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Episode 24 August 2, 2016 | 28min

How to Build the Ideal Tech-Media Conglomerate

Our co-founders break down Verizon's acquisition of Yahoo and discuss tech industry M&A.

Show Notes

Verizon just bought Yahoo, but what exactly did they get? This week, Paul Ford and Rich Ziade discuss the acquisition of the beleaguered Yahoo, and mull over the long games of companies like Verizon, Google, Facebook, and Apple. They also consider the failed tech acquisitions of old, how to build the ideal media and tech conglomerate, and finally address the way Paul pronounces “Yahoo.”

Paul: Rich, why are we here?

Rich: Well that’s a bigger question, isn’t it?

Paul: I think we’re here to record a podcast called Track Changes.

Rich: We sure are.

Paul: For Postlight. What’s Postlight?

Rich: Postlight is a, uh…

Paul: Proooduct stuuuudio.

Rich: Product studio that builds technology products. Designs and builds and ships stuff.

Paul: We do lots of events. You should check out our website, postlight.com.

Rich: Yes.

Paul: You should subscribe to our newsletter, trackchanges.medium.com. Oh you know what? We should also tell people who we are.

Rich: Rich Ziade.

Paul: Paul Ford. So you know, let’s talk — briefly, but let’s talk briefly about something kind of fascinating —

Rich: Yeah.

Paul: That just happened. Which is that for almost five billion dollars…

Rich: Yes.

Paul: Verizon, little company…

Rich: Yes.

Paul: Bought Yahoo. So let’s talk about what just —

Rich: Who did Verizon acquire?

Paul: [the way he always pronounces “Yahoo”]: Yeah-hoo.

Rich: Yah-hoo.

Paul: [deep voice] Yah-hoo.

Rich: Yeah, OK.

Paul: So…

Rich: Continue.

Paul: OK. Riddle me this: Verizon is what? What is Verizon?

Rich: Verizon is…mainly a mobile, actually television and…it’s a media distribution…company?

Paul: So it spins out from the old telephone company in the eighties, right?

Rich: Yep.

Paul: So it’s like a network company, really.

Rich: It’s a network company. Cellular service and television with Fios.

Paul: OK, so that’s the thing that it does.

Rich: Yes.

Paul: It has wires that connect people, and other things.

Rich: And the wireless network that connects people.

Paul: And the wireless network, and because it has those wires, it can put things through the wires that people might want to look at or listen to, including conversations with each other.

Rich: Yeah, I mean, it’s, it’s, we’re geeks, so we like to customize stuff. We know how to get junk out of our way. But there’s a lot of people who just take the default.

Paul: Right.

Rich: When they get that phone from…that Android phone from the Verizon storefront, uh…there’s stuff already on that phone.

Paul: And this has been something that’s been going on for a long time, I mean, they put software onto telephones…

Rich: It’s sort of the modern-day homepage.

Paul: Right.

Rich: It’s…

Paul: Right.

Rich: When you first load, and you open that phone, there’s going to be a couple of icons on there that you could probably get rid of if you were really tidy about things, but they’re gonna, they’re gonna be in front of you.

Paul: One of my favorite — I was with AT&T and they have an electronic wallet program, do you remember this at all?

Rich: No.

Paul: It was called “Isis.”

Rich: Oh boy.

Paul: Yeah. And so…

Rich: I-S-I-S.

Paul: Oh yeah.

Rich: OK.

Paul: It was just called Isis. Which is like having an app called Nazi Party that’s supposed to be used for a wallet. [laughter] And so they renamed that, I can’t remember what they called it, it’s like, you know, AT&T E-Wallet or something like that…

Rich: And that’s because it’s already pre-loaded and built in, and that’s a big, big, big advantage versus going to an app store and getting something and setting it up and all that.

Paul: The irony is it’s always such bad software, though. Like, you figure —

Rich: It is always terrible software.

Paul: And you’re desperate to erase it, and they make it really hard. Apple’s good at that, like you get the built-in Apple software’s kind of great?

Rich: It’s Apple…that’s its value prop, right?

Paul: You figure, you’re AT&T or you’re Verizon or whatever, you should be able to make some pretty good stuff.

Rich: It’s incredible. It’s really, usually, very Chrome-y and…just…

Paul: You know what it reminds —

Rich: Messy look…ah, it’s just…

Paul: You know what default Verizon, or default cell-phone company software reminds me of printer drivers? Or like, a scanner driver, where you get it and it’s, like, 680 MBs and all the window…

Rich: Windows…

Paul: The close button is in the middle of the screen instead of on the title bar and stuff like that.

Rich: Yeah. It’s a lot of customized stuff.

Paul: But the point being that these are network companies that run wires and do cellular things, but they’re in the software business. They might make their own switches or stuff, I don’t really know, but they’re in the, um, they distribute Android phones by Samsung or LG. They distribute iPhones. And they put their software on it in order to get more value out of their network.

Rich: You know we’re touching on something, by the way. I mean, I don’t know this for a fact, but I would bet it’s a fact that Apple won’t let them do it.

Paul: Yeah. Yeah yeah.

Rich: You can’t have a Verizon app pre-installed on an iPhone.

Paul: I can’t remember…

Rich: I think that’s true because I’ve never seen it.

Paul: I think you’re probably right. I think with Android the story is quite different.

Rich: Oh yeah.

Paul: Yeah.

Rich: It’s a free-for-all.

Paul: It’s sort of like Windows. You remember you used to — Windows used to come with, and this all ties in, it used to come with AOL…

Rich: Yeah.

Paul: Built in, right? They had a deal with AOL, Microsoft did. And it was hard as hell to erase that thing.

Rich: Yup. Yeah.

Paul: You’d start up your new Pentium 486…

Rich: And it was in there and it was…

Paul: Whatever.

Rich: Soldered into the screen.

Paul: I guess the 486, because the 486 Pentium came later.

Rich: OK, so Verizon acquires Yahoo, because, you know, that’s a great…

Paul: Well they already bought one big thing called AOL.

Rich: That’s right.

Paul: Which is interesting, too, like, Matt Turck, on Twitter, pointed it out, that this is a big New York City company, like, AOL is in the former John Wanamaker building, it’s actually very close to where we’re recording here, and a little bit south of us, Verizon is as New York City a company as you can get. It spun out of, or this area, it has a big office in Jersey, too, but it spun out of the old Bell system, which was also headquartered here.

Rich: Telephones. Systems.

Paul: Deep, deep roots.

Rich: Yeah.

Paul: In the city, and so.

Rich: For sure.

Paul: So we know what Verizon is, it’s a wiring company that connects people. What’s AOL?

Rich: AOL…I think the majority of AOL’s business today is still people who don’t notice the monthly fee on their bill.

Paul: The majority of their profit, right?

Rich: The majority of their profit is, I think…

Paul: At aol.com.

Rich: Yeah, is, um, people who are still subscribed to AOL, and it’s still $20 bucks a month. If you told them, “Hey, you really should cancel this,” they probably wouldn’t even feel it, if they cancelled it. But there’s still a lot of people who just keep paying that monthly bill.

Paul: The millions and millions of people.

Rich: Yeah.

Paul: OK, so that I actually —

Rich: Probably holding on to email addresses, I’m guessing?

Paul: Sure.

Rich: I don’t think anybody…I don’t think they even provide internet anymore. They used to be the internet provider.

Paul: So that makes, actually, a ton of sense for Verizon to buy that.

Rich: Yeah.

Paul: So that’s, that makes, like, hey they provide services, we’ll get you on the internet. We do all sorts of extra internet things like Fios. We can up-sell all those people.

Rich: You’ve got a…yeah. It’s a heck of a list.

Paul: But AOL does other stuff, too. It perceives itself also as a media company.

Rich: Yes.

Paul: And so they have properties, probably the best known is The Huffington Post.

Rich: Yup. They have content.

Paul: Another one’s TechCrunch.

Rich: A lot of content.

Paul: Right.

Rich: Yes.

Paul: And so the deal there is that you…you make the money, because you can’t charge people for web content. There are some exceptions, right, like TechCrunch has a thing called CrunchBase, that used to be open — they’ve now shut a lot of it down, and you can pay to access historical information —

Rich: Subscription, yeah.

Paul: About dot-coms. It’s quite expensive. So there are certain things that people will pay for in terms of content, but the real money in content is advertising.

Rich: Yes.

Paul: So the way I think about this, Rich, is that you basically are kind of selling rectangles. You have this big rectangle that people like to look at, on their phone or the browser or whatever. And you’re selling rectangles inside of that rectangle that other people can put ads in.

Rich: Yep.

Paul: And the thing is is we think about media as sort of being based on, like, print, right? It still feels that way, like a web page, right?

Rich: Yeah.

Paul: With banner ads and such.

Rich: Page.

Paul: Reality is all this stuff is really 100% software at this point.

Rich: Yes.

Paul: I could make my banner ad, it could be a word processor. I could run Microsoft Word in a banner ad.

Rich: Yeah.

Paul: We choose not to. Instead we choose to say, like, “Isn’t Mennen a good brand for…for your…smell.”

Rich: Well, they sniff out, “Rich is a male.”

Paul: That’s right.

Rich: And he lives in New York, and…

Paul: Good so far.

Rich: He tends to visit these types of sites.

Paul: Mmmm hmmm.

Rich: Around food and fashion and news and whatnot.

Paul: Non-incognito mode.

Rich: Non-incognito mode. And a particular profile is drawn, and a particular target set of advertising. The more targeted the advertising, the higher the value.

Paul: That’s right. So if I can tell you definitively that here’s a person that has $1.8 million in the bank, is looking for a car or whatever.

Rich: Yeah.

Paul: That’s the holy grail. So what a big media company does now is go out and gather those statistics and then kind of sell the rectangles, saying, “I swear to God — ”

Rich: Yup.

Paul: “If you tell me what to say, I can say it to the person that looks like this.”

Rich: Yes. And Verizon knows a whole lot about its subscribers?

Paul: Boy does it.

Rich: Cell phone subscribers. And it’s about to get — so it’s a synergy thing, I mean it makes sense. My mom called me.

Paul: Yeah. Because now we’re going to get to Yahoo.

Rich: They acquired Yahoo.

Paul: Your mom called you.

Rich: My mom called me.

Paul: This is not a normal subject for her.

Rich: No. My mom knows that I’m involved in a technology company. She called me up in a frenzy, on the street, and said, “Rich, Verizon” — which she understands is her phone.

Paul: Mmmm hmmm.

Rich: “Bought Yahoo” — which by the way, she still uses, because she keeps all her contacts in Yahoo Mail.

Paul: We should point out, too, your mom is not a heavy technology user.

Rich: Not at all.

Paul: She’s smart as a whip.

Rich: Very smart.

Paul: She’s very, very smart, like, she runs businesses, she knows what she’s doing, she’s…

Rich: Not tech-savvy at all.

Paul: But not a technical person, and kind of a little overwhelmed.

Rich: Kind of a little overwhelmed.

Paul: Take a minute and tell the story about the toolbars.

Rich: Yeah, so my mom’s computer is running real slow, and she says, “Could you come and take a look at my computer?” And I open Internet Explorer, and I find, I think six or seven toolbars stacked — like there’s not a lot of room left for the web page to render. It’s just toolbars. And she has the Capital One toolbar because she thinks that’s how she gets to her bank account. She doesn’t know…like, that just made it easy. And she likes them. That’s the irony of it. She doesn’t view them as annoying or distracting, she’s like, “Wow, this is really great. Look at all these things, that…”

First off, there’s a sense of achievement. She installed software, and so she…she likes that stuff. There was all kinds of, like, spyware and malware on her machine, because some of the toolbars I’d never heard of, and they were pretty shady looking?

Paul: Mmmm hmmm.

Rich: So there was that. So…she gets by, and she calls me up, and she says, “I heard that Verizon bought Yahoo. Is this good for you?” Was her question. Meaning, I’m involved in a technology company. This might be a big deal for Rich.

Paul: Mmmm hmmm.

Rich: So she called me and said, you know, “I don’t know what this means, but it sounds like big news.”

Paul: OK.

Rich: “It was this good news for you.” And I said, “Mom, it’s really not…I don’t think relevant to me in any, any sort of way.” And then she, she actually pieced it together, she’s like, “They’re gonna put Yahoo on my phone now.” Which actually is pretty much the plan. [laughter]

Paul: That is…I mean, the plan.

Rich: They’ll probably spend a lot of money doing analysis and whatnot about what they’re gonna do with this acquisition, but pretty much the plan is to put Yahoo on everybody’s phones.

Paul: She nailed it. I mean, that’s…so Yahoo has lots of stuff. Yahoo has Yahoo News.

Rich: Yup.

Paul: It has…

Rich: Sports.

Paul: Lots of sports. It has that —

Rich: Finance at Yahoo is one of the most, I think if not the most-visited finance site.

Paul: Crazy, yeah. They’ve still got that big homepage.

Rich: Yup.

Paul: And it also has Yahoo email.

Rich: And Yahoo Mail’s still the real…for a lot of people, it’s not a matter of, “Wow, this is a terrible interface.” That’s not how they’re thinking. They’re thinking, “This is where my email is. This is where it’s gonna be. This is where I have to be.”

Paul: Right.

Rich: My mom doesn’t have any notion of exporting her email to some other…provider.

Paul: Actually, my father has tried, like, five email services. He loves to try different services. But it’s still Yahoo Mail.

Rich: Yeah. Yeah. And so…it’s worth noting that this is the Yahoo core assets. So their investments in other things is not part of this deal. Like, their Alibaba investment is waaaay more valuable.

Paul: And they have these patent portfolio and so on.

Rich: They have other assets and stuff, so this is a carve-out for Verizon.

Paul: That’s true. There’s billions of other dollars in Yahoo’s stuff?

Rich: Yeah.

Paul: There’s Yahoo Japan.

Rich: Yahoo Japan.

Paul: That they have a large investment in and so on.

Rich: Yeah.

Paul: But the core business that when people were talking about, “What is Marissa Mayer gonna change and do?” They were talking about this set of properties.

Rich: Yeah. This is kind of it. The game is kind of over. Like…

Paul: It’s now a holding company for a couple different assets, once you divest this stuff.

Rich: Yeah. The mission of making Yahoo relevant again in the face of Google and Facebook is pretty much done.

Paul: So you think about it: Verizon’s gonna adopt these properties. One of them is Tumblr.

Rich: Yeah. That’s interesting.

Paul: Some of them are gonna get sold off and go away.

Rich: Some will get sold off…yeah, I mean, they’re gonna probably optimize it for whatever their strategy is, etcetera, etcetera.

Paul: What would you do if I gave you Tumblr right now?

Rich: Wow, that’s a good question. Fix it?

Paul: What’s broken?

Rich: It’s busted in…I don’t know, it seems rickety, in terms of…the technology that’s underneath it. It’s slow, it’s kind of buggy…

Paul: “Random page” doesn’t really work.

Rich: “Random page” doesn’t really work. I think a lot of things…I feel like it’s dated, you know? Like, tech can get pretty brittle if you don’t…

Paul: So it’s not really serving its users. It’s not fast, it’s not easy to search.

Rich: Yeah.

Paul: The functionality that’s promised just doesn’t always land.

Rich: Yeah.

Paul: OK, so that’s… you would fix that, that’s the first thing you would do.

Rich: And I don’t know if they even took advantage of Tumblr. Did they ever get ads onto Tumblr? I don’t even know how…

Paul: Yeah, no, they did. There’s tons of ads on Tumblr now.

Rich: Oh OK, OK. I didn’t know that.

Paul: Yeah…

Rich: I don’t use Tumblr. I think that’s another thing. I don’t, my understanding is that the growth is flat.

Paul: I think Tumblr users know. But you actually do use Tumblr.

Rich: I do. I use it for a personal storage area, but it’s actually become unreliable, because I only use it to file away YouTube videos, which often get removed.

Paul: You’re not very engaged with the community.

Rich: I don’t even know what the notion of community is on Tumblr, so no. Nobody’s — I don’t share out and reblog and that whole mechanism is not a thing for me.

Paul: OK. So…

Rich: But yeah, I mean, that was a billion-dollar purchase. This is telling, by the way. They bought Tumblr for about $1.1 billion.

Paul: Mmmm hmmm.

Rich: And they sold all of Yahoo for $4 —

Paul: I think it was a little less. I think it was, like, $800 million, but it kind of went up. I don’t remember exactly. Anyway, yeah.

Rich: I think it was about a billion bucks.

Paul: OK.

Rich: And then, now they just sold all of Yahoo for $5 billion, so that sort of gives you perspective. Here’s another thing that can give you perspective: Yahoo turned down an offer from Microsoft in 2008 for $44 billion.

Paul: That’s $44 billion 2008 dollars! Which is even more.

Rich: [laughter] True. True.

Paul: That’s like…$49 billion.

Rich: That’s…it’s incredible, like, how you go through those kind of timelines and see the decisions that are made, but I guess…here we are.

Paul: We’ve all made decisions — you’ve made decisions like that. I’ve made decisions like that.

Rich: Yeah.

Paul: There’s a glittering —

Rich: I mean, it’s just hindsight, but whatever.

Paul: What I remember from that one in particular is Yahoo was like, “We’re not gonna go work for some stupid Microsoft.”

Rich: Yeah.

Paul: And when you look at it now, like, Microsoft has actually become, essentially, a very attractive company again, in a lot of ways that it didn’t used to be. Like the thing that Microsoft was turning up its nose at has changed quite a bit, at least in terms of PR and optics.

Rich: Yes.

Paul: And the community and culture that Microsoft has around shipping software, releasing things open source, like, at some level, Microsoft, which just bought LinkedIn, which is terrifying, almost feels like it would be better as an adoptive home for a Tumblr.

Rich: Probably.

Paul: Because it seems to care more about community…

Rich: Probably.

Paul: Here’s the thing that’s interesting, right, like, Verizon does not have a great sense of consumers. Like, it’s hard to get service and to get help from Verizon. It’s a…

Rich: No.

Paul: It’s a tense relationship.

Rich: Yeah. Community is an alien notion to a Verizon.

Paul: And what’s funny is that like, Microsoft’s kind of getting its act together, Google….a little tricky with Google Plus, but certainly things like Gmail and so on are incredibly effective.

Rich: Yeah.

Paul: Facebook and Twitter are just…great at it.

Rich: Another interesting tidbit: Yahoo tried to buy a very, very young Facebook for a billion dollars.

Paul: Right.

Rich: Which was turned down.

Paul: Right.

Rich: Way back when.

Paul: I mean, it’s interesting just to see…you don’t even have to play it out, it’s just everybody kind of knows what’s going on.

Rich: Yeah.

Paul: Yahoo was like, “Oh yeah, that looks real. We’ve gotta get in on that and…let’s spend a billion dollars.”

Rich: Yeah. That’s right.

Paul: And I think at one point MTV tried to buy Facebook, too. For a billion dollars. That was like a different…

Rich: Yeah.

Paul: Entity.

Rich: They just saw…

Paul: They see that spike and they’re like, “OK, get in there.”

Rich: And now it’s over. That’s it.

Paul: So Yahoo, what they did is they took the part of Yahoo that you would call a “media property,” Yahoo. Everyone made fun of me because I can’t — apparently I can’t pronounce “Yah-hoo.”

Rich: It’s…you would think you’re from South Dakota.

Paul: I think it’s a Pennsylvania thing. It’s like, like I say “war-ter.”

Rich: I think it’s a Pennsylvania thing.

Paul: I’ve always, I mean, I’ve been saying it for 22 years.

Rich: What’s funny about this acquisition is it has this sort of whiff of being kind of predatory? This is a company that’s struggling.

Paul: Well and there were five people bidding, I mean there were five organizations bidding for it, like —

Rich: Yeah, it was a bidding process.

Paul: Yeah.

Rich: You got to wonder if, like, 20 years from now, Sprint will buy Google, because Google is dying because something else showed up.

Paul: Well, or Google will buy Sprint, right? Like, those two are weird, because Google’s trying to build out the network and infrastructure —

Rich: Yeah, distribution.

Paul: But its core remains that sort of search plus advertising product that’s most of its revenue. And so like, this is a fundamental question, right? The question about Yahoo is like, is this a media company or a technology company? And then gets bought by a network company.

Rich: Right.

Paul: You know, you see Google and Facebook are both trying to actually create enormous amounts of internet infrastructure, like they’re gonna fly drones with solar panels in order to get people wifi.

Rich: They want to provide the information.

Paul: Because they’re worried about not controlling the network.

Rich: Sure.

Paul: That’s a risk for them over a 20-, 30-year period.

Rich: Yep.

Paul: And they’re looking at companies like, with enormous market caps, like I think Verizon’s a $240-billion company, so it’s not as big as Google or Apple, but it’s also as close to them as you can get.

Rich: Yes.

Paul: It’s an enormous —

Rich: And they own dis — I mean, they are the channel.

Paul: That’s right. Literally most of my Google experience comes through T-Mobile when I’m on the bus.

Rich: Yep.

Paul: Right, like, the same is true, I watch Netflix, it’s either on wifi which come through Optimum.

Rich: Yeah.

Paul: Or it’s through T-Mobile. So they are the gatekeepers.

Rich: Yeah. You know, when I look at, sort of the reverse happened, when you saw content start to seep out of the cable box and onto the internet, you could see a very real threat towards the monopoly of cable.

Paul: Yeah.

Rich: Cable television. And then you see an acquisition like Comcast, which is, I think, if not the biggest cable provider in the country, one of the biggest.

Paul: Right.

Rich: Acquiring a content provider, like NBC.

Paul: Right.

Rich: Which is essentially saying, “Listen: so what I’ve got the channel. If I’m about to get, you know, bypassed entirely, NBC’s gonna sell its content for $5 a month, or $10 a month, like, I’m flat-footed.”

Paul: Right. I’ve gotta get in there.

Rich: So they just went right in and got the content. They just went in and sort of closed the loop, effectively.

Paul: Well I think if you’re a giant company, you make defensive moves like that.

Rich: You have to. At that size?

Paul: There’s a conversation — yeah, I mean, there’s a conversation for us to have about how Samsung is…working on its own, uh, mapping platform.

Rich: Yeah.

Paul: And you know there’s another good example here, which is that Time Warner owns HBO.

Rich: Yeah.

Paul: Right, so here you have this giant sort of platform entertainment conglomerate, and they have the hottest content producer in the world.

Rich: Right.

Paul: And no one —

Rich: Key.

Paul: Yeah.

Rich: Because eventually I think they know that HBO — which one is it, there’s Go and Now, I think it’s Now, let’s you…you can now get HBO on your computer and your devices without cable.

Paul: Yeah, there’s some —

Rich: You can pay directly to HBO, which is…a big deal.

Paul: There’s some weird statement got triggered in the spreadsheet, and they were like, “OK, finally.” Like, everybody knew that there was customer demand for that.

Rich: Yeah.

Paul: And it just sort of got to a point where they were like, “OK, it can really work now. It’s gonna work OK.”

Rich: I’m almost there. I watch five or six channels on cable, and if I can figure that out, I can, you know, I pay a lot, I pay $100 and something dollar a month for cable.

Paul: You like, you like football, though.

Rich: I do. I do.

Paul: Yeah, you like sports. If you like sports, I think you’re pretty…kind of, caught up in cable for a while.

Rich: Maybe. I mean, I think the NFL will eventually make their product available…it’s such a massive relationship. I don’t know. Who knows. You’re right.

Paul: That’s the thing. That’s the — well, I mean, I think, if you’re into a specific college team, you can often buy access to that college team.

Rich: Yeah.

Paul: Like if you’re a UNC fan, you can see those games —

Rich: I researched HD antennas?

Paul: Oh yeah!

Rich: And it’s a weird thing…

Paul: We have one.

Rich: The whole thing is —

Paul: We have one. We cut the cord. Because we don’t…

Rich: It works…

Paul: We’re not, it’s fine, it broke after, like, a month. We got a bad one, it’s from RCA, but…

Rich: RCA.

Paul: Yeah, no, we did have to, like, my wife would go up and reposition it from time to time to, like, get an episode to come in. She has a few things, like the Oscars and stuff like that that she won’t miss.

Rich: Yeah.

Paul: I don’t miss anything, because actually the really boring stuff that I tend to like, like the political conventions, are now getting covered by YouTube.

Rich: Yeah.

Paul: I am a little bit worried about having cut the cord so much if there’s a big emergency in New York City.

Rich: Yeah. Well I’ll call you.

Paul: Good!

Rich: Don’t worry about it.

Paul: Just patch me in on your Slingbox?

Rich: Yeah. [laughter] I’ll bring you in. It’s funny, it’s distribution and content, the value, it’s 2 + 2 = 5 to a large extent, right? I mean, like, for distribution to be paranoid enough, or willing to capitalize on content that can come in….I mean, Yahoo isn’t golden content, by any means, but there’s a lot of value that is locked away there that…

Paul: But by the definition of golden content, it kind of is, right? Like it’s not hot or sexy in the way that we think of.

Rich: Yeah.

Paul: We’ve kind of come down hard on Marssia Mayer a lot, but she did this one thing: she set up a video product and hired some people to make new, experimental, kind of fun shows?

Rich: Yeah.

Paul: Some of them were great. There was one by Paul…Paul Feig, or F-eye-g, it’s the guy who did the new Ghostbusters?

Rich: Mmmm hmmm.

Paul: And a lot of the characters in the new Ghostbusters came out of this show. He did this show, it was like a sci-fi space show. We’ll put in the links…

Rich: Original for Yahoo?

Paul: It was great. It was actually just like a first-class dumb piece of TV. I loved it. I probably watched it twice.

Rich: I don’t even know about this.

Paul: No, of course you didn’t. Like, that part didn’t work, and the video player kept breaking, and it was all sorts of stuff. But the reality is like, they did make an effort to create genuinely first-class content. I mean, they went and hired Katie Couric.

Rich: Right. That was the big move.

Paul: But the problem, too, is like, the Yahoo News brand is just kind of associated with older people. They’ve hired some first-class journalists.

Rich: Yeah.

Paul: The thing is, you don’t get the sense that Verizon bought Yahoo because of its excellent former New York Times journalists, they brought it for the distribution and reach, in a more spreadsheet-y way.

Rich: Yeah.

Paul: Because they kind of have to. It’s how they see the world.

Rich: Yeah. I think that’s right.

Paul: And so, but we are seeing this pattern, right, which is like, you want to have control of the network, and then you have control of the content production, and then you want to have control over the kind of advertising and the media, the distribution of advertising as well.

Rich: Yeah.

Paul: And you want to be able to combine all of those things in a very complicated way, meaning that, like, I know who’s paying for what, I know what bandwidth people are using, I know all this stuff, I have all these secrets.

Rich: Yeah.

Paul: And then, like, like AT&T, I’m gonna jam my wallet app onto the phone, so people can make transactions.

Rich: Bring it together.

Paul: The entity that sees this most clearly is probably Apple, right? Like, everything that they do, they seem to be there earlier, even if it doesn’t hit. Like, Apple Wallet is not doing so well, or Apple Pay?

Rich: Yeah.

Paul: But at the same time, like, they’re just going, like, it’s got to be there. We’re gonna make it work.

Rich: Yeah. Yeah. Because their distribution is first-rate and massive and also the profile of the Apple user is higher income than the Android user, so they’re, they’re sitting on gold, right?

Paul: They are, except that they are not going for the network in the same way. And this has been a criticism, I’ve read this somewhere, I can’t remember where, but you know, people pointed out that, like, Facebook and Twitter and so on, like, they just use user data in order to create new products —

Rich: Yeah.

Paul: That people can then advertise on top of. And Apple, Apple doesn’t do that.

Rich: Not really.

Paul: And it’s one of their kind of promises to the consumer, that they’re gonna give you that respect?

Rich: Yeah, and you can see it, right? They sort of miss, that’s not their wheelhouse.

Paul: It’s not.

Rich: Their wheelhouse is great hardware.

Paul: And they’re still fantastically successful, but that is a real competitive threat to them, because they don’t have control over the wires.

Rich: Yep. That’s right.

Paul: So it’s…it’s tricky that way.

Rich: I’m just happy that two relatively cheesy companies bought one another, or came together. It’s fun.

Paul: I don’t know. As we keep talking about it…

Rich: They’re both horrible logos.

Paul: [knowing sigh]

Rich: It’s all ridiculous.

Paul: Yeah, the current Yahoo logo…it’s not good. But look, as we keep talking about it, I start to see more and more…grim intelligence in this decision.

Rich: Yeah.

Paul: I’m like, “Ugh.” Because now they have everything. They’re like, “Well, what if we need our own video platform?” Well, Yahoo’s got one. It’s not great, but we can dust it off.

Rich: Yeah. There’s a bunch of stuff in the bag.

Paul: Yeah.

Rich: Totally.

Paul: And then it’s like, could this entity, like, what else would it need to buy in order to be truly terrifying? If it bought Netflix, that would be truly terrifying.

Rich: Yes. Yes.

Paul: Ummmm, what else. What else is out there?

Rich: Hmmmm.

Paul: See, YouTube’s already locked away, like, the Google properties, the Facebook, the Twitter properties —

Rich: That’s the thing, those are the ones that could be really…

Paul: There’s very few freestanding entities. Vimeo would be one. They could pull that out of AIC.

Rich: Yeah…not impactful.

Paul: Well it doesn’t have that many…

Rich: Netflix is way more impactful.

Paul: Yeah.

Rich: Yeah. There’s not a lot. There’s not a lot out there to pick up and take.

Paul: No, there really isn’t. Things tend to find, like, their corporate home.

Rich: They get snatched up fast, right? Anything that seems to have any traction. Snapchat?

Paul: Yeah, that’s expensive, too. But yeah. Yeah, it’s true, because they don’t have a social network.

Rich: Yeah.

Paul: Everybody needs to get one of those. You need to be, you need to own the network, have a social network, have your own media, and have your own ad platform.

Rich: No, but at the same time, you can’t, the moment you wall off Snapchat for Verizon, people will give some sort of distinctive functionality for Verizon, it breaks.

Paul: Yeah, well they’re also just not good at that.

Rich: You can’t do it.

Paul: They’re bad at premium experiences.

Rich: No, yeah. By the way, Verizon, wherever you are, you’re in New York, you have a strong presence in New York. Postlight is a very, very thoughtful product studio that builds really first-rate experiences. [laughter]

Paul: Well this is the tricky thing for us. We run into this, right? We’re talking frankly, openly, and honestly about —

Rich: [email protected]

Paul: About these giant entities? It’s a little scary sometimes, because we’re kind of crypto-reliant on them. Like, if Verizon never calls us, because it won’t —

Rich: I don’t know…

Paul: It could. But if Verizon never calls us, we’re OK.

Rich: Yeah.

Paul: But at the same time, it’s like, well, Verizon has an enormous amount of influence over our lives.

Rich: Sure.

Paul: And I sort of feel like we should be OK with just…

Rich: Absolutely. There’s a lot of opportunity to do it better.

Paul: That’s right.

Rich: That’s all.

Paul: But we see that about ourselves, too.

Rich: Yeah.

Paul: Yeah.

Rich: That’s OK.

Paul: We all have a Verizon inside of ourselves that could give you better customer service.

Rich: That answers the phone.

Paul: That answers the phone. That doesn’t just transfer you to somebody.

Rich: So I think we should close this out with a congratulations.

Paul: Congratulations!

Rich: To…Yahoo, or as you call it, Ya — what do you say again? Say Yahoo.

Paul: I say Yeah-hoo.

Rich: [amazing Paul impersonation] Yey-hoo.

Paul: But what I really mean is, [the deepest of voices] Yah-hoo.

Rich: Right. And Verizon. Congrats to both companies, and may they be…happy with one another and so on.

Paul: I hope you guys have great metrics together.

Rich: [laughter]

Paul: All right, Rich. Look, let’s get people out of here. They’re busy. [email protected] is how you reach us.

Rich: Yes.

Paul: This is Track Changes, the official podcast of Postlight. We’re a product studio in New York City. My name is Paul Ford.

Rich: Rich Ziade. And please, you can subscribe to the podcast at, on iTunes, and we’re also available in other places.

Paul: That’s right, just go ahead, and also check out trackchanges.postlight.com for our daily newsletter.

Rich: Mmmm hmmmm.

Paul: Daily. We really appreciate our listeners.

Rich: We do. And our readers.

Paul: We love getting our, getting emails. And we actually welcome critical feedback. So…

Rich: Sort of.

Paul: Sort of, no, I mean, it takes a minute, it takes a minute.

Rich: It does.

Paul: But if you…

Rich: We come around.

Paul: Yeah, we listen to people. So get in touch.

Rich: Yeah. Have a great week, Paul.

Paul: Let’s have a really good week out there.

Rich: Let’s do it.

Paul: Bye, everybody!

Rich: Buh-bye.