize that it was a pre.com bubble. In my head, it was sort of like Facebook era, not Google era or Amazon era.

**David Rosenthal** (1:27)
Well, this is why we have to do this as a two-parter, because when we first started researching this, we didn't think of it that way, but there really are two different companies here. There's Netflix pre-streaming and Netflix post-streaming. We're going to cover the pre-streaming today.

**Ben Gilbert** (1:44)
Well, listeners, we announced on the last episode that we had formally launched the Acquired Limited Partner Program, and we've been totally floored by how many of you have joined our LP community and are listening to the bonus show. So if you'd like to join us and get an extra episode in between every normal Acquired show, you can click the link in the show notes to join and support the show for $5 a month, or go to kimberlite.fm slash acquired. That's K-I-M-B-E-R-L-I-T-E dot F-M slash acquired. On last week's bonus show episode, we talked about the elusive concept of product market fit and the practices, structures, and mindsets that successful companies do differently before and after this stage. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (2:28)
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. 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** (2:53)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO Chase Lockmiller.

**David Rosenthal** (2:59)
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** (3:17)
Yep. Obviously, it's a huge benefit for the environment and for customers on cost 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** (3:33)
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 energy internet happens because they are doing everything in their clouds.

**Ben Gilbert** (3:49)
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 crusoecloud.com/acquired.
Or click the link in the show notes. All right, David, you're ready to take us in with the acquisition, I suppose the IPO history and facts.

**David Rosenthal** (4:13)
Well, there will be lots of acquisition offers back and forth as we go here, but...

**Ben Gilbert** (4:17)
There were, which I didn't know until I started reading. David and I both read this. There's a great book.

**David Rosenthal** (4:23)
By Gina Keating called Netflixed.

**Ben Gilbert** (4:26)
Netflixed.

**David Rosenthal** (4:27)
Yeah. This is really fun. When we were discussing what episode to do for this one, we were like, okay, we're getting kind of towards the end of season three. We want to do like a big important splashy episode. Let's do one of the fan companies, Netflix. I thought, Netflix seems pretty straightforward. Reed Hastings, very solid dude, for sure. But it doesn't seem controversial. This seems pretty straightforward. As always with these companies, once Acquired shows up on the scene, there is so much more to the story.