Season 3, Episode 6: Behance (with Scott Belsky)

0:00 Mm-hmm. Welcome to Season 3, Episode 6 of Acquired, the show about technology, acquisitions, and IPOs. I'm Ben Gilbert, and we are your hosts. Today we are covering Adobe Systems 2012 acquisition of Behance. Since acquiring Behance five years ago, Adobe's market cap has 5X. to$130 billion. They've successfully moved all of their creative software from a box software model to a subscription service, and they have bought several companies to expand both their creative business and grow beyond it. Now we're super excited that we have with us today Scott Belski, the founder and CEO of Behance and Adobe's chief product officer. So welcome, Scott.

0:50 Thanks, guys. Really appreciate you coming on. No, of course. All right, so listeners, Scott is someone who has done many awesome things in the tech world. He's currently obviously chief product officer at Adobe, which acquired Behants. However, unlike what you might imagine, his path from founding Behance to the acquisition by Adobe uh was not a straight line, which we will get into, and especially to the position that he's in today. In addition to all of the above, he's a prolific angel investor, he has co-founded three companies, was a general partner at Benchmark, and is now a venture partner at Benchmark, and has written two books, the latest of which was The Messy Middle, which is a very apt title for the journey that we are about to discuss.

1:28 Indeed. Mm. If you are new to the show, you can check out the Slack at acquire dot Fm. Uh, it's the place where David, myself, and sixteen hundred of our favorite listeners discuss episodes right after we release them, along with uh hot takes and the biggest tech news of the day and and really just get to know the you, the listener and the community better. All right listeners. Now is a great time to talk about a new partner of ours here on Acquired, Lagora.

1:56 The agentic operating system that is redefining how the world's best legal teams work. Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do. operate with obsessive customer focus. They embedded inside a massive law firm.

2:28 For months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legor's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work. and do higher value work. And this means that the pie can grow even as each individual task takes less time. And they recently launched Lagora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

3:16 And Lagora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Lagora numbers essentially speak for themselves. When they have a head to head pilot with their top competitor, they win seventy percent of the time. Lagora now has over a hundred thousand lawyers on the platform from twelve hundred legal teams in fifty countries. And crazily, they went from one million

3:43 In about Eighteen months. Mm. truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client.

3:59 If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at Lagora.com/slash acquired. And just tell'em that Ben and David sent you. Well, Scott, we couldn't be more pumped to have you with us. This is a topic that's uh near and dear to my heart, and I think we'll get into this a lot in the the episode, but I uh I worked on Office for iPad at Microsoft right as we were sort of uh taking a a lead from Adobe and switching to uh Office 365 sort of cloud first subscription model. And it's really been amazing to watch the the transformation that you guys have gone through from seven hundred dollar box of of Photoshop to where you are today with Creative Cloud. It's been an adventure and uh and and really interesting for me to learn and observe this as well. When we came in to Adobe through the Behen's acquisition, this was late two thousand and twelve.

4:48 The company was just going through that transition at that point. I I think that there were a lot of folks internally that were still resistant to it. I think there was a lot of kind of a rude awakening as to what does this mean to actually start measuring monthly active users and have a a relationship with customers as opposed to selling box software and not necessarily knowing who was using it and how many people were using it.

5:11 It it was quite a whirlwind of a of an education for me. So hearing you talk now you know an incredible amount about the sort of design and product world and you're you're really deep on all this stuff. Looking at your resume, it didn't exactly start with you as a product designer. Take us back to the earliest days in your career. How did you get into this crazy world? Yeah, I mean it's funny. I mean, even when I talk to my designs who went to design school, they'll say that a lot of what they learned, they learned through apprenticeship on the job.

5:39 And I think that the field of product and product experience. is as much about psychology and empathy and and marketing and understanding how people think and grounding yourself with customers as it is about design principles. It's a burgeoning field in itself. I mean, it's kind of if you if you look at a computer interface 20 years ago, you'll just see how far we've actually come in terms of evolving customer experiences. But my background I've always been kind of entrepreneurial. I've always been into design. You know, I had I was one of those kids who had Photoshop at thirteen. When I went to college I was sort of

6:15 deciding between some of the uh science of earth systems, which is a major at Cornell economics, which is sort of a traditional business approach, and then and then design. There is an actual um a major in human ecology college at Cornell called Design and Environmental Analysis. And I actually couldn't make up my mind. So I started taking classes in all these different places. And I think I am technically a graduate of uh the general studies major, which is their way of saying I didn't do as much of anything as I needed to. That I did too much. Um then I left. I this is I graduated in two thousand two at a time where you Cut your teeth on Wall Street if you were interested in business. Um, and I guess I had a choice then of to go fully on the design path or to um You got a master's or something like that, or to go into business and I I chose to go into business and and have that experience at Goldman Sachs of all places.

7:05 Two years in a traditional finance job, hated it. Um had another opportunity there to join a team focused on leadership development and Really? internal um like management consulting basically. And it was fascinating. And I found myself again using Adobe Illustrator to make a leadership compass of how to sit how how leaders should make decisions, you know, using visual communication as a way to kind of organize information. And that was always a theme of interest for me. And then Behance was really inspired by um me wanting to bring my interest in business and design and the creative community all together. And a increasing

7:43 degree of frustration that I had. with the creative industries because I felt like all of my friends who were in the creative industry were disorganized, their careers were at the mercy of circumstance. They never got attribution for the work that they were doing. And a lot of them were always kind of being traded by headhunters, marked up as freelancers, you know, passing from agency to agency, and it just didn't make sense to me. These are the people that make our lives interesting. Like why Where their careers in this state.

8:10 That was the inspiration for Behants. You left Goldman and you went to HBS. Did you go into HBS thinking like already with this idea and thinking like I'm gonna work on the core of this while I'm in school or or did it come out? Yes. I went in, in fact I should have never gone to HBS if you think about the progression of my Path because I was working on Behance as a side idea.

8:30 I call them. When I left I had Basically four months before starting business school. And I was all in on Behants every day. I had already hired one full time designer to work with me, who became my co-founder, and we were on it. And I think I went to business school out of fear.

8:46 I went to business school because I was trying to hedge myself. It's an insurance policy. Exactly. Did did you end up graduating? I did. I did end up graduating. I think the PR value of not graduating would have been far better. We could have put it right on the back of the messy middle.

9:01 Yeah, HBS dropout. Damn it. All right. Anyways, but I but I I survived and actually, you know, you know, made some great friends in business school and did learn quite a bit and did an independent study my second year there, which basically meant that I was in New York the whole time. Working on your company. Yeah, working with a woman named Teresa Amaboue, who's a professor at HPS focus on the creative industries. So I tried to make the most of it. I bet there's a lot of our listeners out there considering, hey, maybe I'll dual track and try and go to business school while starting a company. Do you feel like that's advisable or do you feel like that's an insane thing to sign yourself up for? I don't know if I would say it's advisable. I feel like the benefits that I got were like fifty-one forty nine, you know, in terms of the benefit cost of of of enduring that. additional blow of responsibility as I was building my company. But at the same time, I mean

9:49 I did it because I wanted to have a bit of a hedge and I also In some ways was slow baking the concept. I was working with Matthias, my designer at the time, and we were just kind of we were making Progress. Um even while I was going to classes. So I don't know. I mean, could we have accelerated the history of B ants had I not done that?

10:11 Was it net positive or net negative? It's hard to tell. I just don't think I would advise people to do it because it wasn't You know, an out of the park obvious benefit. I'm super curious how being at HPS and taking this path played into the decision to bootstrap too, but First though, I have to ask What was the deal with the action journals? Was that like the original beginning of Behance? Was that something you did to to help bootstrap along the way? You guys go deep. I like this. Well, Behance

10:40 We started in two thousand and six, two thousand five, depending upon what you call starting it. And Um in our first product. By the way, the mission has never changed. Yeah.

10:53 But the um first product was a paper product called the Action Pad, and then the Action Journal and the Action Book. That were designed to help creatives be more organized. And we figured, you know, what better way to start our brand than a physical manifestation of what we were about? By the way, it was also a bootstrapping mechanism. So we actually bootstrapped our company for the first five years with very little of the capital that I save that Goldman. to get this company off the ground. you know, the action pads and journals were a big part of that, as long as well as these conferences and

11:24 The first book that I wrote, there were various ways we were trying to bootstrap the company, but it was always It was it was a somewhat medium agnostic but mission centric approach to building the Behants brand. Hm. Both you were getting awareness and distribution, if you will, for Behan's um, but also it's non delutive capital. That is true. And I think that is a big factor, you know, if we want to get into it, but I mean, we'll I know we'll get there, but with the acquisition A big part of the math was the fact that we had not really diluted ourselves much. We had raised one real round of third party capital.

11:58 five, six years into the business, um, which really was very, very um, you know, significant for us. Well it's interesting having a revenue stream that you don't think is gonna be your ultimate product to help bootstrap the company. I think it's a pattern that most people don't explore because when they're setting out to start a startup they often want to be venture backed right away and so they want to get right into the core business. But you know, it reminds me of one other business that sold something to make money along the way and that was that was Airbnb with the cereal boxes. Imagine if they were selling like airbeds or something that was actually like very aligned with raising awareness for their product and their community itself. You know, I do interview Joe Gebie, one of the co founders for the Messy Middle for the new book and I'm talking about sort of those early days. I mean they were

12:41 They went through some real fits and starts and they had multiple iterations and you know, the first two didn't really hit it like the third one did. Um the serial was like a It was also the like a cultural element of the team and how they operated and how they you know, work together. There was something um significant even though the serial wasn't necessarily related to the end product. But it was all about like kind of this

13:05 fun experience and community and that sort of thing. Yeah. So you're bootstrapping, you're selling action journals, you're doing conferences, uh, you wrote your first book, and then y you also had uh ninety-nine percent, right, which was happened where there was like the one percent, ninety nine percent thing, and then we had to uh change the name of the conference to the ninety nine U conference because ninety nine percent conference was suddenly attracting unwanted press.

13:39 Things you don't think will happen like turns along the way in your company. I know, I know. So you had uh all those are revenue streams that are, you know, helping you find the company in Bootstrap, but you have the core product, which is be ants and and, you know, uh crudely put, uh sort of, you know, LinkedIn for designers and creatives to showcase your portfolio online. How did that product evolve? Was that was that the core vision that you always started with? It was. We knew that we wanted to help organize the creative world at work. And of course we had some bootstrapping projects that we've talked about that helped define our brand and pay the bills, frankly. But Behance, we always imagined it being a global network. It was interesting. We had a we had one focus group in the history of Behance, and it was right in the beginning.

14:27 When we were doing these paper products in the conference. We had a group of people in our office from different creative fields, and we gave people, you know, everyone a bottle of wine and some cheese, and we basically said And what do you think of this idea of an online network for your creative work? And people said, Oh, like the last thing we need. Is another website for creative stuff. We have MySpace, we have

14:47 Deviant art. And we have Facebook, like why would we need this? And we were like, Oh, okay. Um, well, what are your problems right now? And then people just opened up, oh my goodness, well, my portfolio is always out of date. I never get attribution for my work, my images show up in all these random places. You know, everywhere I have to showcase my work and build a network is unprofessional. It's always like a playground and different fun images, but I I want to consider myself a business. Like these are like the types of things we heard from our customers. And

15:20 We realize wow, this is one of those moments where Our customers don't know what they need. What they do need is they need a better professional network to showcase their work. And so we made a few principles at that moment. For example, we never use the word creativity. In behance.

15:36 There's no word of inspiration or creativity because the purpose of the platform is the opposite. It's to help you organize the creativity you've already got. So there were certain things that came out of that. experience that helps build the narrative and direction of our brand, but we also realized that um, you know, we had to build something that people didn't necessarily know they needed. Mm-hmm. And and of course LinkedIn was already around at this point. Were you looking at that directly and seeing like

16:01 This Product is clearly working, but is not working for this community or Or did it evolve kind of more organically side by side? Yeah. I mean we, you know, LinkedIn was always a sort of resume type, you know, text site. It was never visual. And um, and even when they started launching the visual tool for showing your Any sort of images, it was powered by Behants, actually. So we had a partnership with them when we started to make that turn. Yeah. So It's just not how creatives want to showcase

16:28 their work. They don't wanna it it doesn't matter where I worked, it matters what I did. And I wanna have the content speak for itself rather than you look at my profile image, you know? Um so there were some real differences that we felt dramatically um differentiated Beehance from other other products that were out there like LinkedIn.

16:47 I would imagine it's not a good thing. Most of the people on Behance, they're creators, they're freelancers. They don't have a traditional job or a resume in the same way that would lend itself to a Site right LinkedIn, right? It's all about the work, not about

17:02 you know, your history. Yeah. It doesn't matter, I mean, what agency you worked at, that mat it matters um what what actual work you you created and what's in your portfolio. So portfolio first was always a big principle of ours. Mm-hmm. All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done.

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18:59 That Ben and David sent you. One way to look at behance is LinkedI attacks the meaty part of the market of showing off stuff you've done to get uh an interesting job. And it misses a lot of things along the way, including the creative work. Do you think there's other verticals that there's sort of can be a beehance for this field that that are still to be built? Well, I do think that there's a void of attribution, generally speaking.

19:25 In the world. Uh, I don't think that the actual people who do work get sufficient credit. I think it's usually the companies or agencies that employ them. I mean, even look at a website. Why isn't there a extension in every browser that shows you the actual development team that

19:40 did the work to power the product that you're using so that they get attribution For their work and therefore get career opportunity based on the quality. of their work. I think it's also fascinating that In some ways every portfolio is a lie because

19:56 If I have a portfolio of work I have images that were retouched by a certain Retoucher who, you know, and the images were shot by a photographer, and the font that I was using was designed by a foundry that actually hired someone to do the actual work. I mean, there's this attribution graph that just doesn't exist across so many parts of our lives. I've always hoped that the internet would help bring some of that to the surface. Yeah, it's interesting. It's reminding me of um a couple episodes ago we had Kara Sweater on to tell the story of Recode, and you know, kind of a big point she made in it.

20:24 Theme there was that like Yeah in the Print. world of media. It's about the Wall Street Journal. It's about the New York Times. It's about the Washington Post. It's the brand of the publication. But

20:36 You know, once the internet happened and and she was a big part of making that happen for tech blogging specifically, the journalists became the stars, you know? And all of a sudden you know Kara, you know Walt, you know. Uh well I guess people always knew Walt in the personal journal. But you can all of a sudden, you know, have a relationship with the person who wrote the piece, not just The piece itself. Yeah, I think that that's

21:00 That's true. I mean that's the unbundling in some ways of talent, whether it's in journalism or anywhere else. And You know, that's an opportunity and you know, that's what we sort of saw in the creative industry and continue to work On to this day. I mean, if you really want to figure out who did what the best way to do it is to root that back to the actual creative tools that they use because that's the source of truth for who's doing what.

21:20 How did you start to find the business model for The core B hands. Product. It's it's not super obvious, uh uh from the get go, right? And and attaching to that, how did you know it was working and when was that aha moment when it sort of started working? And of course, I'm sure there were a bunch of little ones.

21:36 Furby hence. The greatest reward we received in the earlier days before we had a real business moving along was just seeing people from around the world showcase their work. being awed and humbled by the work, as well as wondering like how the heck do they find us. And realizing that the best way that Behance was growing was the quality of work and professional that was in the product. And then having that spread.

21:59 Obviously there were growth milestones that we always had that we were hoping to meet, and there were certain moments when we just Did things to the product that just increased the growth by a step function. Those were always magic moments for us. In terms of the business There were different mile markers of the business quote unquote working. The first was

22:18 Successfully bootstrapping ourselves. When we had the paper products it was a pretty robust business for a very small team. When the conference was selling out months in advance, and we realized, oh, we can increase the ticket prices and we can actually float the business by selling tickets way in advance. And that was another kind of big moment for us. And then with the website.

22:39 We started getting tons and tons of page views and this is back in like Two thousand and eight, two thousand and nine, when there were, you know, a lot of advertising opportunities. And so we were running actually running sponsored campaigns through the network as a way to um bootstrap the company as well. And that was a real revenue stream. And that was exciting because it was like wow, like we can actually You know, sign a six-figure deal with a brand because they all want to be associated with the creative world at work and have a business there. Although in the back of my mind, I always said I want to get the heck out of that business. I didn't I didn't love advertising and nor did I like the process of sales and advertising per se. But I would say that things really started to work when we started to have a premium product for our members. So we launched a product called ProSight, which is now a Adobe Portfolio. But that's like a

23:28 monthly portfolio um product that also it powers a portfolio in your own personal domain name, but keeps it in sync with the platform so that you can kind of have an incredibly customized personal portfolio that always has the same work as Behan, so other people can actually find your work. So that was like the first real product, and the job posting board was actually a pretty good business. So those are the things that We're like, Okay, this is growing month to month, it's scalable, we get it, it's right in the center of what we're doing. Five years in you raise capital from Union Square Ventures. Any time before that in the first four years that you were like, eh, maybe we should raise money, or was it uh you know, I'm curious if it was intentional to not go raise venture or if it was more like we just don't have a business that we feel like is fundable yet.

24:13 Yeah, well listen, I mean you can put your own money, get money from like, you know, a an uncle or something like that, but when you go to third party capital You have to have a degree of ambition for scale and potential exit in the future. I swear in the first five years, my co-founder Matthias, I never talked about an exit. I mean, honestly, it was like a lifestyle business. We were loving what we were doing. We love the autonomy. We sort of despised the whole venture capital ecosystem of companies just getting way ahead of their skis and

24:44 you know, spending resources they shouldn't be spending yet, and that sort of thing. And we just kinda liked having control over our own destiny. And so We just always were um very careful about what we were spending and who we were hiring. We were paying way below market wages, but we were distributing equity to our team. And so we had a very generous kind of equity approach because we wanted our team to be a team of owners. But five years in

25:07 What we found is that the network was growing at all on all cylinders. Uh, it was hard to actually keep the network up because we needed to build and invest in the infrastructure. And the people that we wanted to hire to do the greatest work of our lives To make this scale properly. We couldn't afford.

25:23 And so I actually started to feel like I was strangling my own team. And that was one of those as a leader signals to me, all right, like I should start thinking about raising capital. And It was just a small number of conversations. Union Square Ventures, you know, Jeff Bezos is one of our angels. Chris Dixon was one of our angels. A few other folks that I respected that I thought could add value. And the whole thing happened pretty quickly. And we raised money. I think it was like a thirty five A 30, 35 million dollar valuation. And this was our first kind of external round of funding because we had accomplished so much in that first five years. And usually, you know, usually in a seed round, you're raising at a five million dollar valuation.

26:02 And then you have a few subsequent rounds, and that further dilutes the team, but we were fortunate enough to really skip a lot of that. Yeah. So many entrepreneurs Think about valuations and that's what gets all the press. But like What you really need to think about is dilution because like whatever your valuation is along the way. Doesn't really matter. What matters is, you know, when you have a

26:25 quote unquote exit of whatever form. You know, how much do you and the team own of the company? So there's a section in the book at the end. Which you probably haven't gotten to yet, but it's called the final mile. And in that I I basically tear apart why so many people screw up the final mile of their venture. And I actually talk about some conversations with entrepreneurs going through acquisitions and the fact that you can do everything right for five to seven years and then the final mile happens and you think you're ready for it because of all the success you've had so far with what you've done to get there. But in fact it's a completely different playbook.

26:57 You know, and we went through that. And when you're doing the apples to apples comparisons of hey, do we get acquired now at X or do we wait three years With potentially two to three more rounds of funding and increase market risk and everything else and exit it. Why? And what you end up finding is it might be the same. I mean, I know. businesses that have been acquired for north of a billion. Who's

27:19 Founders. you know, received uh a fraction of businesses that I know that were acquired for two hundred million dollars. And it's um and yet the s the press celebrates a unicorn quote unquote exit. But at the end of the day, you know, that means nothing. Yep.

27:34 Just like you say, you know, every time you're you go out and you raise capital, like that's a minimum twenty percent hit to your cap table, often more. So you know, you raise Five rounds of funding. Well, you know, guess what? You sold, you know, not a hundred percent of your business, but twenty percent to the fifth. Like Well, that math is wrong too, but a lot. A a very, very large portion. Well more than a majority. But listen, I mean a lot of companies can't bootstrap and um and need to raise capital. And there's nothing wrong with raising capital. I think the question that you just have to ask yourself is

28:06 How do I play this for the lone game? How do I not raise so much of such a high valuation out of the gate? Yeah. I mean I have a few companies in my portfolio that are coming back now saying we need to raise more money and they really stretch themselves the first time around in terms of their valuation because of the fact that they were Stanford this or PhD is that or whatever. And they could get away with it in a you know lose funding environment. And guess what? Now they're gonna have to do a down round, which they're freaked out about because their employees are gonna be like, wait, you you're saying my equity is actually worth less than it was a year or two ago.

28:37 And investors are gonna be they're gonna smell blood and realize this isn't working. You know, and if had they just done like a sort of more level headed Easy round in the beginning, they would have been fine. One thing before we we move on on bootstrapping. So you said you were you were very generous with employees on equity. How do you communicate

28:57 uh when you're giving out equity in a business where you're you're not thinking about the exit. what the upside potential is or how how employees should think about that equity. Yeah, I mean for me it was pretty easy. It was the it was an L C still, so because we weren't thinking about an exit and these were These are compensatory units in an LLC, so

29:16 Theoretically, as we were profitable, every time we would distribute that profit to shareholders, it would go to everyone in the percentage of the company they owned. Wow. So you when you say you weren't thinking about an exit, you really weren't thinking about an exit. No, in the early stages I wasn't. You know, it I I think it was part of What kept us together in some ways, though, because we were all In it for

29:38 What we were building. When people came in to interview with us who were like, you know, there because you know they wanted to have like an exit, they wanted to have an IPO, they wanted this and that or whatever. They would have been interested in working with us. Right. You would have been like, Here's the LLC unit, and they would have been like Exactly. Back to like the messy middle, like in order to keep a team long together long enough to figure it out, which is by the way, I think the competitive advantage of most startups is just to stick together long enough to figure something out that they're completely naive about initially. True. And then apply like their modern sort of ways of working and skill sets and whatever else to solve a an ancient problem. But that's that's the the trick is just to keep people together. And I think there's unique ways you can structure a team and compensate people and

30:22 develop a culture in order to uh transcend uh you know the odds. All right, so going back to you know, May of twenty twelve, you you decide, hey, we're gonna pour gas on, we're gonna go uh raise what five million somewhere in there? We raised five and a half million dollars. Five and a half million, uh, thirty to thirty five million dollar valuation, you really start pouring the gas on, you're not the only one thinking about this. You know, that we're starting to see a little bit the rise of of dribble and there's uh people are starting to pay attention that hey, every single startup needs uh design from the very beginning. It's not just polish, it's really an integral part of of every product. We start seeing all consumer products get beautiful and all uh a lot of enterprise products get a consumer like level of polish.

31:04 How did you think about Behance in the market and and really the competitive uh landscape? You know, there were a lot of them over the years, right? There was a one called Crop, there was Coraflot, there was Deviant Art, there were so many different Um competitors over the years, you know, many of which dissipated, some of which sort of stayed small in niche. And we had some interesting lessons along the way. You know, I talk in the book about dribble a little bit and how It it at first caused us to kinda question if we had it all wrong. I mean Dribbble was encouraging designers to throw in these

31:34 four hundred by four hundred pixel snapshots. of um of their work. And the result of that is that you can make anything look good. You can just find like a really nice drop shadow or a little nice little piece of your edge of your design and put it in. And people be like, oh my God, that's amazing. And yet we would look at these people's portfolios on B hands, and many of them were like, wow, that's actually not good work. Um It has a nice drop shadow at the corner, but otherwise it's not. And we we realize that the you know the real The real measure of a designer's portfolio is seeing the project in the context of the goal and the product, like everything around it, like how you bring it all together. That's like the the masterful nature of a great designer is how to integrate everything.

32:15 and be seamless and simplify Yet it's harder to do that. And so here we have this conundrum where it was much easier to engage and contribute content on dribble and get feedback. And so that was like a me a better social dynamic. Yet we also believe in the principles of behance as a way to showcase your work and to get opportunity based on the quality of your work. And so we actually Had some deviations. You know, we built a a snapshot sharing tool in Behants. That

32:41 We did out of out of the competitive thread of dribble to some degree, and then we realized After launching it. That this wasn't us. And we ended up killing it. And that sounds easy, yet imagine like going through a year of building a whole new dimension of your product, launching it, realizing it's splintering the message of what your product's really about, and then having to actually kill it. It's like, oh my goodness.

33:03 What a what a lesson. I think you you talked about this a bit on uh on the Tim Fair show and it was super cool, like You know, one of the startup platitudes, right, is uh that like, you know, most startups die of um indigestion versus starvation, right? And like you should stay focused on your, you know, your customers, not your competition, and don't worry about all that. And you can that can lead you to raise money and do stupid things. But like That's so hard to do in practice, and I mean So many companies I've been involved with, you know, the same thing. You have direct competitors, they do something, and then you have to react to that. I mean this is what I hate about best practices though, because look at Instagram

33:37 copying a lot of the best practices of Snapchat. That was the best thing they ever did. Totally. How did you get conviction that you know you'd headed down this path as a competitive response that like Wait a minute, that really wasn't the right thing and then walk it back. Well, just stepping back for a moment, like the volatility of the middle of a bit of a venture or startup, right? And actually one of the things that really compelled me to write this book was the realization that we are not at our best when things are going really well, because we falsely attribute the things that we did to what worked. And we also start to have an ego, oh my God, we're winning. And then you start to stop paying attention, you stop being paranoid. You're also not your best when things are going the worst, obviously, because you're making decisions out of fear.

34:19 And I would say that when we had the rise of remember it was right after we raised our round of financing. And uh I got a call from Albert, who was on my board at USV, who was like What do you think of Dribbble? Like everyone's starting to talk about Dribble, and I was just like, Oh my God, you know, we just raise our money and now Now that's like

34:38 increased focus on this, you know, site for um UI designers and and we just I guess the lesson that I would learn here is that When you have principles for what you believe is best for your community and your product. The insights that you gain from competitors that are in line with your principles. Potentially you should do yourself.

34:59 I mean, that's how competition makes everyone better. But when you see competitors doing things that are not in line with your principles, but seem to be working. You have to really determine whether you should Change your principles or stick with it. what we did, you know, in in a bad way at certain times and a good way at other times is is is navigating that difference. And that was the tough lesson we learned with this sort of snapshot sharing tool on behind that we ended up killing.

35:24 Because Our our principle was That Nothing would be better than a source of truth for the work that people created and like a truthful way of showing. And um you know what? And that was the right call.

35:36 Because Behance, you know. you know, dwarfs dribble in terms of its reach and size now, even though Dribble actually still is a thriving ecosystem for a niche community of designers. And I think that there's actually a place for both. And most of our members are, you know, have a portfolio on or a a a page on Dribbble. And that's great. And when people actually ask me where they should put their work, I'm like, put it freaking everywhere. You want it everywhere and you'll see where it performs best and then spend your energy there. If you could go back and talk to yourself in the past at the moment where you're making that decision, hey, we're gonna fork off a piece of the team and start building this this competitive product.

36:10 Would you do it again? Was that lesson important, or would you save yourself the trouble? It's hard to Ever Regret. Lessons learned in the middle, right? Because I think they made me who I am. They gave me this point of view.

36:22 Hey, I wouldn't have had that chapter right in the book. And I had that experience. So but it it has taught me about for for a an approach for dealing with competitive pressure. Uh, which is channeling it for us to spend more energy and time on the things that adhere or are in line with our principles for the product. And when teams ask me now, you know, do I quit it or do I stick with it? It's always a question back to them of whether the conviction they have in the end state of what they're building is greater or less as a result of what they learned so far in the product.

36:55 And in the process. uh if the conviction is greater, if you are like, oh my gosh, even more than ever, I know the world's gonna be this way, stick with it regardless of who else is doing what and how hard it is and how hopeless you feel. Don't quit. However, if you're starting to compromise in that conviction a little bit, you're like, actually, you know, we've learned this and that, and this is actually not what we realize, and maybe the market isn't as big as we thought, or whatever. Then then quit and do something different. I mean, life is short. You have if you have a good team of people together, apply them towards an entirely different

37:25 Idea. my way of thinking about this is always like if you think about the totality of your You know, whatever you want to call it. You know, user growth, revenue Whatever is, you know, success in in your product. And you think about that.

37:40 as like a a curve over time. And just think about like what area under the curve, you know, have you already achieved? Like is the majority of the area under the the curve in the future? Or is it, you know, in the past. And this is a cool like way to focus that more on the customers and the market for the product. All right listeners.

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39:47 Let's go back to the the story. So in May of twenty twelve y you raised this money December the news breaks that you guys have sold the company to Adobe. How did that conversation start and when did it start? Well, it was always a relationship. We're getting into a fun area here of you know w how you kind of build ongoing relationships with potential acquirers, you know, in an appropriate way. We were never interested in selling our business in the first few conversations we had over a four year period with Adobe.

40:17 And some of these conversations yielded potential partnerships that would um in one case we had a million dollar deal on the table to power a network for Adobe. And then eventually, even with lawyers in the room Uh, some executives at the time were like, wait a second, we can't do this. We can't have all of our customer data owned by a third party if we ever want to go into a subscription model. So it was an interesting, you know, four year um experience, getting to know the company and

40:44 Always sharing updates. You know, I I would share updates with various companies that we could have partnerships with um like Uh Autodesk, Adobe, LinkedIn, where I would connect with folks and send them, hey, FYI, here's the investor newsletter we sent out. Um, you know, just give you a sense of our progress, you know, love to find more ways to work together, things like that are important. And then when it came down to the fourth kind of year and of this relationship with Adobe in particular, the company had made the decision to go to subscription.

41:14 uh the person who led digital media at the time. A guy named David Woodwani. And now he's CEO of App Dynamics and led them through their acquisition. And he kinda came to me and said, We are all in on this and we actually believe that behind wouldn't necessarily just be a marketing channel anymore.

41:29 Or a cool kind of community for our customers, it would actually be at the center of Creative Cloud. This is how we're going to build an active. user base of customers is how how we're gonna know who's using what tool and how to make sure that And we build an enduring business that has high engagement. And um, that was super interesting to me because then suddenly I felt like wow. We could be at the core of a very exciting business. We could build our products into the actual tools people use to create.

41:58 And I love the culture of Adobe. I liked the people that I was talking to there. Everyone seemed to be there because they liked making things for creative people, just like us, as opposed to being there because they have the flashy headlines. And so it just felt like I was starting to check off all the boxes. I I felt like we had found a place where our team would be valued and placed at the center rather than treated as an appendage. I felt like it was a company that embraced new DNA and innovation as opposed to stifling it. Um, I felt like the mission was very aligned to help creatives be successful. And then from a standpoint of economics

42:32 When we started talking about that, I went through that apples to apples comparison that I we talked about earlier, where Guess we could have raised a series B and then a series C, and we could have maybe had a much larger exit, but then we would have had much greater dilution and greater market risk. And when I did all the math in terms of how many, you know, how much we'd have to increase the option pools and how many more people we'd have to hire and how much more dilution we would have and like everything else. I realized it was basically apples to apples, you know, didn't really

42:59 It kind of negated that part of the equation. So it was really about You know, where we wanted to work. That's so interesting to think about. Just modeling out what every existing shareholder's equity is, um, you know, diluted twenty, twenty five percent by another round of financing plus another ten, fifteen percent for an option pool, and you start looking at the hurdle you have to clear, I mean, that's i it gets serious. Per round you raise. You know, like you're saying, you gotta raise two rounds, double that. For the people involved, you realize that$150 million valuation or acquisition is maybe the same as a$600 million acquisition, or even more. What was helpful to me was to go through that exercise long enough to realize, all right, you know what? This is not about that.

43:38 At this point, this is not about the potential future return that's greater. I mean, this is really about what we want to do for our customers. What we want to do for our team, like how we want to work together and feel like we have a few more chapters ahead of us. What was USV and and your other venture investors, uh or people who had invested in the in the past round, uh, what was their reaction to all this? They were very supportive, um, because they

44:02 I mean US V is just one of the greatest firms in terms of how founder friendly they are and focused on doing what's best for for us and for our team. In fact, they went even further I wanted to make some changes on the cap chart of our company to incentivize some people who had recently joined us who had not had any vested equity. And who had who were about to maybe get another grant in six months or whatever, I wanted to synthetically kind of orientate the entire team.

44:27 to feel like they could get the outcome. In three years that they would have gotten had we say it a private company. Yeah. took some maneuvering of the cap chart and some generosity from our investors. And I went to Union score ventures and said, Listen, I'll take this out of my pocket.

44:41 I want you to take some out of your pocket. And we took, I forget what it was, maybe it was like$10 million or something off the top of the entire transaction. And I was able to use that. across our cap chart to Make certain people whole and give certain people equity or cash in the deal that would vast over a period of time that they would have otherwise not not received. And

45:01 They were super flexible, um, in that sense. And I remember, I mean, they got What a you know, a five X plus return or something like that. in in the twelve month period. So that's a pretty good IRR. Um, I don't think that there was any complaint on that front. I think that obviously they had had higher hopes for us to stick with it and you know, grow even further. But at the end of the day, I mean they wanted to do what was best for us and they understood our logic.

45:24 Let's talk about what Behance was able to do then kind of within Adobe. And as as you mentioned, being at the Core of I didn't realize that Adobe had already committed to go all in on subscription. Uh before they bought you guys.

45:39 This decision completely transforms Adobe and The proof is in the pudding over the last five years, the stock price is up five X. Talk a little bit about that. First of all It uh Center of that is

45:51 being able to ship updates and features and value to customers every month as opposed to once every eighteen months. So it is an absolute no brainer in terms of both the customer value, um, what customers are actually getting in this modern world where It's more than just a desktop product. It's software that works across different devices that you can pick up where you left off. It kind of opens up a whole world of possibility, you know, for how we can build the creative products of the future across new mediums and that sort of stuff. And so especially now with the roadmap, I mean goodness, like if we didn't have creative cloud to build on top of

46:27 I don't know what the future of creative would look like, but it would not be pretty. The software as a service business is also an easier business to understand from an investor perspective. It's it's really about conversion and retention. You know, it's not about these like crazy sales cycles every 18 months that could go any which way. So it creates more regularity in in in the business, which obviously investors have valued. Um so it's one of those Moments in the business that

46:53 I I I can't take credit for the decision. It happened before I joined, but it was a you know a great decision by the leadership to build a better business for Adobe as well as for investors, but more importantly, just build a a a platform as a service for customers where they could just get updates all the time every day. you know, wherever they are and be connected. And I think that that's the future. Before this transition, you know, I would imagine a huge, huge portion of Adobe's

47:20 Business was dependent on negotiations with large, you know users of Adobe software, you know, call you know, WPP or whatever agency, or you know, I'm sure there've hundreds of big users, even companies themselves around the world that would come up for renegotiation every couple of years and then it'd be like, Okay, well how much are you gonna what what's the price that, you know, you're gonna charge per seat for the next four years of, you know, the right to use Photoshop. Switching that over to

47:48 The subscription model, like Like you're saying, it's so much more predictable, but also lets you deliver a lot more value and reorient the company around that. The way I like to look at it is if you were starting a company today that was delivering any type of software experience to any group of people that wanted to collaborate, to work across devices. You of course would make it a service. I mean no one would

48:10 create desktop software anymore. easy to say hard to do for a big company that it had a traditional business model, right? And Yeah totally. I mean this is like Adobe's a at this point probably close to a th thirty plus year old company, right? Right. I love the idea of first of all, I'm very passionate building for creative people, and I just think that I mean think about our world today. Labor is being increasingly commoditized and automated. you know, the pricing of labor's going down, the rise of the machines, artificial intelligence, everything else that's happening.

48:42 Yet creativity is the y most uniquely human trait there is. I I believe that design should be taught as a form of literacy in school, just like you learn penmanship and how to write and read. And I think that it's one of the things, one of the few things that can just make everyone stand out at work. on social, you know, in any walk part of their life. I mean, at the end of the day, it's gonna be about creativity. Yeah, I always tell my teams we've got not only a br uh an opportunity, obviously, but we have a responsibility. We've got to figure this stuff out.

49:10 Um and usher in this next generation of creative products and I'm just grateful that Creative Cloud is a better business model because at the end of the day, we just have to get people to convert to tools and retain. Um it's very very straightforward. So better business model, and you've alluded a few times to sort of integrations and positioning Beehanse at the center. Can you talk about what that actually looks like from a product perspective, where it's evolved to today, and sort of how is the acquisition a one plus one equals three where Adobe's able to do things they weren't d able to do before and Behanse is able to be more than it could ever be? Yeah, I think it's on a number of fronts. I think it's a go to market level, it's a product level, and it's a people level. On the go to market side, obviously knowing, you know, having a reach of tons of people that are

49:50 Um, that are on behind showing their work, that have an Adobe ID that may be have may have been like pirating Photoshop for the last 10 years of their life. But um having a relationship with them so they can start to see the features of the new Photoshop and they can start to discover projects made with the new Photoshop. I mean, there's a obviously a creative graph we built that Adobe can leverage in so many ways on a go to market level. On a product level I'm starting to think about okay, you're in Lightroom. How do you publish all an album of photos as a project on Behands with one click? How do you show work in progress in Photoshop with one click?

50:23 So there were a lot of product integrations that were really central. But on the people level um, you know, and I'm somewhat biased on this front, but there are now people that were in our team N B hands that came in and December of two thousand and twelve.

50:37 That are now scattered throughout the company. We had basically no attrition for the first three years. And then even four or five years in A lot of our initial team is still here. Um because we like working with each other because

50:51 We continue to make an impact, the company continues to do very well. And uh and we still feel like we're in the early innings of some of the possibilities. So it's it's a good story in that sense. And you know, everyone talks about unicorns as like companies that are billion dollar valuation, blah, blah, blah, blah. I actually think one of the real unicorns in the world is like an acquisition that actually works. Where people stick together and they make continue to make an impact.'Cause you know, usually it's not a not as Not as nice of a story. It's funny. I mean, uh that's the reason we started this show. I was gonna say, when we first set out to do the show, Scott, uh in our first few episodes when nobody listened, the tagline for the show was A podcast about acquisitions that actually went well.

51:28 And then you realize you didn't have enough stories. Seriously. Yeah. Mm. I got one more, and this this one, um, kind of before moving on to your journey since the acquisition. Has the growth post acquisition of the Beehance product alone, not sort of considering all the advantages to Adobe, accelerated? And and has the product hockey sticked after the acquisition.

51:50 Yeah, I mean we were maybe a little over a million users. uh of the platform at acquisition. Now we're over fifteen million. And growing rapidly. So You know, I think that I attribute that both to

52:02 our positioning within Adobe as well as just the continued work of the Behand's team just building out a great product. There's such a still cr it's crazy, but still I feel like in the tech and startup world, like the power of distribution is not fulstood or, you know, underappreciated. As you were saying in describing, you know, Behansa's role within the creative cloud, like

52:23 All of a sudden if you've got a publish to you know to behance button in Photoshop, like that's the best form of distribution you could have ever asked for, right? Yes, in theory. What I would say in practice is that it's hard to integrate in the right way into tools that have been working in a certain way for twenty five years.

52:43 In some instances. So it I I agree with what you're saying, and actually that is true. However, what I've also learned is that A lot of the things we thought were the obvious Methods of distribution before the acquisition. We're not as Powerful as some of the ones we discovered after.

52:59 Let's uh dive in a little bit here to your your journey afterwards. So angel investing. How did you start doing angel investing? On the angel investing front Um, it you know, it sort of happened by accident in the sense that I was in the before the acquisition of Behans, and most of my stuff I did after, but before I was introduced to Ben Silberman when he was coming through New York to raise money for what became Pinterest, and he was building a site that was also on a grid. And he was also trying to appeal to designers or design minded folks.

53:31 And uh we just started having a lot of product brainstorms together and he asked me if I wanted to be a product advisor for the team. And I said yes. And then you said, Well, do you also want to participate in our seed round? And I thought, Well, I Don't have a lot of disposable income at this point to do so, but It would actually be fun to be a part of another journey and learn and And also he was a s he was a West Coast.

53:52 entrepreneur. I was an East Coast entrepreneur. He had I think a lot of a network and a lot of stuff I could learn from. So I did it. You know, and it was an incredible journey of being an advisor of his and then of course When Pinterest started to really work, I started to

54:08 Meet a number of other entrepreneurs Also, at around the same time, and this sounds a little crazy, but I was uh Doing a big partnership. Maybe it's like now two thousand

54:19 Ten, to his eleven, to his twelve, I forget which actual year, but a big partnership between Behanson Stumble Upon, which you'll remember was a great discovery website. for creative work online and Beehance is one of the number one sources of content for stumble upon and so I remember One fateful day where Garrett Camp, um who was the CEO of Symbol Pond, and also Yeah. pulled out, I kid you not, an action book. This is gonna go full circle, guys.

54:45 He pulled out an action book and He showed me a sketch in an action book of a little side project he was working on to get a car on demand on your phone. And and he was like, Scott, you wanna help me out with this? And I was like, Sure. Did you invest when it was a sketch? Um, I actually invest probably like six months after a sketch. So of course everyone we're we're talking about Uber here. Yeah, so this was the fateful moment as well early on. And of course I should have just stopped my angel investing at that point and uh called it a day, right? Yeah.

55:20 But really, I mean the opportunity to be involved as a product advisor and early investor in Pinterest and Uber um really led to a lot of different things, uh, obviously, and um have had a great a great experience being an investor, and I you know, one of the moments in my life after three years at Adobe, it had been a ten year journey of being Adobe and everything else. And I was thinking, like, what do I wanna do next? Do I wanna stay and, you know, and continue to build an Adobe and build products for creatives? Do I wanna uh do something else, start another company. And everyone I knew was like you have to be an investor. I mean look at look at your track record

55:53 You love doing this. Yeah, and we should say for for listeners who don't know about Scott as an angel investor, it's it's a ridiculous portfolio. I mean you've angel invested, so it in the very earliest stages of Pinterest, Uber, Warby Parker, Periscope, Carta, Ernest, Sweet Green. I mean the list goes on. You know, for me it's about the products and it's about the people, and I would love to say that I am um You know, I I can I can scale this and make it into a firm or whatever, I just don't think I can, nor should What I did go through though was this question of should I be a full time V C.

56:22 It was one of those moments in life where I learned that just because everyone says you should do something doesn't mean it's the right thing for you. I left Adobe and I left my you know, hung my spurs as a product Maker. And a team leader and builder. And and what year was this? So this is now two thousand and uh sixteen.

56:40 I took the opportunity to jump in and become a general partner at Benchmark, which is one of the Uh great VC firms I've always admired, and I, you know, have a tremendous amount of admiration for each of the partners. And I uh figure, okay, let's just jump in and learn from the best and uh and do what everyone says I should be doing. And what I learned pretty quickly, maybe even three weeks in. was that I really missed building and

57:02 jamming about product and spending time with teams Not based on the traction they were already getting, but because of the potential of their product and their team. And it was just in some ways a mismatch between what I loved doing and uh and what the real job was. And so going through the process with my partnership of figuring out, okay, am I just are these just like the blues of a new career transition? Should I just stick with it?

57:26 Um or should I really rethink this? You know, it was very difficult, but ultimately became a venture partner with the firm so I could kind of focus on on the teams that I wanted to focus on and and um and still have a relationship with the team, but have a little bit more freedom to figure out what I wanted to do full time. That brought me back to Adobe.

57:46 What was it about the venture job?'Cause ostensibly from the outside, and Dave and I'll laugh a little bit about this being a little bit more tied up in the mechanics, but What is it about the job of being a general partner at a venture capital firm that takes you away from spending time with the founders and obsessing over their products with them. And you think about it as a as a venture capitalist You are trying to see and network with as many different teams as possible.

58:13 And at a top firm, you're trying to make sure that anyone that's really getting traction, any product that's really working, that you're ahead of it. Which basically means that any additional minute spent with a team that hasn't figured it out yet is in some ways a wasted minute. That's what I love doing. So benchmark being just a top, top, unbelievable series A firm, you you sort of had the best job at one of the best firms to the extent you wanted to do venture, like you had it. You had it completely made. Do you think that going earlier and and if you had joined a or or started a fantastic seed firm where the job was really more about sort of working with maybe pre traction or companies just as they found traction that the the job of being a full time investor would have been one that you you enjoyed more.

58:57 You know, I don't know. I I think um Like I knew it wasn't a fit. My partners knew it is just you know, it was Being that mode of just trying to make sure I find the transactions of traction and really trying to focus on the stuff that was really already working. Would would that have been different at a seed fund? Potentially. I what I kind of come back to now, though, is I think I have my best of both worlds right now because

59:18 I can continue to work with with benchmark in this capacity, but I have a full time job building teams and building products that I care about. And then my investing that I do, I get to do on my own. You know, all the seed investing that I do now, it's A one to one relationship between me and the founder and their product. And uh, I can spend my energy and time where I wanna go. I don't feel responsible for LP capital. So if I feel like there's nothing interesting for me to invest in for a period of time, I can just do that. I have no pressure. And uh and to me that's sort of a happy medium. What really struck me

59:48 When you were talking about you're angel investing and and you know meeting meeting Bennett Pinterest and and Garrett Newber Is those Conversations came out of like a business relationship. And then as you were talking about, you know, being a full time investor,

1:00:04 is super different. Like, you know, when you're an angel investor, when you're meeting companies in a business context, like you're working together on problems. when you're a V C, you know, you're out there, as you say, you know, you're meeting companies. Yeah. You are their problem, you know. You're showing up and trying to invest in them. It's a completely different uh approach. Yeah, it is. And and um but it feels natural to me. And you know what I advise everyone in their career is to find like the motions that feel natural to them and then do them. It doesn't matter whether they don't confine themselves to a you know, standard job description or the way things are done. I'm

1:00:38 proud of the portfolio I'm building on the seed side. I think it's One of the best, if I say so myself, and I do it my own way. And I like the fact that I have a day job where I get to work with designers and product makers. It makes keeps me on my toes. It You know, it it un it unleashes a part of me that I love exploring the most. And You know, and this book was a way of Just challenging myself to

1:00:58 share a lot of the things that I've learned and and also in the process interview people and like get get advice myself. Um, you know, I learn probably more in the process of writing the messy middle. Than I uh ever expected. Well, David and I can certainly uh uh agree with you on uh I mean, in in doing the show, I I think that we've absolutely learned the most from the people that we've gotten to have on and and research with. Yeah, so let's jump to that. So You come back to Adobe as chief product officer and and start working on the book. You know, how did uh both of those things happen? Well, the book was always an ongoing project, of course, and you know, and during my time

1:01:33 Um, before coming back to Adobe, I had more time to really focus on pulling it together. But coming back to Adobe was really this incredible homecoming. I was very excited about kind of this next generation of creative products. I feel like creative cloud is at this transition where products can become services, where they can start to work in different ways. You can it can become more collaborative across different services. Like I just think that that's

1:01:55 Kind of the moment. of the of the product right now. And I to me, like the opportunity to be involved with that inflection and to really help the teams get it right was really, really exciting to me. And I also just wanted to kind of get back into my zone where I could be doing the different things that collectively round out, you know, my my interests.

1:02:12 So it was a relatively easy decision, actually, even though a lot of people were like, You're doing what? You're going back where? Um It made a lot of sense. It made a lot of sense to me. A lot of my team is also still there. And I feel like some of my DNA is also in the company through the Behants acquisition. So it felt pretty natural. And and I told them, Hey, listen, I'm gonna continue working in this capacity with Benchmark and Benchmark was fine with it and Adobe was fine with it. And and also I explained that, you know, I have this book project that I'm gonna have to put some effort into to to get wrapped up and out there. And um and I think that You know, to to Adobe's credit, um, the the team my leadership team has been very, very supportive. I'm curious, I d I didn't ask this. Did you move out to the West Coast and then move back to New York or did you uh were you in New York the whole time? Twice. I know I've I've I've moved back and forth twice over the last five years. Um so it's uh been a little bit volatile. But right now I spend my time on both coasts. So we have a place

1:03:03 in San Francisco and in New York, which is really cool to be able to Say, Hey, I can make the most of both of these interesting cities. For a company like Adobe, that makes a lot of sense, right? I mean, like it's a software company at heart and it's, you know, been one of the Iconic, you know, Silicon Valley companies, you know, going back to the eighties. And yet Your customers are creatives, you know, and uh

1:03:24 The creative capital, at least of America, is, you know, New York. That makes a lot of sense. There's a bit of a renaissance in the company right now where A lot of new ideas are coming in. Yeah, people that are thinking services before desktop products. You know, there's a lot of change in It's always fun to see, you know, what the next generation of a company can look like.

1:03:41 All right, so this is a really good transition. The next section that we're gonna do is the uh the acquisition category. So in this segment we kind of assign a category to the acquisition, people, technology, product, business line, asset. consolidation or other. Scott, you're welcome to sort of participate uh or not in this, but you talk a lot about this renaissance in the company. I'm curious before sort of labeling this, how how much do you think of that is attributable to acquiring Beehance? Oh, it's hard to say. I mean I I think that Yeah, it's a small little part of this whole picture.

1:04:13 I think it's all about the people, you know, and there's some fantastic people that have been at Adobe for many years, and there are a lot of new new great people that I believe Behan's brought in. Um But it's uh you know, it's a joint effort. No one gets no one gets the credit. There's a few elements here. I mean, I think some part of this acquisition was definitely people and and having you join the company and be a part of the uh senior leadership team now. To some extent I think there's a business line where obviously Behands itself is is a a nice business. But I'm gonna go with product because I think that this is really something that as you alluded to earlier, Adobe was really able to plug into sort of the where the puck was going within the company. And you know, really be both distribution and uh a relationship with the company through the Beehanse product for everything else that that Adobe does.

1:04:59 And David, I'm curious on your take on that. You know, I mean before the show I was uh pretty dead set on product too, but I think, you know, something that's come out as we've discussed here in uh We're gonna have to do more episodes on Adobe and uh I don't know when the IPO was. It was probably a long, long time ago. That'd be fun to go back and look at. Our founders are still on the board, so it's amazing. Like there's still real founder DNA involved with the company. It's just a remarkable story. Silicon Valley just doesn't talk about as much. Yeah, it's it's not as well known. That's why I think we I think we need to expose it more on this show. I think I'm gonna go with people though because

1:05:31 This transition from package software to Subscription. Was so important. Obviously there's

1:05:40 the impact on Adobe's market cap and you know, I mean uh uh creating eighty plus billion dollars of market cap like that's a that's an A plus in any regard, we you know, uh previewing uh creating here and and obviously not all that is uh or even majority of that is attributable to B hans that's such an huge DNA change and I mean only look at like Microsoft to see how hard that is to go from The old world of license software to a new world of service based software and and subscription pricing, you know, it took changing the CEO of Microsoft for that to happen.

1:06:14 Most of the Behanced team is still at Adobe. You guys were acquired, you stayed there for four years, then you went to Benchmark. Now you're back you're back as chief product officer. I think again from the outside. Like it's it's I can really appreciate how much of a DNA shift that is, uh at Adobe and and how important this has been. So I'm gonna go with people. As I think about

1:06:34 the transformation of Adobe that I've seen happen, you know, I think about first of all our C our CEO of Shant Nu has just had an incredible tenure and impact and led this whole thing. And then just think of the teams that We're just like not willing to give up, even even when it was uh you know not so clear that this transition would be smooth to to the subscription and everything else. So it's it was fun. It's in front of play a part. I think Behansa's DNA has had

1:06:57 impact in ex unexpected places, that's for sure. Yeah, hopefully we're still in the early innings to some degree. Alright, what would have happened otherwise? So this is where we talk about if the company hadn't been bought at the time. and by the acquire had been been bought for what would have happened. Scott, I sort of have two questions for you. One is growing from one million users to 15 million users. Impossible to say for sure, but where uh do you think you'd be sort of close to that as an independent and that that you would have sort of grown independently? And then two, Well, where else could it have been a fit? Which is kinda funky to talk about now, now given uh your job at Adobe, but what else would have made sense?

1:07:33 Mm-hmm. Well, of course I think that Behants would have been uh as big if not greater. Um we have an incredible team and I think that the the problem and the solution were on point. So that's my extraordinarily biased answer. But at the same time, I mean, I think that what Adobe has done for Behance and what the team has continued to do within the within the company is extraordinary. So Gosh, I don't know. I can't answer that question. I'm so happy with the way fate played out and um It's like I think the customers have been served, I think the team has been served.

1:08:03 And I think our you know, I I think the Adobe's become a become better as a result, so Very, very tricky one. That's a great answer. I'm not gonna push any harder. Thank you. Tech themes.

1:08:18 Um we've touched on a lot of them. I think one that we haven't given enough uh uh airtime to, and I'll just take a minute here to talk about it, is you know, these marketplace businesses and and sort of network businesses are so crazy powerful because every additional person that joins the network makes it so that much more valuable for everyone already on the network and everyone new that joins the network. Boy does it require patience for a lot of these flywheel effects to kick in. Your story illustrates it so much more viscerally than uh a lot of others because It was five years before you sort of felt comfortable making any promises to any investors that there's a there there. You guys are selling paper journals. Which led to Uber directly. I mean like how awesome is that directly. when you're starting a a business like this, you know, it's it's a grind and it's it's gonna be a while before you can kind of f fully realize the

1:09:08 It is it is a grind, which is a good segue in the messy middle. I mean, gosh, like talk about talk about the fact that um Ups and downs, abs and fits and starts and uh endless amounts of ambiguity, uncertainty, and self doubt along the way. You know, we had through five years of bootstrapping. Tremendous volatility.

1:09:27 The ultimate challenge was to sort of mine the volatility for its gems. And in some ways develop like muscle and and uh tolerance um for the team that in some ways we just became like outfit for the journey from all of this. Um

1:09:44 But it's ironic'cause of course we want to like limit the volatility in a journey typically. Um, who wants to go through difficult periods, yet at the same time, without any of that adversity, you you struggle. Even more. Alright, well we're round it out here with a a a grading, our final section of um assigning a letter grade to the acquisition. And that basically is, you know, the the A plus of the Apple acquiring next, or maybe uh Facebook acquiring Instagram.

1:10:10 we all have many, many stories about what an F would look like, including a AOL time warner. Um the question is like how do you really measure an acquisition? I mean there's so many different We've we've struggled a bunch with it over the years and and trying to um really hone in the way that we've sort of defined it is if you were uh a a shareholder of the larger company was that a good use of the capital uh relative to the other uh opportunity cost of it. Wow, you do this with me on the line as opposed to You you you can beg off. You can also you're you're also welcome to grade. The way that I sort of thought about these as we've uh evolved our grading is this belongs in the A camp, so it's sort of A minus A A plus. the AA pluses are when a business sort of single handedly can be attributed to multiple tens of billions of dollars of value creation, which are like, you know, a few of those ever in history. So to me this is an A minus because it certainly belongs in the the category of A's where it made a ton of sense for the company. It wasn't a tremendously expensive acquisition and what the company got and being able to be on that path of reinventing itself, get that right DNA, do the right things with with integration and keeping all those people that were thinking about this the right way around and continue to grow

1:11:25 what is a what is an important sort of piece of the the Adobe ecosystem um coming in at an A minus. But I don't think you've got to be a little bit more than I've We have formulated that rubric on the show yet, but I I I like that a lot of like What does it take to get into an A range and then and then within the A range? I'm completely with you.

1:11:44 A minus here. But I just wanna underscore again, like I know I've talked about this a couple of times in the show, but like Adobe is Such an underappreciated story in tech. Like Seriously. Like I was just looking at the stock charts, like to make sure I'm right here. Like Since The Beehance acquisition.

1:12:00 There's been over a hundred billion dollars in market cap created here. Like uh and again, of course, you know, lots of people and a scout is the first to say, like, uh lots of people in the team are responsible for that, but like That's pretty astounding. But I I love I love the way you look at the world. What I would say to anyone who's listening who's gonna go through an acquisition at some point in their lives is to make sure that In that spotlight of seduction in that final mile where you feel like

1:12:30 Oh my godness, like these are all the decisions gonna affect the rest of my life. And you start to be in some ways you could you could potentially be selfish or start to make decisions that are A little bit more short term oriented. All I can say is that doing the right thing by the team. And also for the acquire. Nothing is more valuable than every reference check you'll ever get in the future.

1:12:52 from people that either worked for you or worked with you or acquired you. To say That you Exceeded their expectations. And so I think that as a as a leader of a startup going through an acquisition,

1:13:05 Put yourself in every employee's shoes. Think about what they would expect from this and try to exceed their expectations. You know, when you're coming into a company and you're given a new VP title, you're given some some additional stuff to do, and it's like I could either mail it in or I could really make an impact and continue to do some of the greatest work of my life, life is short. Do great work. You know?

1:13:24 Find a battle worth fighting. You will make an impact you're proud of. And everyone who works with you will want to work with you again in whatever capacity that might be. And uh and your investors. You know?

1:13:35 Communicating with your investors. Trying to do b do right by them. Going to bat for them, not doing something that you know a lot of a lot of entrepreneurs will go through an acquisition and Try to take a lot of the capital towards. their incentive plans and not really think about their investors at that point.

1:13:51 Also a mistake. You know, you just want to have that feeling about an experience like this where Um, you tried to really take care of everyone and you were fair and you'll stand behind it and you'll look at anyone in the eye that you come across for the rest of your life. And feel like you did the right thing.

1:14:07 Well, Scott, that is why you are the revered product leader and business leader that so many very great people look up to. So Great, great place to to end the show. Can you tell our listeners? The messy middle. Where can they get it?

1:14:20 Where can they follow you? Yeah, sure. No, I mean I welcome people to follow along along. I consider myself a curator of things that are interesting to me. And You can follow at um at Scott Belski, whether it's at Scott Belski, B-E-L-S-K-Y on Twitter or Instagram. And here's my shameless promo, the messy middle.

1:14:39 Hits shelves. October second, so probably by the time you're listening to this. It will be in its first week. I really encourage you to get a copy. There's just a lot of stuff that I have learned. and uh and belive by or want to live by in this book. And um and I wrote it for for for you listeners who are trying to uh to start something in enduring volatility of a bold project of your own.

1:15:02 Well thank you so much, Scott. Thank you guys. Mm-hmm. All right listeners. Now is a great time to talk about one of our favorite companies, StatSig. Yes, there is a reason why the best product teams rely on StatSig, whether they are iterating on their core product features or shipping AI powered experiences at scale.

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1:16:13 We'll see you next time. Mm-hmm.

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