The NBA

**Ben Gilbert** (0:00)
By the way, I'm excited for this episode. I got this CO2 detector to tell me how many parts per million are in here when I close the door in the studio. I'm kind of scared of what it's going to get up to based on what my Peloton was the other day.

**David Rosenthal** (0:14)
That's awesome.

**Ben Gilbert** (0:15)
It may be the case that I actually get dumber toward the end of episodes, which obviously is bad for a podcast that ends in grading, but I want to see if that's the case.

**David Rosenthal** (0:23)
That's amazing.

**Ben Gilbert** (0:35)
Welcome to Season 7, Episode 4 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder of Pioneer Square Labs, a startup studio and venture firm in Seattle.

**David Rosenthal** (0:49)
And I'm David Rosenthal, and I am an independent angel investor and startup advisor based in San Francisco.

**Ben Gilbert** (0:55)
And we are your hosts. Today, our tech focus podcast takes a turn to cover a different powerhouse business, the National Basketball Association. And whether you have been following the playoffs in the COVID bubble at Disney's wide world of sports or not, there is no better time for an absolutely exhaustive deep dive on the history and strategy of the NBA than the week of the finals. So how did David and I get here? Well, our original plan was to cover the business of the Jordan brand. And halfway in, we realized that the story of Jordan is really a part of the Nike story, and we want to cover that another time. But as we dug in, we realized that there's actually a great story in the NBA itself, and it's one that's very relevant through an acquired lens. How it built itself from very much the underdog of major American sports started 50 years later than the others. And now it's the second most popular sport in the world globally after soccer, or as many of you call it football. And it has done so using a playbook that is very much in the acquired wheelhouse.

**David Rosenthal** (1:59)
Yeah, spoiler alert, it is quite appropriate that the NBA is playing in the Disney bubble right now because so much that we've covered about Disney on these shows over the years is going to echo here with the NBA.

**Ben Gilbert** (2:17)
Indeed. So with that said, today we are bringing you a story of a business at its inflection point, making huge bets for the future compared to other major sports leagues. The average team valuation has grown a staggering 6X in the last decade, which talk about an amazing investment return just on its own. And today we will try and understand all the factors that have made that so.

**David Rosenthal** (2:39)
Yeah, these teams used to trade for like 20 million bucks. And now I think every single NBA team is worth more than a billion dollars.

**Ben Gilbert** (2:46)
Yep, all triggered by Steve Ballmer's $2 billion purchase of the Clippers, what, five-ish years ago?

**David Rosenthal** (2:53)
Yeah, as covered on, was that like episode 34 of Acquired or something like that?

**Ben Gilbert** (2:57)
If you know the number, that is very impressive. But yes, quite, quite early. So as always, if you love Acquired and you want to hone your own craft of company building, you should join the community of Acquired Limited Partners. You'll get access to the LP show, The Bread and Butter of the LP Program, where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls, where we talk with all of you directly, and of course, our Book Club and our Zoom calls with the authors. So exciting announcement on that front. Our next Book Club will be reading Brotopia by Emily Chang of Bloomberg TV fame. And Emily has graciously agreed to join us and all of our LPs for a discussion on the book next month. So LPs, keep an eye out in your email for the announcement on that.

**David Rosenthal** (3:44)
So excited.

**Ben Gilbert** (3:45)
So if you aren't a limited partner, you can click the link in the show notes or go to acquired.fm slash LP and all new listeners get a seven day free trial. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (4:00)
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.