《宋飞正传》的生意经（音频）

So, David, I bought a DVD player for research for this episode.

No way. Did you buy the box set?

There’s some stuff, like facts about the pilot, that’s only available in the DVD commentary—

Yes.

—and doesn’t exist anywhere online. So I had to go on eBay, buy a copy of the Seinfeld DVDs, and buy a brand-new DVD player here in 2026 to view it.

Do they even sell those on Amazon anymore?

They do. Sony makes them.

Wow.

They’re, I don’t know, $100 or something.

Sony. There you go. Appropriately, distributors of Seinfeld.

That’s right. All right, shall we do it?

Let’s do it.

Today, listeners, we’re taking a giant left turn. David and I were staring at each other, poring over our usual topic list, and we decided we only wanted one criterion for selecting this episode: What would we have the absolute most fun making, and can we do something different and fresh for Acquired? We found something we’re very pumped about: the business of Seinfeld, the show.

We had both just read this astonishing stat: In the first 6 months of 2026, Seinfeld was watched by 60 million Americans, about 20% of the entire U.S. population.

This show went off the air almost 30 years ago.

I reached out to Nielsen to verify this. Not only is it true, they said that if you update it through the end of August, that number is up from 60 million to 72 million Americans.

Oh, wow. That’s almost the same audience size as the Seinfeld finale when it aired.

This is a show that finished making new episodes nearly 3 decades ago, and yet we’re all still watching it. Netflix’s 2019 deal for Seinfeld, which was reported at well over $500 million over 5 years, was the largest sum a streamer had ever paid an outside studio to license a series that was no longer in production. That’s more than $100 million a year, decades after they were done making new episodes.

The economics, the way it’s owned and structured, are essentially a complete accident of history. Seinfeld managed to be one of the last shows of the old world, where everyone watched the same thing at the same time, while also having a foot in the new world, just as the internet was taking off.

Yep.

The story is really an entrepreneurial one of obsession, craft, and a team that created the number one show in America by doing everything completely differently from the way it had ever been done before, defying all conventional wisdom. It’s one of the best examples we’ve ever studied on Acquired: the creators, Jerry Seinfeld and Larry David, believed so strongly that their product was excellent that they didn’t care what anyone else thought or what the numbers looked like at first. A small, passionate early fan base, with a slow burn, went on to become their greatest asset.

Today, listeners, we’re doing an experiment here on Acquired: the business of Seinfeld.

Let’s do it.

David, where do we begin?

Well, naturally, even though this is an episode about Seinfeld the show, not Jerry Seinfeld the person, we have to start with Jerry himself.

Yes.

Jerry was born in 1954 in Brooklyn to a Jewish family. When he was young, his family moved to a small town on Long Island named Massapequa. I actually spent a fair amount of my childhood in Massapequa. It’s definitely suburban Long Island. There wasn’t a lot of interesting culture going on there.

Great.

But Jerry’s father, Cal Seinfeld, was known in the family and among his friends as a funny guy who was always telling great jokes, as Jerry would talk about it later. He had the funny gene, and Jerry definitely did, too.

Yeah, Jerry insists that comedy is a gene, right?

Yes. He thinks his kids have it. He knows his dad had it.

And that it can’t be taught.

Yep.

Obviously, you can work really hard to hone it and develop more material, but the instinct is actually genetic.

Yep, yep. He was always making his friends and family laugh. Around the same time, when he was about 12 years old, he fell in love with an album—a record. Not a music album, not one of the great bands of the ’60s or ’70s, but Bill Cosby’s stand-up comedy album, Why Is There Air? And this is—

These comedy records used to be a big thing.

Yeah, stand-up albums on vinyl were a big thing.

It’s funny: today we all tune in to Netflix to watch the big stand-up special that just dropped. Albums were doing that same thing 50-plus years ago.

Yep, totally. After high school, Jerry went to Queens College in New York, actual New York City, where he majored in communications and theater. He was really into comedy, so he set up an independent study where he studied stand-up comedy like his heroes. He went out to the comedy clubs in New York and wrote papers for college analyzing various comedians’ sets. Then he went on stage as part of his college studies to get experience and try out being a stand-up comic. It was just like what he was born to do.

And it seems like, from every interview he’s given—and Jerry has given a lot of interviews—

We’ll get into why Jerry has given a lot of interviews later in the episode.

Yes. He basically said, “I had one goal since middle school or high school: become a successful stand-up comedian. That’s it. I didn’t have specific goals around other things I wanted to do, some sort of career progression, something I wanted to rise toward, family, hobbies. I had no goals around anything other than becoming a successful stand-up comedian.”

Yep. At age 22, after Jerry graduated from Queens College, he started his career. He made his stand-up comedy debut at the famous Catch a Rising Star comedy club on the Upper East Side in Manhattan in 1976. Just like he did in college with his independent study, he taped himself and analyzed his own performances. He performed night after night after night.

This is the level of obsession necessary for Jerry to become who he is, but it’s also not that uncommon in the stand-up industry. This is what you do if you’re going to dedicate yourself to the craft: every night, you perform and analyze, meticulously refining every word, every syllable, every movement that comes out of your mouth and your body.

Stand-up is unique among any sort of performance—entertainment, music, sports—because you get a real-time scorecard from the audience on something that’s entirely within your control, and you might have just come up with it that morning. Let’s say you’re singing and you manage to write a song and perform it. That’s a long process. Usually, it involves other people arranging the music or other musicians playing with you.

In stand-up, it’s you and your material, delivered through your instrument, with brutally honest feedback from the audience in real time about whether they’re laughing or not. It’s as raw as it comes.

Yeah, it’s a solo act. He compares it to being a solo athlete, but it’s the most extreme feedback-and-spotlight version of an athletic performance.

Yep.

This is what Jerry did night after night after night. Pretty quickly, Jerry became a successful stand-up, and that led him to other opportunities in comedy, specifically in television. In 1979, 3 years after he began his comedic career, he got a call from Hollywood. They wanted him to come out to L.A. and join a sitcom named Benson, which I’m sure none of you listening remember. He was going to get a recurring role on this sitcom. He’d make a lot more money than just playing in the clubs, and it would be steady work.

Well, he was in 3 episodes, and then his character got dropped from the show. It didn’t work out exactly as he planned.

Which is the common experience in television.

Yep. But this becomes very important to Jerry and to the eventual show Seinfeld because, despite the disappointment with Benson, during that first brief stint Jerry has in L.A., he performs in local comedy clubs and does stand-up on nights and weekends around the city. One night, he gets spotted by the legendary talent manager George Shapiro. Shapiro and his partner, Howard West, were among the most legendary comedian talent managers and agents in the business.

They had gotten Andy Kaufman the recurring role on Taxi, the sitcom that was a huge hit. They were placing their comics on The Tonight Show, which was filming in L.A. at the time with Johnny Carson, getting them national exposure. There was this whole flywheel between stand-up and TV.

And what Jerry is watching here is, “Oh, that’s how you become successful as a comic and make money. It’s the next rung on the ladder.” But it’s not that what he wants is to be in sitcoms. His calling is stand-up, and sitcoms are what the industry has for you.

Yep. It also becomes a self-reinforcing flywheel for your stand-up act because once you’re on TV, whether it’s sitcoms or a regular spot on The Tonight Show, you get national exposure. Then you can tour with your stand-up routine, and people in cities all across America will know you. They’ll buy tickets to your shows. That’s the way you hit it big in stand-up.

Once Jerry is signed with Shapiro and West, they get him the big break: a spot on The Tonight Show with Johnny Carson. Jerry talks about this. He trains like he’s training for the Olympics to go onstage for, I think, 5 minutes—a 5-minute set.

And he always talks about how you take most of the best material out of your 40-minute set to create that idealized 6 minutes, to put your absolute best foot forward.

Yep. So he goes around to clubs and does the 5-minute set, practicing for months just to get it down before going onstage for 5 minutes. He does it about 200 times in clubs, comes off, and gets the next guy on. He starts jogging to get in shape. He’s playing the Superman theme on his Walkman.

In 1981, the appearance happens, and it’s a hit. Johnny loves him. Famously, while Jerry is performing, Johnny flashes him an okay sign from the desk so everybody knows it’s going well.

Hmm.

That leads to regular bookings on The Tonight Show, then Letterman wanting to book Jerry, other variety shows, and all sorts of opportunities.

And this is where Jerry learns discipline. If you spend 5 years creating your 40-minute act and then you get 6 minutes on Carson, you do your 6 minutes and then you get invited back pretty quickly. The next 6 minutes in your act aren’t your best 6 minutes.

Right, right.

They’re your second best, then your third, then your fourth. He remembers watching other comedians churn out material. Once they got through their material, they stopped being invited back on the show. So he picked up this discipline of writing for hours a day, keeping steno pads or yellow legal pads where he would write everything all the time—everything he was observing in the world—so he could avoid that horrible fate of irrelevancy, of no longer being invited back.

If you’re always developing material, and you do need to be on this treadmill of developing material, then you keep getting the opportunity.

And you can see how this leads into Seinfeld eventually.

Yep.

But this is the big difference between stand-up comics and musical acts.

We’re all happy to go to a concert and hear Taylor Swift sing “Shake It Off” again and again on every tour. That’s exactly what the fans want: to play the hits. You don’t want to go see stand-up and hear the same joke again. You get it once, and then it’s over.

Eventually, this leads to Jerry getting another sitcom opportunity. He’s considered for the lead in a pilot show for ABC called Past Imperfect.

Yep.

It’s a new production company. It’s a hot ticket. Things are looking promising for this show. Ultimately, the production company decides to go with somebody else because Jerry doesn’t have enough sitcom acting experience.

Just acting experience, period.

Being a stand-up is not at all the same thing as being a great actor on a sitcom. These are 2 very different skill sets, even though the same people are doing both at this point in time.

Yep.

But losing the show doesn’t matter that much to Jerry because his stand-up act is killing it thanks to all the exposure he’s getting on the late-night shows. He’s touring basically every week, and he was so popular that he was making an average of about $25,000 a week from the clubs he was playing—

Wow.

—across the country. So call it about $1 million a year that Jerry’s making just from his stand-up touring here in the mid-’80s. Pretty good.

I didn’t realize that—

—before the show—

—because the life of a stand-up, when you’re playing in comedy clubs, you get paid in stage time.

Yep.

They’re like, “You should be grateful to get an audience to test your material.” When you go on Carson, I don’t think you get paid, at least not anything material.

Yeah, not significant.

So it’s building a brand around yourself using the clubs, then using TV shows, then using the late-night shows so that you can tour. That’s the first time you’re actually getting paid doing this form of art, and there aren’t that many people at any given time who are touring, headline artists, comedians making a living.

No, Jerry is in rare air here, and this is going to become super important because this is why he has leverage with NBC, which is coming up in just a second. So Shapiro and West, his managers, are saying, “Okay, Jerry’s a big star. He’s making tons of money. We’re making tons of money as his agent, but he can do more.”

They start going to NBC. In fact, George Shapiro starts writing letters—a letter-writing campaign to Brandon Tartikoff, who is the president of NBC Entertainment at the time—saying, “You’ve got this guy, Jerry, this comic. He’s regularly coming on The Tonight Show. He’s doing great. Don’t you think he needs a show of his own?”

Jerry actually has a great quote on this. He says, “Imagine you have this kid who’s been on The Tonight Show 30 times, and on Letterman 30 times. He’s on your network all the time. Presentable fellow, seems to do well. Nobody ever thought, ‘Why don’t we talk to this young man? Maybe we can do some business, do a show?’” Finally, in November 1988, Shapiro succeeds in convincing Brandon Tartikoff and the powers that be at NBC that maybe they should consider this Jerry guy.

Yep.

So they schedule a meeting to discuss it, but it’s not with NBC’s comedy department. The comedy department at NBC means sitcoms; they control the sitcoms. They’re not thinking of Jerry as sitcom material. They’re thinking of him as late-night material, where he’s obviously already doing great. Can he do specials for us? That’s the direction this ends up going. I think, in the back of their minds, they’re also thinking, “Hey, can this guy be a host?” Johnny Carson is getting older. It would be a few years later that Johnny would retire, and then there’s the whole Jay Leno, David Letterman drama and the succession. But that’s a couple of years away. Maybe Jerry Seinfeld deserves to be in this mix.

You mentioned specials. There were network comedy specials. Bob Hope would get these specials where he would go and do these routines. So it wasn’t like, “Hey, we’re going to pitch you a whole new format called Jerry Seinfeld Does Stand-Up on TV.” That was already a thing.

On November 2, 1988, at 5:15 p.m. local time in Los Angeles, NBC finally takes the meeting. Jerry shows up, along with his manager, George Shapiro; Brandon Tartikoff, president of NBC Entertainment; Warren Littlefield, head of prime time for NBC; and Rick Ludwin, who heads the specials department, the variety and specials department they’re thinking about Jerry for.

Jerry says of the meeting, “We sat in there, we chatted about, ‘Oh, what do you think you want to do? Would you be interested in a talk show?’ And we settled on doing a special in the Saturday Night Live time slot one week when Saturday Night Live wasn’t airing.” NBC says, “Come back with a script for what you want to do for the special and we’ll make it.”

I always like when they ask Jerry, “So what do you want out of this meeting?” And he has some comment like, “Oh, I actually hadn’t really given that thought. Success as a comedian is getting this meeting. So I’m in this room, I’m excited to be in this room with you right now.”

“I’m just happy to be here.”

So NBC at the time is in a pretty interesting place. They had just recently figured out who they were. In the late ’70s and early ’80s, they didn’t have a cohesive strategy. It was the classic “We’re making anything and everything for everyone.” But they turned it around in the mid-’80s.

Brandon Tartikoff, who you mentioned, was the president of NBC Entertainment. He had developed this philosophy to try to appeal to urban audiences aged 18 to 49 with smart content, and it worked.

They’re becoming the number one network. In 1986, GE comes in and buys the company, and they have 2 big messages. Keep in mind, this is GE.

GE, like Jack Welch—

Yes.

GE, General Electric, yeah.

One, you need discipline in your business. You have to pay attention to costs and ensure that everything you do aligns with your chosen strategy. You can’t just be haphazard. The NBC guys kind of know this at this point. And two, things are changing. Viewers have way more choices with cable.

Yes.

They’re not just going to watch whatever you put on by default, so you need to quickly develop great shows and, if they’re not great, get rid of them. The shows should be aligned with your business strategy, the audience you want to reach, and the advertisers you’re trying to reach. Stop doing everything else. So, of course, NBC kind of looks at it and says, “Hey, this is already working for us. Let’s build a real business strategy around it. This is a very valuable demographic: urban audiences 18 to 49 who want to watch smart content. That’s a great business to sell to advertisers.” This is obvious now, but at the time, it was pretty novel.

Well, it was also novel, I think, for a broadcast network to just have a corporate strategy, period.

Yes.

The other networks and NBC before this point in time were just like, “We’re the broadcast networks. America watches what we put on TV.” GE comes in and says, “No, we’re General Electric. I’m Jack Welch, Mr. Black Belt Six Sigma, greatest CEO in American history”—until it all fell apart, but at this point in time, “You need a corporate strategy.”

Yes.

It’s tied to revenue and profits—

Yes.

—and it’s everything that GE does.

So the perfect thing to do is sign Jerry Seinfeld to a development deal.

Yes. Now there’s just one problem, though. As Jerry walks out of this meeting with Tartikoff, Littlefield, and Ludwin, they’re like, “Yeah, yeah, whatever you want to do. Just come back with a script; we’ll make it.” Jerry has never written a script for anything in his life, especially not for a TV show. But Jerry knows one guy, one of his old New York stand-up buddies, who does have some experience with scriptwriting that might be useful for this special here for NBC. So, 3 days later, after this meeting in LA, Jerry flies back to New York and goes looking for that guy, Larry David, late at night after the sets at Catch a Rising Star, where Larry was a regular as a stand-up comic.

And they got to know each other well during this period, when they were both constantly going up and trying new material. You don’t go on until 9:00, 10:00, or 11:00 p.m., so you’re friends with the other comics, just sitting in the bars, chopping it up.

As Jerry was coming up as a kid out of Queens College, Larry David was one of the established comics he looked up to. But by the end of the ’80s, their careers had gone in very different directions. Who was Larry David in November of 1988? The answer is, he is nobody. And he’s not even a promising young nobody with potential and talent like Jerry. He’s 41 years old, single, broke, and living in subsidized artist housing. His stand-up routine has—I think the term people used to describe him at the time was that he was a comic’s comic, meaning that he was appreciated by other comics, but his humor did not exactly land with audiences.

And he had basically been chewed up and spat out of the industry.

Jerry said they always had a comedic resonance, the two of them, and had known each other for a long time. But Larry had this kind of George Costanza-esque string of failures that led to this moment. So the stories about Larry before Seinfeld, you probably already know them; you just know them as George Costanza stories. Larry had actually moved to LA not for a sitcom, but because he got a job on a show called Fridays.

That’s right.

ABC, in the late ’70s and early ’80s, was jealous of Saturday Night Live on NBC, so they decided to do a wholesale knockoff of Saturday Night Live. The only 2 things they changed were filming in LA instead of New York and doing it on Fridays instead of Saturdays, so they called the show Fridays.

And they were going to fish in the exact same talent pool.

Yep. They also couldn’t get the best talent out of New York; the people interested in this kind of stuff were going to SNL, so they got Larry David to come out for this. They got an eccentric young comic named Michael Richards. You might’ve heard of him. Fridays lasted, I think, 3 seasons, and then got canceled. Fortunately, SNL said, “You know, we could use some extra writing talent around here. Everybody who was a writer on Fridays, we’ll offer you a 1-year trial.”

Larry just needed a job, a paycheck, so he came on for 1 season at SNL. Across the entire season, only 1 skit he wrote got included on the show. Famously, one day Larry was so frustrated that what he was writing wasn’t getting on the show that he flew into a rage, yelled at all the producers, screamed that he was quitting, and walked off the set. Then he was freaking out: “Oh, shoot, I don’t have a job. I’m not going to be able to pay my rent. What am I going to do?” He was so worried. He went home and explained the situation to his next-door neighbor in his subsidized apartment in New York, Kenny Kramer. The real-life Kramer said, “Larry, why don’t you just go back in tomorrow and pretend like nothing happened?” So Larry did—

Which he does.

And it works.

You might be thinking, “I feel like I’ve heard this story before.” George Costanza does this on a Seinfeld episode.

Yeah.

This is the first of many examples where what you see in Seinfeld is just things that happened in Larry and Jerry’s lives, and eventually the other writers’ lives. This is the early stew of what would become Seinfeld: mining their own lives for stories.

Yes, and most specifically Larry’s, because Jerry’s life is exciting. There’s Hollywood and stuff. The funny stuff is happening to Larry.

Yes.

Also, this is going to become so important once Jerry brings Larry into this project with NBC. Larry did this and things like this during the 1-year period when he was working at NBC. NBC hated this guy. To the extent that he had any reputation, it was as a loser and somebody who couldn’t function in any sort of corporate environment, and NBC wanted nothing to do with him.

And he turned out to be a genius.

A genius.

And one of the best comedians and writers that the world has ever seen.

Yeah. During that ill-fated year for Larry at SNL, he also crossed paths with a young woman on the cast named Julia Louis-Dreyfus.

She also had a very short stint at SNL and kind of got churned out of it.

Yep, I think she lasted 2 or 3 years, but they bonded over not getting any airtime or getting their material on the show. So, back to this night in early November 1988, when Jerry goes looking for Larry at Catch a Rising Star. This is what’s on his mind: “Hey, my buddy Larry has experience writing this kind of stuff—Fridays, SNL. He’s been on TV.”

Mm-hmm.

“He can help me flesh out what we can do with this opportunity.” So he finds Larry. They go out for a walk together. Jerry explains to Larry what’s going on, and they stop at a Korean deli on the Upper East Side, Lee’s Market, right near the comedy club. In the deli, they can’t help themselves. These are 2 comics together, and they start making jokes about all the products on the shelves.

Larry makes a quip about Korean jellies, and Jerry looks at some fig bars and says, “It looks like somebody made these in their basement.” The words come out of Jerry’s mouth, and Larry turns and looks at him and says, “This is it. This is what the show should be. This is the kind of dialogue that we should do on the show. Two guys just talking like this.” They’re both excited and inspired by this. They say, “Okay, great. Let’s meet up again tomorrow night after our sets.” The next night, they meet again. They go to the Westway Diner on 9th Avenue. It’s around midnight.

Jerry says to Larry, “You know, I’ve been thinking about what we came up with last night. The number one question I get asked—and I’m sure you get asked too, being stand-ups—is, ‘Where do you get your material?’”

Larry says, “Bingo. That’s how we set up the show so we can do that kind of dialogue on the show. The premise will be: How do stand-up comedians get their material?” Jerry says, “Yes, great. The comedians, they get their material. They do this.” He’s just gesturing with his hands to the two of them there at the table in the coffee shop, hanging out with his friends. And at that moment, Seinfeld is born.

Notice that nowhere in there did David say the words “a show about nothing.” That has nothing to do with how the show Seinfeld was born. Later on in the show—Seinfeld is so meta.

Yes.

They would do a season arc where Jerry and George are creating a show called Jerry—

Yeah.

And they’re pitching NBC about the show. That is a show about nothing, and then, of course, that gets co-opted to be, “Oh, Seinfeld in real life is a show about nothing.” But no.

No, no. The premise is the show is about how stand-up comedians get their material.

Yes, and so this leads Jerry to believe, “Okay, whatever format this takes, I’m playing myself, and I’m not just playing someone named Jerry. I’m playing someone with my sensibilities, with my observational humor about the world. I’m not gonna cast myself into a character that is super different. I don’t wanna do that. I’m not acting.” I mean, we all know Jerry can’t act. So—

Yeah, Roseanne Barr, the comic who did Roseanne, isn’t playing Roseanne Barr on Roseanne. She’s playing a sitcom character.

It’s a slightly different Jerry Seinfeld. I mean, the version on the show is in a little shoebox apartment, and this guy was making a million dollars a year flying around. There are differences, but it’s pretty true to personality.

And again, you can see how this all takes shape because nobody’s thinking about a sitcom here. This is a one-off special that they’re gonna do.

Right.

So that brings us to the next month, December 1988, when Jerry returns to NBC in Los Angeles to meet again, this time bringing both a pitch for the idea for the script and a partner, Larry. And NBC, as you might expect, doesn’t exactly like either of them, or especially Larry. But nonetheless, the two of them, Jerry and Larry, walk out of that meeting with probably the most valuable TV deal that has ever been made in all of television history.

1. The Seinfeld Ownership Deal

So, David, Jerry and Larry, they’ve got a TV deal, right? There’s a show?

Well, right. So Jerry and Larry have this TV deal that would go on to become arguably the most valuable television deal in history. But NBC isn’t sure about the idea, and they definitely aren’t sure about Larry. Why on earth do they go through with this? One is, we talked about this whole thing: comedians crossing over into television is currently hot, so they’re motivated to do it. It’s part of their corporate strategy.

In general, you’re probably gonna get eyeballs if you bring in a brand-name star or a star in a show.

Yeah. Young male comic. You want your young male audience in urban areas, et cetera, et cetera. Great. But two, more important, at the end of the day, this is just a one-off 90-minute special that they’re talking about here as a commitment. This is not a big deal. If it doesn’t work—

Right.

—it doesn’t work. They decide in the meeting, great, okay, fine, let’s call this thing Seinfeld’s Stand-Up Diary.

Oh, I never caught this.

That was the original working name for the show when it was still conceived as a one-off special that was gonna be about how Seinfeld got his material. The premise was gonna be that at the end of the special, you would see him on stage doing his stand-up material—

Oh.

—that he got throughout the episode.

Oh. What’s the name again?

Seinfeld’s Stand-Up Diary.

Okay. This is so fun to see how all the rough edges get sanded off, so it eventually becomes the thing we know.

Totally. Totally. Okay, so the deal—what’s the deal? Why is it so valuable? How much is NBC gonna pay these guys? Well, actually, NBC isn’t gonna pay them anything directly because at the time, NBC could not legally own the show. Thanks to rules from the FCC at the time, broadcast networks were prohibited from actually owning the content that they broadcast on the networks. These were the Financial Interest and Syndication Rules, or FIN-SYN.

Yes, so time for a little history lesson, listeners. Today, you know about these media conglomerates, but before that, the TV networks were entirely separate companies from the production studios. NBC was its own thing, totally separate from Universal. CBS was just a broadcast network, nothing to do with Paramount. ABC was separate from Disney. When TV production started in the ’50s, the networks—ABC, CBS, NBC—needed to hire the production studios to make stuff for them to broadcast on their networks. Some of these studios were very large, like Paramount or Universal or Warner Bros. or Disney. Some of them were really small, like MTM Enterprises, which is named after The Mary Tyler Moore Show.

Mary Tyler Moore. Yep.

Yes.

Or Desilu, of Desi Arnaz and Lucille Ball.

Yes.

Interestingly, the big guys, the big Hollywood studios getting into making TV—we talked about this on our Disney series—it was Walt Disney who started doing that. Originally, the Hollywood studios kind of boycotted TV because they were worried about it—

That’s right.

—as a threat to the film business. Walt was the first one who was kind of the visionary. He said, “No, no, no. These broadcasters—there’s so much money that’s gonna be made here as television sweeps the nation, and we’re gonna be the best arms dealer for them.”

And if we flash all the way forward, way more money was in TV than movies.

Way more. Way more money in TV.

Walt was incredibly right. When you look at where the cash gushers are in the entertainment industry over the last 40 or 50 years, it’s come from TV, not from movies.

It’s kind of one of these jokes in Hollywood that we really learned about studying for this episode: all the glamour goes to the movie stars and the movie directors and the movie executives. The richest people in town were always the TV guys.

Yep. Yep. Okay, so back to, call it, the ’60s. The way that the deals worked between the networks and the studios was called deficit financing. It’s crazy that this is how it worked, but it is. The networks would not fund all the production costs of the show. They would green-light something, find the production company to make it, and say, “We’ll pay you 60 to 80% of what it costs to make the show, because we’re—”

Yeah, like in this case, this special with Seinfeld and Larry David.

Right. Because historically, these networks are cash-conscious, and so they’d rather save 20 to 40% of the budget of the show. They’d give up some future upside, but that’s okay.

Right. Well, in return, the production company would own the show.

Yes. So because NBC wasn’t totally covering the costs, they were leaving this deficit. They just got a license to the show to air it on their airwaves once or twice—a very limited license. But that meant the studio was still in the hole for the rest of the funding to make the show. But it’s sort of fair. The studio gets to own the rights to that show in the future, to monetize it when there are international ways they could license it, or merch, or later home video, or the eventual huge cash cow of syndication, or reruns of the episodes on other networks or on cable channels in the future. But then the networks started including one deal term that was very, very favorable to the networks. They overreached, and they demanded a large cut of the future syndication revenue—

Hmm.

Even though they were not fully funding the cost to produce the shows.

Ah, I didn’t realize—

Back in the ’60s.

—that there was a period in the ’60s when the networks could own syndication rights.

Yes.

Ah.

So studios, of course, as you would expect, complained to the government. They said, “This is ridiculous. They’re not funding the whole thing, but they’re making it so we can’t make money now, and we can’t make money in the future?” So in 1970, the FCC issued the thing that you mentioned, David: the Financial Interest and Syndication Rules, or FIN-SYN. These rules prevented the networks from owning a financial interest, which mostly meant participating in the future syndication of shows they were buying from the studios.

Yeah.

So this created a true separation between networks that aired the shows and the studios that made them. You’ve got a buyer, you’ve got a seller. It’s very clean.

Yep, yep.

But then by the late 1980s, 20 years or so later, the networks are now the ones complaining. Cable shows up.

Right, right.

A lot of consumer attention is leaving the networks and going to cable, and the networks argued, “Well, we need more latitude in operating our businesses to effectively compete and make profits.” You might remember this from our Disney episode, where we talked all about what opened the door for Disney to eventually buy ABC. So by 1993, the networks won. FIN-SYN was repealed. The net of this is that networks could produce their own shows from 1993, 1994, or 1995 onward.

Yep, which means they’ll own those shows in perpetuity.

Yes. But here, where we are in the Seinfeld story—

Yeah.

—it’s 1989, the tail end of the FIN-SYN era, and the way it works is NBC is not allowed to own the actual intellectual property of the show. They must say, “Hey, go find a production company, make the show, and then we will pay you 80-ish percent of what it costs to make it in order for the right to air it on our airwaves.”

Yep, and that dynamic back in that era had set up this incredible entrepreneurial ecosystem where you had these independent production companies and the creators they worked with, who got actual ownership of the shows and the syndication rights. It’s almost like Silicon Valley startups: this capitalistic, entrepreneurial incentive to go make these amazing things. Seinfeld is one of the last ones out of this system.

And it had power-law dynamics, where, just like the venture capital industry, most shows fail, but the shows that succeed do so massively. The cap tables are made up of a bunch of individuals or a small production company. It’s not like all the profits just go into a big network, the way they do today. So you actually could have power-law outcomes for individuals on a cap table, just like in Silicon Valley.

Yeah.

So you could have power-law outcomes for individuals on a cap table.

Yep. So back to Seinfeld and Jerry and Larry and this meeting with NBC. When NBC says, “We promise you we’re going to make what you’re pitching us,” that is an extremely valuable commodity they’re giving Jerry and Larry. They’re saying, “Yeah, go get a production company, and you work out your own deal with them, but we’ll make it.” Usually, it’s reversed. The production companies are making pilots, concepts for specials, and scripts—

Right.

—that they’re pitching to the networks and desperately trying to get the green light to air. NBC is now saying to the individual creators, to Jerry and Larry, “You go find your own production company. Cut your own deal with them. We guarantee we’ll make it.” This is like—

It’s free money.

—to use a Silicon Valley analogy, it’s like if you’re investing in a Series A and somebody has already guaranteed that they’re going to mark it up 10X in a Series C afterwards.

Right. You write this check, and then there’s another check waiting right here for you.

Yep. So Jerry and Larry and the agents, Shapiro and West, are just given the golden goose here. This is where that very nice production company, back when Jerry was being considered for the ABC pilot, comes back into the picture: Castle Rock. Jerry says to George Shapiro, “All right, great. Why don’t we just use those guys from last year? They seem nice enough.” And boom, Castle Rock becomes the production company. You might know Castle Rock, or you might just know it from watching Seinfeld episodes and seeing their title card at the end. Ben, what’s the awesome history of Castle Rock?

All right. So we’re going to go back slightly pre-Castle Rock. In 1982, Columbia Pictures—

Major Hollywood film studio, yep.

—gets bought for $750 million by, longtime listeners will know this, Coca-Cola.

The Coca-Cola Company. Acquired episode crossover.

Coke is trying to get into the movie business. They just had a new CEO, Roberto Goizueta, take the helm, and he’s trying to diversify.

And I think part of the rationale here is, “Oh, hey, Coke products in movie theaters, films, and then product placements in movies. What if we just own a studio? There can be some efficiencies here, some diversification, as you say.” But sure, whatever.

Maybe.

Maybe.

Okay, so that’s Columbia and Coca-Cola. A few years after Coke buys Columbia, Castle Rock Entertainment is formed in 1987 by five partners, including Rob Reiner.

The successful young actor and director. He’d been on All in the Family and directed This Is Spinal Tap, I think, and The Princess Bride.

Yes.

Great movies.

And the idea is to be a studio by artists, for artists: really talent-friendly, flexible, and easy to work with.

Yep, and funded by the big bucks from the Coca-Cola Company.

This is the craziest thing. Castle Rock is just this little thing with five partners—

Yeah.

—that needs to get off the ground.

An independent production company in the Silicon Valley style we were just talking about.

Right. It could end up being very, very valuable, because they’re going to own the forever rights to any downstream revenue after the first run on television of any shows they make, and any movies they make. But for now, it’s just five guys. They find their way through Columbia Pictures to Coca-Cola, and Coca-Cola invests $30 million at the founding of Castle Rock. So the studio that funded and created Seinfeld was itself Coca-Cola money.

Amazing. Why do you think Jerry drinks Diet Coke in Seinfeld?

At formation, Castle Rock is owned 60% by its founders and 40% by Coca-Cola. Part of the deal is that Columbia would get to be the distributor of any films and TV shows that Castle Rock made.

Yep.

That doesn’t matter that much right now, but later on, you need a distributor in order to sell the syndication for reruns anywhere you’re going to put reruns. So it’s kind of a nice thing to put in the contract right now: “Hey, we get to be the distributor down the line of anything you make.” In November 1989, right around the same time that Seinfeld is getting started, Sony buys Columbia from Coke, which means the distribution rights Columbia had go to Sony.

To Sony, yep.

Sony also gets a minority stake in Castle Rock itself. Sony did get the minority stake in Castle Rock, but they don’t control it, so that distribution right goes with—

Columbia.

—Columbia to Sony.

To Sony, yep.

But the actual IP ownership stays with the independent Castle Rock.

Mm-hmm. And this is all going to become very, very important to the financial incentives behind Seinfeld as we go here.

Yes. So, taking a step back here, you’re probably like, “Why did I need to know all of that, and what’s the bigger picture here?” Just think about the incentives. If you’re Castle Rock and you own the rights, all of your returns are super back-loaded. If you make a show, you’re making it for $500,000 an episode, but you’re only getting paid $400,000 an episode by a network to buy that show from you.

Right. You have the rights to lose money on every episode that you make.

Right. Every episode you make, you’re like, “Oh boy, I hope this does well,” but you just keep losing more and more and more money every single episode. You don’t make money until five-plus years down the line, much like the venture business, when that show goes into syndication, the foreign rights get sold, or merchandise or home video becomes big. And it’s the same for those distributors. The distributor doesn’t do anything when Castle Rock is selling a show to NBC. So that whole apparatus of Castle Rock and Sony is just sitting there on their hands saying, “So, when do we get to stop losing money?”

Meanwhile, the networks are sort of in this rental business, where they’re renting content to show. I think the contracts usually say, “We get to show it once and show ads against it on a big night of television in primetime. We also get to show it one more time, maybe next summer or something, when there’s nothing on the schedule.” But after that, all the rights revert to the IP owner, to the studio. The whole business of a network is just: we’re going to rent content that we’re legally not allowed to own, and we’re going to bet that we can sell more ads than it costs us to rent.

So they run a very short-term business, while the studios and distributors run a very long-term business.

It’s just like Silicon Valley. They’re betting on the equity value in the long run.

Yes.

Back to the Seinfeld stand-up deal: Larry and Jerry having the guarantee that NBC is going to make this thing is so valuable to any production company they work with, because the idea is that this is going to be a one-time special, and it’s guaranteed to be made by the network. Any production company that comes and works with them to make it will air it right away on NBC, maybe get a summer rerun on NBC, and then it’s theirs. They get to sell it to HBO or Showtime or whoever, sell it internationally, and run the whole business model on the back end right away—guaranteed. No need to pitch the networks, no need to put capital into developing pilots that might not get picked up, et cetera, et cetera. Awesome.

Yep. But you don’t know how big it’s going to be. Is this thing—

Well—

—going to be worth anything to sell to other networks in syndication?

Sure, sure.

Probably not. It’s a one-time special.

Right. Nobody’s thinking about this as a sitcom. It’s a special. But what this allows is Jerry and Larry, via their managers, Shapiro and West, to negotiate a huge percentage of the back end—essentially the equity in this piece of content—with the production company.

Ah, because nobody thinks it’s going to be worth that much, and there’s no risk.

There’s no risk. Jerry and Larry have all the leverage. They could take this to literally any production company in Hollywood.

Right.

And so, by choosing Castle Rock, they can essentially write the deal terms. The exact deal terms—the cap table, essentially, of Seinfeld the show—have never come out, because the only people who really know are Jerry and Larry, Castle Rock, and Shapiro and West. But it’s reported that Jerry and Larry each own 15% of the show, which is huge. Spoiler alert: Seinfeld is going to make billions and billions and billions of dollars, and Jerry and Larry are going to get 15% each of that.

And they have this very clever way of dealing with it in interviews. Someone will say something like, “You’ve made X hundred million dollars,” and they never quite deny it. They say, “That’s preposterous. That’s an insane number.”

Right.

“That’s a ridiculous number.” And it’s true: It is a ridiculous number, the hundreds of millions of dollars that end up coming out of this. But they’re not saying it’s wrong. Even when they do say it’s wrong, they’re not saying by how much. Someone throws out, “It seems like you might have made over $600 million,” and they go, “Oh, that’s not the right number.”

Right. Right, right.

But you didn’t say it wasn’t in the ballpark.

Yeah.

So it’s just one of these funny… It’s admirable, the way they handle it, because it’s so true to form.

Yes, yes. But this is why this crazy, unlikely stand-up special ends up becoming probably the most valuable deal in the history of television for these guys.

So, as best we can figure out from what’s been publicly reported, ballpark it at about 65% left for Castle Rock. The interesting thing to know is that the way a distribution deal usually works—remember Sony eventually owns the distribution rights—is that it usually takes 15% off the top.

Yeah.

So everyone gets diluted down by 15%, because whoever Sony manages to sell it to, they get the first percentage off the top. And we’ve seen different numbers. We’ve seen 15%, we’ve seen 30%. There’s lots of reason to believe it’s 15%.

So, simplifying this a little bit, you can essentially think of the waterfall of Seinfeld’s billions of dollars of syndication profits as 15% to Sony, about 15% each to Jerry and Larry—a little less because of the Sony dilution—about 5% to Shapiro and West, and about 50% to Castle Rock and its successors—

Yes.

—as we go along here. Once all these various parties are in place, they need to write the script for this thing. Larry and Jerry go off and start working on the script, but they have a tough time coming up with 90 minutes’ worth of stand-up material to do the exposé, if you will, on how material gets into comedians’ sets. Ninety minutes of stand-up material is a lot.

It’s an eternity. It’s really hard to be funny for 90 minutes.

As they’re working on it, they’re banging their heads against the wall. They also realize there needs to be some semblance of a story—I put “story” in quotes—or some situations to get the characters into the scenes where the conversations would happen that would lead to the stand-up material. So Larry floats an idea: “What if we just do this as a standard 30-minute sitcom pilot?” A standard 30-minute sitcom is only 22 minutes of actual content. Twenty-two minutes is a manageable amount of stand-up material that they can come up with for this thing. And doing it as a sitcom will give them enough of a story and situation—situation comedy, sitcom—to get the characters into the scenes so they can say the dialogue, et cetera, et cetera.

The way they’ll make it all fit is: Jerry, what you want to do anyway, as you said, Ben, is play yourself in the sitcom and end with the stand-up. So the first script they come up with, the one they’re going to pitch back to NBC, has Jerry going on The Tonight Show—an NBC tie-in—but he doesn’t have any new material, so he needs to pull his act together. He’s hanging out with his friends, particularly his Larry-like friend, George, to get the material. Then, at the end of the episode, Jerry will perform it on The Tonight Show.

They go back to NBC and pitch the new version. They also have a new title to reflect the shift from a 90-minute special to a sitcom pilot: They’re changing it from Seinfeld Stand-Up Diary to The Seinfeld Chronicles. It’s going to be an ongoing chronicle of Jerry’s stand-up material.

If anyone, like me, now has the DVD box set, you can watch the original version of the pilot that aired—not the edited version from later on. It’s actually called The Seinfeld Chronicles onscreen.

Indeed, indeed. Once again, NBC, somewhat surprisingly, just says, “Okay.” Jerry has a great quote about this. He says, “Every step of the way, we were waiting for somebody to come in and say, ‘You can’t do this on network TV.’” But nobody did.

Because it’s just different from everything else that’s on network TV. It’s like a sitcom that’s not really a sitcom. They just needed to borrow from the sitcom format to accomplish their goal of showing how a comedian—

Yep.

—gets his material. And it’s not even happening in the comedy department—

Yes.

—it’s happening through these late-night people.

Through the late-night department, the specials department. This is part of why they say yes to this change in plans: It actually makes their life easier. Previously, they were going to have to fit a 90-minute special into the calendar. Now you’re telling me I only need to give you guys 30 minutes? Sure. Whatever you want to do, no problem.

So they sort of sail through NBC here.

In a wholly unprecedented move. The upshot is that NBC’s late-night and specials department approves a sitcom pilot. This has never happened before. The show just stays in Late Night.

And just so listeners understand what we’re talking about, the comedy department at this point has The Cosby Show and Cheers.

Yep.

It has a bunch of hits. They’ve got a whole process for reviewing scripts, giving notes, and working with the creators. The late-night department is just like, “Uh…” It’s really easy to say yes, because it’s an even easier yes than the thing they’d already said yes to. They get to skip all the comedy department checklists and committees.

So NBC says okay, and Castle Rock, now the production company, and Jerry and Larry are like, “Well, all right. Let’s cast this thing. Let’s go make a pilot.” Rob Reiner at Castle Rock suggests they look at Jason Alexander, who was mostly a Broadway actor at the time, for the part of George. He felt—and Jerry and Larry certainly agreed—that they needed a really polished, really great actor to play opposite Jerry, because Jerry is not a great actor.

He was about to win a Tony a month later.

Yes.

When Jason came in to read, they were like, “This guy’s unbelievable. He’s perfect for it.” Later on, Jason would figure out that this character was kind of Larry David. He’s not exactly Larry David, but he’s loosely based on him. Jason actually thought it was a Woody Allen character at first.

Yes.

So he came in and did a Woody Allen impression for George.

Next they need to cast Kramer, because Larry has decided to write his eccentric neighbor into the script for the pilot. But he’s not calling him Kramer just yet.

Kessler? Is that right?

Kessler, yes. Kessler.

He’s like, “Oh, I don’t want to make it too on the nose, and also, if we call him Kramer, then we’re going to have to pay this guy—”

Yeah.

—or do some kind of rights situation. So they call him Kessler. The funny thing is, eventually they realize—and this is so Larry David and Jerry Seinfeld—they’re looking at the page, saying the name out loud, and realize, no, of all the names they can think of, Kramer is actually the funniest name.

It just sounds funny.

There’s just—

Yes.

—something about it that sounds funny, and funny is the most important thing. Everything else is secondary to that. We have to go with funny, and so they name him Kramer.

And then, of course, it’s the best thing that ever happens to the actual Kramer, because he sets up Kramer’s New York Tours in New York City.

Right.

So they need to cast the character, and Larry says, “I know the perfect guy from my days back at Fridays: Michael Richards.”

Yep.

And that’s how Michael Richards joins the show.

George Shapiro has this great quote: “Michael Richards was standing on his head while he was doing his lines, a yoga pose.” And Brandon Tartikoff goes, “Well, if you want funny…” This is at the audition. This is how he’s preparing to go in and audition for this role.

Yeah. I mean, again, this is so off the wall compared to anything that would go through the normal process—

Yep.

—at NBC. So then they need to cast the fourth character, a woman. The character of Claire, the guys’ regular waitress at the diner, is played by Lee Garlington. There’s no Elaine in the pilot, so they cast Claire, shoot the pilot, and then bring the NBC executives in to screen it. They’re not sure.

Interestingly, the comment that really sticks out from this session is that some of the executives thought it was too New York and too Jewish.

Yep, which is quite ironic, because basically the entire origins of American comedy are New York and Jewish.

But they didn’t wear it quite on their sleeve the way Jerry did. I mean, they named the show Seinfeld, and it has this very Jewish type of humor. The sensibility, the timing, the observational humor, the persnicketiness, the crankiness, the detail-orientedness, the obsession.

It’s a really good point. The Jewish tradition of comedy really was the main lineage of comedy in America. I mean, the Marx Brothers, George Burns—basically everybody who came out of vaudeville was Jewish. But they changed their names; they didn’t wear it on their sleeves, and it wasn’t as obvious. I think the thing the NBC executives didn’t realize is that by the late ’80s, it kind of didn’t matter anymore. Everybody knew Woody Allen was Jewish. He was the biggest name in comedy.

The other point in this is nobody knows anything.

Yeah.

It’s Seinfeld, right? It would go on to become Seinfeld, and they’re like, “Eh, I don’t know.”

Yep.

So they test it. They’re like, “We should proceed with our standard testing and feedback.”

We’ll recruit a test audience to watch this thing.

Right. The practice at the time—and I didn’t know this; it’s super interesting—was that they would cold-call a bunch of houses to recruit 400 households to watch an unused channel on their cable system at a certain time. If you knew to tune in and had the right hardware, you would tune in, and then you’d see the pilot pop on. I think there was nothing else afterward. You’re just watching this one channel at this one time.

Wow.

The researchers would then convene these people or call them and ask them a standard set of questions. It tested horribly.

Horribly.

Like—

Yes.

—the network executives were just a foreshadowing of how people in the world saw it. Some of the most infamous comments that came out of this were, “You can’t get too excited about going to the laundromat.”

Which is where most of the pilot takes place, with Jerry and George at a laundromat.

And Jerry and George have this whole discussion about what it means that this girl who’s coming into town wants to see Jerry when she’s there, whether she’s going to stay with him, and how much they should read into it. When he greets her at the airport, are they supposed to hug? Is she going to hug him? They’re just overanalyzing the crap out of this situation, but they’re having the conversation in a laundromat, which is where a lot of the feedback focused. The other quotes include, “Jerry’s loser friend George isn’t—”

Right.

—“a forceful character,” “Jerry needs a stronger supporting cast,” and, “Why are they interrupting the stand-up for these stupid stories?”

Yeah.

If the viewers liked anything about it, it was actually just Jerry’s stand-up, but even that didn’t test that strong. The recommendation from the research department to NBC was: if you’re going to air this, and if you’re going to green-light it and do something with Jerry, it should be stand-up, and it should be better than this.

Yeah. My favorite quote from the pilot research report was, “No segment of the audience was eager to watch the show again, and the overall pilot performance was rated as weak.”

And Jerry and Larry did not see this memo for several years, but once it was brought to their attention, they hung it on the wall of the bathroom on set.

Yes, that’s right, in the bathroom of their production office on the set.

So they do air it.

They do air it in a time-and-day slot where the network notoriously burns off not-very-promising pilots. They air it on July 5, 1989. Not a lot of people in America are tuning in to television on July 5.

No.

And with that, 99 times out of 100 in history, that would’ve been the end of The Seinfeld Chronicles. It would’ve been put out to pasture with many, many, many other failed pilots. NBC does not pick up the show for a season run that fall in 1989. Instead, NBC picks up two other sitcoms over Seinfeld and all the other pilots they ran: The Nut House and Sister Kate.

You probably don’t remember them.

Yes, exactly. Just to prove your point, Ben, that nobody knows anything. That would’ve been the end, except that back in the late-night and specials department at NBC, they keep thinking about this Seinfeld thing. They love Jerry. They want to do something with Jerry, and they’re like, “Yeah, everybody was worried it was too Jewish, it was too New York, but I’ll be damned if it’s not funny.” It was just funny.

And even though most people didn’t like it, there was a small group of people who completely got it.

Yep.

It’s like any successful startup. You’re not trying to be a 7 for everyone. You’re trying to be a 9.9 for a very small group of people, and then figure out how to get those superfans to tell their friends. There were people at NBC who were like, “This is the future. This is what—”

Yep.

—we need to do. We need to be in business with Jerry Seinfeld and this brand of comedy.

And it was Warren Littlefield in primetime and Rick Ludwin in specials. The two of them come together, and they hatch a last-ditch plan to give their little baby another chance. They decide, “Well, since we’ve been doing this out of specials, what if we just cancel one of the other one-off specials we were going to do and use that budget to place an order—a season, quote-unquote, order—for this show that we love?” So they cancel one two-hour Bob Hope special they were planning to do on NBC that fall, and instead they use that budget. They call up Jerry and Larry and say, “Great news. We are ordering a season of The Seinfeld Chronicles.” Jerry says, “Great. What’s the order?” Four episodes. That made it, I believe, the smallest first-season order in television history.

And didn’t you talk to Warren Littlefield about this?

Yes, yes. The quote from Warren about how this conversation went down: “I called Jerry to tell him the good news. There was a long silence over the line. Jerry finally asked me, ‘Has any show in the history of television ever succeeded with just four episodes?’” And Warren says, “I didn’t know, and that’s exactly what I told him.”

Probably not. If anybody knows, it’s probably the head of primetime at NBC.

Yep. Jerry’s telling Larry in the background as they’re having this conversation, and Larry famously reacts to this with, “Ah, it’s fine. I think four episodes is all I got in me anyway.” It’s the ultimate Larry David line.

Larry David would go on to be the head writer of 135 Seinfeld episodes.

Yep, yep. So they’ve got the order.

And Jerry has later said in other interviews that he and Castle Rock were looking around for other buyers, because they assumed NBC was out, which is a fair assumption. Fox actually made an offer and guaranteed—

That’s right.

—24 episodes. But Jerry wanted that NBC imprimatur of a real network.

Well, Fox was also a startup network at this point in time.

Yes.

It was not the Fox you know today as one of the major broadcast networks in the U.S.

Jerry has phrased it as, “It wasn’t the major leagues—”

Yeah.

“—and I wanted to be in the majors.” And so they went with NBC’s 4-episode deal instead.

Yep. So they get the order, and NBC’s like, “We trust you, but there are some problems with this show. In particular, the worst-scoring demographic in the pilot was women.”

Yep.

“Women don’t relate to this show at all. And usually what we do here at the network is just add a character from that demographic group to the episode. So I know you guys have got Claire, the waitress.”

She needs to be hanging out, a member of the group.

Yep, which leads to the network’s, I think, one good creative note in the history of Seinfeld, which makes the whole show work: “You need a girl in this thing.” So adding Elaine—

Yes, the makers of Claude. And, uh, David, I wanna start with that research memo about the pilot.

Yes, uh, viewers didn’t really like the cast of supporting characters. They thought the scenes of Jerry and his friends just hanging around were boring. Not good.

Yeah. But in 1989, they weren’t wrong. I mean, there wasn’t really anything to come back for yet. The show that people couldn’t stop watching that it would eventually become was really built out over those nine seasons of shared history. So all the things you know, Vandelay Industries, Festivus—

Yes, yes.

—every single time that Newman walks in and goes, “Hello, Jerry.” All of it gets so much funnier the more you see.

Yep. And Anthropic just did the same thing with Claude. For most people, every conversation with an LLM has been like the Seinfeld pilot. You explain what you’re working on, how you like things done, and the next time you sit down, it has no idea who you are again. Now, their new memory functionality carries across chat and co-work, so all of that accumulates no matter where you’re working in Claude. And for teams in Slack, Claude Tag does this for your whole team. One Claude in the channel that’s read every thread, knows the standing instructions, and can notice things nobody asked it about.

So the value basically just keeps building the more you use it. A conversation with Claude isn’t disposable anymore. It carries into the next one. And so if you wanna learn more about how Claude can help transform your chats into tangible, memorable work, check out claude.ai/acquired. And if you are inquiring about enterprise usage, just tell them that Ben and David sent you.

So adding Elaine—

Yes, arguably makes the show. I mean—

Yes.

When you watch the pilot, you’re like, “Oh yeah, there is a giant ingredient missing.” And it’s not just because the couch is weird, and Jerry’s apartment’s weird. There’s an Elaine-shaped hole in the show.

Totally. Elaine makes the show, and it’s not just NBC’s note of, “You need a girl.” It’s so much more than that. Yes, adding a female character gives Seinfeld a lot more appeal to more demographics than the pilot did, but the character of Elaine is also this incredible act of subversion to the network. By “You need a girl in it,” NBC meant, “Give Jerry a love interest,” and that is not what Larry and Jerry are doing with Elaine. I think it’s really what establishes what Seinfeld, the show, is.

Yes, because if you look at every other sitcom, I bet NBC felt like they didn’t even need to give the full note: “Give Jerry a female friend who will have an on-again, off-again, ‘Is there a flame here?’ relationship, and then eventually end up together and give the viewers what they want.”

It’s Sam and Diane in Cheers.

Yes.

It’s Ross and Rachel.

Yes.

Blah, blah, blah.

Eventually, Jim and Pam. This is the formula, and the way that Jerry and Larry chose to interpret the note is literally, “But we’re not gonna do any of that other stuff.”

Yeah, we’re just gonna need a girl. George Shapiro, the talent manager, has a great quote about what “You need a girl” means. He says, “The network wanted Jerry and Julia to be married or dating. That was normal network thinking. Fortunately, we had two creators who didn’t give a crap. Jerry and Larry felt strongly that Jerry and Julia shouldn’t have a relationship, and they were ready to walk away from the show because of it.”

And the way that they pulled this off is Elaine is a former love interest.

Yes.

They’ve already had a relationship, and it didn’t work, and they broke up. So viewers, you don’t even need to take your minds there because we already told you it’s not gonna work. There is one episode where they explore—

“The Deal,” yes.

Incredible episode. But then after that—I think that’s the end of a season—they come back the next season. The whole thing is forgotten. They don’t take it anywhere. These characters are not a love interest, period.

That episode, “The Deal,” where the two of them re-explore the romantic relationship, is even more subversive to the network because Larry and Jerry do that episode, and then they just never mention it again.

Yes.

There’s no resolution. There’s no “They continued,” “They didn’t continue.” There’s no development. There’s no relationship. It’s just, “Eh, that didn’t happen.”

This show would go on to be number one by throwing out the playbook entirely and going straight off of the thing that Jerry and Larry wanted to make, with no reverence for the rules that you were supposed to do to get to number one.

Exactly. So this is why, when I said that the Elaine character makes Seinfeld what it is. What is Seinfeld? It is a merging of stand-up and the sitcom. Just like the whole development of the show, this is what it’s leading to. Like a sitcom, Seinfeld has continuity of characters, places, and relationships across episodes, seasons, and years of the show. You get to know these characters; you know the apartment, you know the coffee shop.

You know George just can’t help himself.

Yeah, yeah, yeah.

Every time, you can count on them to do the wrong thing, to see the temptation and give in to the temptation. Creating these consistent characters helps provide a framework for those jokes.

What does stand-up comedy not have? Continuity, consistency. That doesn’t exist in the stand-up world. Okay, now flip it on the other side. Like stand-up, Seinfeld doesn’t have any development of these characters, places, and relationships. Jerry’s always Jerry. George is always George. Elaine is always Elaine. You could tune in to any episode. There’s no development of the relationship or the characters; they never learn anything. The places don’t change. The apartment is the same. The coffee shop—

Right, they’re—

—is the same.

It’s a situational comedy—

But the situation is static.

Or I would say the characters are static. The characters are vessels—

Yes, yes.

—for humorous situations, whereas they called them sitcoms before that, but really what they were—

They were dramas with jokes.

Yes. And Seinfeld drops that and just creates situations that are inherently funny, with characters that are static, versus needing to insert isolated jokes to lighten the mood of a dramatic situation that has a beginning, middle, and end.

And those dramatic situations, as we were pointing out with the network note—the unsaid subtext of “You need a love interest”—are almost always either romantic relationships or family relationships. They develop over the course of the show, and the characters grow and learn and change and come together. Seinfeld is so radical by saying, “Absolutely not. We are not doing any of that.”

One of the writers I talked with for research is Jeff Schaffer, and he wrote for the show in the later years. His comment to me was, “The plot itself has to be funny when you retell it.” That’s how they know they’re onto something: if literally describing the situation is the humorous part. The best illustration of this is how Seinfeld episodes end. They don’t resolve the plot in a satisfying way.

Right.

It’s just like stand-up. When the joke ends—

Right. There are no consequences. It’s just funny.

Right. So the characters find themselves in a tough situation, but there’s no funny arc remaining after that. That’s okay. The show just ends. Freeze frame. Bum bum bum bum bum bum bum bum. You don’t get to know how they get out of the jam. There’s no continuity into the next episode. They start fresh next episode. It’s literally a stand-up act, but the people are in the situations instead of the jokes being purely verbal.

Yep. You led me right into the perfect Jerry quote about this. He says, “I personally believe that what Larry and I brought to the sitcom format, a 22-minute format, was a stand-up comedian’s structural sensibility. We didn’t really have time to tell what the characters were all about because we had jokes to do. We weren’t really storytellers. We became that, but only through that lens: the jokes.”

It’s so true.

Yep.

And the thing that makes it so universally appealing is that the characters they developed—we see ourselves in these characters. They represent a side of ourselves. We’ve all wanted to grab the éclair from the top of the trash can, but we have restraint.

We’re real people who move around the world. We’re complex. We have multiple dimensions. But Seinfeld represents wish fulfillment. George has no restraint. George is an avatar of our worst qualities. Elaine has a lot of them. Kramer has our most insane qualities. The recognition of this very basic human element in these characters is surprisingly timeless and durable.

So all of this comes together and crystallizes during this first-season timeline in Larry’s famous rule for the show. There’s only one rule.

Which I’ve heard is not a stated rule. This was more something that bubbled up later, that they realized they all had a shared understanding around. But Jerry, Larry, the writers—everyone had this ethos for sure.

Yep. No hugging, no learning. Which, again, is the exact opposite of every other sitcom that had ever been made to this point.

Right. The characters never hug and make up. In Full House, you know how at the end of every episode, Danny would sit down on the bed explaining some law of life to his daughters? “You did a bad thing, but you learned your lesson.” Seinfeld is: You did a bad thing, you got caught, you lied about it, you dug yourself into a deeper hole, and you learn nothing.

We end the episode. You do it again the next time. Yep.

Right. No one ever learns from their mistakes. And it provides this perfect substrate for the jokes to happen—

The comedy.

—these insane situations that they get themselves into. I was trying to reflect back on all this. I think Jerry and Larry viewed it as respect for the audience: We don’t need to spoon-feed you what emotions you should be having, and you don’t need to hug and make up and put a bow on everything. You get it. You’re in on the joke with us. The joke’s over. You’re a smart person who can figure it out. And at first, that leads to a very niche audience.

Yeah.

That is not a recipe to have a breakthrough Season 1 or 2 or 3, but it will earn the respect of some small group of people who are obsessed with it.

You’re so right. I think that’s exactly how they thought about it, and it’s so ahead of its time. It’s why Seinfeld is still so watchable and relevant today, because TV, sitcoms, all that other stuff—the hugging, the learning, the emotional arcs—it was all fake. It was all just fake. Eventually, thanks to cable and then the internet, audiences en masse came to see it for what it is: fake. And Seinfeld was like, “Great, we’re not gonna give you the fake stuff.”

We’re gonna give you something that you actually see in your life, too—

Yeah.

—that feels more like real life.

Yeah. Your friends and your family, they don’t grow, they don’t change.

Right. Right. The funny thing about all this is they got the green light for these four episodes, but Jerry and Larry did not think that NBC would actually put them on the air.

Yes. The story I heard on this was they literally thought about these four episodes as, “We are making this for the dinner party that we’re gonna host with our friends. Then, after the dinner party, we’re all gonna gather around a TV and pop in the tape of these episodes, and we can say, ‘Look at what we made. It never made it on the air, but look at how good it is.’”

And the fact that that’s what they made, and then that’s what succeeded, gave them this terrifying amount of autonomy from the network. They did it 100% their way, 100% the thing that they wanted to make, and that’s what people actually wanted. If you’re trying to exercise any measure of control as the network, that train has left the station.

Yeah. Yes. The inmates were running the asylum from the get-go.

Yes.

Especially with Larry running the show. So NBC amazingly does put it on the air, and the scheduling team comes to Castle Rock and to Larry and Jerry and says, “If you’re willing to wait and have this run over the summer”—and summer is usually the traditional downtime for networks, when they don’t have first-run shows going—

Mostly reruns.

Yep. “We could run it after Cheers reruns in the summer.” Now, you might ask: Why is NBC, a broadcaster, doing Cheers reruns? The networks would get the right to rerun each episode once over the summer.

And they would get the right to box out syndication for a certain period of time.

Yep. So Castle Rock and Jerry and Larry are like, “No-brainer, we’re gonna roll this thing after Cheers.” In the meantime, throughout the spring of 1990, ABC had launched another show called The Marshall Chronicles. Nothing like Seinfeld, but everybody started worrying, “Oh no, if we now launch The Seinfeld Chronicles over the summer, we’re gonna look like a me-too to The Marshall Chronicles over on ABC.” And so this is how The Seinfeld Chronicles gets shortened to just Seinfeld.

Drop the “The.” It’s cleaner.

It’s cleaner. Yes. Yes. So Seinfeld goes on the air Thursday, May 31, 1990, premiering after the summer rerun of Cheers. Critically, that very same month Brandon Tartikoff leaves NBC. He was the head of the entertainment portion of the network, so he didn’t run sports or news or anything like that, but everything within entertainment—

Comedies, late night.

—comedy, sitcoms, late-night specials, all reported up to Tartikoff. His successor is chosen: Warren Littlefield, one of the 2 primary champions of Seinfeld, has just become president of entertainment at NBC. That means when it comes to the next critical decision point in the young Seinfeld show’s life cycle—whether it’s gonna get an actual season in the fall, whether it’s finally gonna get picked up for real—it’s now Warren Littlefield’s decision to make. The new episodes air throughout June and July, and Littlefield loves the show; he wants to support it. Rick Ludwin, the specials department head, is right there too. But they know they’ve got resistance in the network, and Littlefield can make the decision, but they’ve gotta build consensus. So Warren pulls over a guy from NBC Research named Preston Beckman and says, “You know the folks at Nielsen, the ratings company? I want you to go talk to Nielsen and see if you can get custom reports made for each airing of these new Seinfeld episodes.”

Hmm.

“And I want you to get reports by city, by metro area, for each of these episodes, so we can have some data on whether this thing only plays in New York or whether it’s universal.” Beckman does. He goes to Nielsen, gets these custom reports, and comes back. There is no difference in audience retention from the Cheers reruns to staying with Seinfeld in any major metro area. The same percentage of viewers stays with Seinfeld in New York as in Chicago, Houston, Seattle, or San Francisco, and that percentage is pretty high. It’s not 100%; nobody retains 100% from Cheers, but it’s high. Most of the audience watching the Cheers reruns sticks around and watches Seinfeld.

Hmm.

So they’re like, “All right. I mean, the audience is not big yet for this. It wouldn’t be big for a while, but there’s something happening here, and there is something universal to—”

Yes.

—this show. It’s not just New York where this is playing.

Yep.

So the end of the summer rolls around, and now the decision has to be made at the network: What is the fall lineup gonna be? What are the new shows that NBC is gonna pick up? Warren has a quote in his memoir, which is great. He says, “I walked up to the scheduling board and grabbed the magnetic card that said Seinfeld. I took it off the fringes of the board, where we had our backup shows, and I put it right smack at the center. This is our future. Rick Ludwin smiled.” That’s the way it is in the memoir.

Success has many fathers.

The reality is, I think, that because of all the internal politicking and horse-trading for the fall schedule, they end up only picking up Seinfeld as a midseason replacement. So, half a season. “We’ll give you 13 episodes,” not a full-season order of 22-plus episodes. “We’re not gonna run it in the fall, but we’ll slot you in when we inevitably cancel one of the other shows in the spring.” It’s a half-hearted pickup.

So NBC comes to Jerry and Castle Rock and says, “Great, here’s a 13-episode order.” Larry goes to Jerry and goes, “Don’t accept this. I’m out of material.” What else could we possibly do? I’ve mined my entire life for all the best crazy situations that we could possibly put into these five episodes. I’m basically scraping the bottom of the barrel here.

Yes, yes.

Obviously, that wasn’t true, because there was way, way, way more material that Larry would go on to create. But it is illustrative: They’ve gotta bring in some fresh talent, because these guys are not out experiencing the world anymore. They’re heads-down writing a TV show. They need writers who are out observing the minutiae of the world to come and work with them.

Yes, totally. It’s also unbelievably unlikely that this happened. By the time Seinfeld gets picked up for this first half-season order, it’s over 18 months since they made the pilot—

Right.

—and over a year since the pilot aired. But because of the way it came up at NBC and through the specials department, and the belief that these guys had in it to keep meting out little chances to it, it broke through.

Yep.

After they get the pickup, Littlefield and Ludwin already have a sense from Larry and Jerry that they aren’t going to take any more notes from NBC, so they make another NBC executive do it for them.

So funny.

They draft another guy to be the hatchet man, essentially.

To give notes that they know aren’t going to be taken.

Yes.

It’s a giant waste of time.

Yes. A guy named Perry Simon. Perry has a great quote in Warren’s memoir about this: “Larry and Jerry came into my office, and Rick Ludwin was there, too. I tried to wing typical network notes. ‘Hey, we need a little more story, a little more of this, a little more of that.’ Larry and Jerry were incredibly gracious. ‘Let us work on this. We’ll come back to you.’ And then they walked out the door, and I knew that they were just like, ‘Fuck that.’”

As in, they weren’t listening to a word those guys were going to tell them ever again. Perry continues: “And now I think, thank God. Whatever they were doing, they were doing it right. It’s a good thing they didn’t listen.” Incredible.

All right. So what were these early episodes? What did season two have in it?

There’s some good stuff in there. They do “The Revenge,” where George quits his job and then comes back the next day like nothing happened.

I guess Larry found some more stuff in his life to mine for material.

Yes. They do “The Jacket,” which is one of my personal favorites.

Oh, where Jerry has to flip the suede jacket inside out to go out in the rain, and then—

With Elaine’s terrifying father, yeah.

—and won’t walk with him.

Another episode that happened to Larry in real life.

Because Larry was dating Richard Yates’s daughter—

Yes.

—and the character is based on Richard Yates.

Yes, just like Elaine’s dad in the TV show.

I see.

And then the big moment: “The Chinese Restaurant.” That’s in that first half-season.

They never leave the lobby of the Chinese restaurant in this entire episode. That must have been so frustrating for the network executives to get the script and be like, “Are you kidding me? This is a single-set sitcom? And not only is it a single set, you’re not even going to use the set that we built you on the soundstage? This isn’t free. We have to build a completely new restaurant set for you to shoot this episode in.”

And it’s totally absurd what you’re doing.

And basically nothing’s going to happen all episode, because it’s just people making phone calls from a payphone and getting mad at the guy who won’t let them get a seat. Is there really enough to move the story forward here in 22 minutes? And it turns out it was brilliant.

Yeah, a defining moment for the show. But during production, NBC is freaking out about this episode, so they consider shutting down production that week, which they would do from time to time with other shows. The network usually has the power to do whatever it wants. If it doesn’t like something, it shuts down production that week. So Rick Ludwin goes out for a walk with Larry around the lot and explains, “Hey, we’ve got some concerns about this one. What are you guys doing?”

And the network has real-time data coming in from its ad sales force, because they’re talking about episode plots to advertisers and trying to get them hooked on advertising. Imagine having to arm your sales force with the fact that the whole episode takes place in the lobby of a Chinese restaurant.

Right.

It’s not good for NBC.

Well, foreshadowing: imagine having to arm your sales force with the fact that the whole episode is about being the master of your domain.

We’ll get to that one in a minute.

So Rick takes Larry out on this walk around the lot, and Larry just blows up. He lets him have it. He’s like, “This is what the show is. This is my vision. If you don’t like it, I quit. Fine. You don’t want to make it? The show’s over.” Nobody did this. No creator would. Usually the network says, “We don’t like it,” and the response is, “Oh, okay, whatever you want.”

It’s interesting, because this is why Seinfeld succeeded, but the lesson here isn’t, “Be a blowhard and abrasive to everyone, insist that your vision is the correct vision, and take no notes ever—and then you’ll succeed.” For most people in most situations, that’s failure. But it just so happened that these two were comic geniuses and were right, and then absolutely worked their tails off to refine these stories with a team of writers to produce some of the funniest material ever seen on television at the time. But what is the lesson?

You hit the nail on the head. I was actually talking to Warren Littlefield about this during our research, because I asked, “Nobody ever made a show like this again. Why not? It was so clearly successful. It was the right way to do it.” There are all sorts of reasons: bureaucracy, people’s careers, politics, and so on. But he also made the really good point that not every creator is Larry David and Jerry Seinfeld. If you’re going to let a genius be a genius, you need to be sure you’re actually working with a genius.

Right. Right.

And most people are not.

Occasionally, out there, there’s a Nathan Fielder or a Tim Robinson, but most people with these totally ludicrous, absurdist ideas are wrong.

Yep.

They’re not geniuses.

It’s yet another parallel with Silicon Valley, right? Most founders are wrong, but some founders are right.

Yep.

So—

And when they’re right, they’re really right.

Yep. Season two, the first full half-season here, is great creatively. The finale is “The Busboy,” where Larry introduces the interweaving storylines that all intersect and resolve at the end in a grand finale.

Yeah, so this becomes a hallmark of Seinfeld. Typically, in sitcoms, there’s an A story, which takes up maybe 60 or 70 percent of the story, and a B story. You flip back and forth, and maybe they rely on each other, but they’re pretty separate. What they figured out in Seinfeld, particularly in “The Busboy”—that season two finale—is where they really hit their stride. They would give each character a storyline, so you have four concurrent storylines, which means you have to be really efficient in your storytelling. There could be no wasted words, no wasted minutes. As the episodes progress, the storylines start to be interwoven in unexpected and surprising ways, and then they almost always converge at the end in a violent, unexpected blowup that’s unfortunate for everyone and ruins all of their lives concurrently. And then cut to credits.

Yep.

And that became a real winning formula for them, which is hard. David, you and I know this is hard as you’re structuring stories.

It’s really hard.

You’re looking at it from all these different angles, especially as the story gets larger and larger. You’re like, “God, how do I introduce this here, pay it off later, and not spoil it in the middle?” And we’re not even doing comedy. We’re just doing storytelling here.

We’re doing nonfiction storytelling.

Yes. It’s an incredibly specialized skill to avoid spoiling the interwoven place where the storylines converge, while making them all funny along the way and making all the payoff happen at the right time. It’s something they figured out that no one else had done before.

I think I can tell you why. This is how every truly great stand-up routine ends.

Oh, yeah.

This is where they’re coming from. This is the DNA of the show.

The callbacks to the other jokes.

Yeah. At the end of a truly great stand-up routine, there’s a moment where you realize that everything throughout the whole 20 or 60 minutes was interwoven and building to this moment.

Yes.

And that’s what they do with the TV show.

No situation is there for filler. Nothing is wasted.

Yep.

So that takes us to what else makes this show different. We’ve talked about the fact that they are despicable characters, which isn’t novel now. A lot of people figured out that you can put deeply flawed characters like Michael Scott on TV, who aren’t just like, “Oh, Dad—”

Yep.

—and who never learn from their mistakes.

That’s thanks to Seinfeld, that people can do that now.

Right, right. They’re neurotic. Every situation they’re in is largely their own fault. It’s super relatable, but there are also a lot of structural things about the show, like the interwoven plotlines, that make it unique and difficult to pull off, and that were just novel. A typical sitcom with a two-act structure has seven scenes. That’s it, in 22 minutes. Seinfeld had two to three times as many, so you’d have 14 to 25 scenes per episode. But they just threw out the act structure.

Right.

Plots often don’t resolve—

Right, there aren’t acts. Yeah.

Yes.

Actually, Larry originally wanted it to be single-cam instead of a multi-cam setup, to basically resemble a movie. For anyone who’s unfamiliar, multi-cam is a proscenium-style show where you have sets and 4 cameras, all catching the same action. You might be able to get away with running the action only once because you’re catching it from every angle, and you’re just lighting it. It’s going to be really bright, but you’re lighting it from every angle so that any of the 4 cameras works at any given time.

Yep, it’s like theater.

Single-cam is probably more expensive because you have to run the action multiple times. You probably have to relight it every time you’re shooting it from—

Yep.

—a different angle. So if you’re shooting character A, and then the next run-through you’re going to shoot character B, there’s a pause and relight step. It has a more cinematic feel. NBC was able to push back enough to say, “We’re not doing single-cam for this show,” but they brought in a lot of single-camera elements. It did have more filmic lighting. It often used a pretty high number of location shoots for a sitcom, where they would—

Right.

—actually not shoot it on the stage that had the sets pre-built for Jerry’s apartment and the coffee shop.

Think about the number of Seinfeld scenes that are out on the street, in Central Park, in an airport, or in some other location.

Right, and that adds all this expense of packing up the whole cast and crew and getting them out there, especially when you’re shooting every week. They borrowed a lot from cinema that was uncommon on TV at the time. It’s not overacted. When I watch a lot of sitcoms from before Seinfeld today, I’m like, “Oh my God, it’s so overdone. Like, stop selling me on your fake emotion.” Seinfeld is not that. In fact, Jerry can barely act, and he’s laughing through the entire thing, but since it’s the situation that’s funny, it totally plays. I think Jerry’s chuckle is a cue for you to laugh along with him.

Yeah. Oh man, the scenes with Jerry Stiller, who plays Frank Costanza, George’s dad, are just so good. All the other actors are cracking up, and you can tell.

God, Jerry Stiller is so good. There’s no artificial laugh track. This is a purity thing for Larry and Jerry as stand-ups. If they didn’t earn the laugh, they weren’t putting a fake laugh in.

Right, from the live audience that was there, of course.

Every single laugh you hear on Seinfeld is the live audience laughing at that joke.

Yes, even for the scenes that were recorded off-set, they would play them on video screens to the live audience when they were there for the taping, and then record the laughter from the screens.

Yes, which has 2 jobs. One is to record the laugh, but two, they need to know if those jokes are funny, and they need to change the episode—

Right.

—if it’s not. It’s a real-time feedback mechanism because these guys come from stand-up.

Yep, exactly.

And then the last one that I didn’t really realize until last night: I was watching a bunch of episodes, and my wife and I were talking about this. It was kind of a lightbulb moment for me. Seinfeld episodes are not live camera-switched. They are edited in post.

Hmm.

Normally, what would happen is you’d be sitting in a sitcom proscenium, there’d be a live audience, the actors would be on the stage, and there’d be someone at a control board saying, “Camera A, camera B, camera C. Okay, now back to camera A. Camera B, go in for the two-shot. Great, cut to camera B.” They’re directing it.

Right.

In Seinfeld, they do some live switching, but that’s to get a feel. All of the real work is done in post, which gives them the flexibility to do 2 things. One, to make all the cuts much tighter. The scenes can be shorter, and you can get more scenes in and more situational jokes. And two, it lets you tell jokes you couldn’t otherwise do. So if you think about the episode “The Contest,” where, David, you mentioned being master of your own domain, there’s a joke where the way it’s told is they’re cutting to each of those characters. You’re seeing them lying in bed, and they’re either restless and can’t sleep, or they’re sleeping like a baby, and that’s the joke as it cuts around. That’s impossible to do in a live-switch show because there’s no way to make those cuts in front of a live audience. You have to record all the material, and then have a whole step afterward of sitting in an editing bay, making the cuts be the jokes.

And of course, that adds production complexity and expense. It’s a way to get closer to the single-cam—

Yes.

—more film-like ethos.

That’s exactly right. It’s hard, but these guys are nut jobs, they’re obsessives, they’re purists, and they want all the flexibility and pacing of editing a movie, while also getting the benefit of what you’d get with a live audience at a play: that laugh to let you know if the joke is landing or not. So they threaded this needle and invented a novel production process to get the best of both worlds.

Yep, yep. So at the end of that half-season, as a mid-season replacement, Seinfeld does get picked up for a real first full season: season 3 of the show.

Still with kind of a cult following—

Exactly.

—but it’s starting to catch.

Still on Wednesday nights. They’re not on Thursday nights yet. But even at the end of season 3, that first full season, Seinfeld was the 42nd-ranked show on television. Seinfeld’s got this cult following, all this creative juice, but certainly isn’t the centerpiece for the network. But season 3 would be the last time that would be true, and really the last time any of the actors in the show, whether leads or guest stars, could live a normal life ever again.

But before we tell the story of how Seinfeld finally caught on and became the Seinfeld that you know it today, now is a great time to thank our good friends at Sentry.

Yes. That is S-E-N-T-R-Y, like someone standing guard.

Which is exactly what Sentry does for developers. Sentry helps teams debug everything, from errors to latency issues, basically any software problem, and fix them before users get mad.

So David, I wanna talk about The Whale.

My favorite episode. We’re gonna spoil it.

The show gave us the single best root cause analysis story ever put on television.

Absolutely.

The perfect illustration of why you need Sentry, decades before Sentry was invented.

I love it.

In the episode where George pretends to be a marine biologist, he wades out to the beached whale that is in front of a crowd, and comes back holding a golf ball that he pulled out of its blowhole, and he says, “The sea was angry that day, my friends.”

The actual root cause of the golf ball being in the blowhole of the whale is Kramer from way earlier in the episode when he was hitting golf balls into the ocean. Nobody in the audience connected those two storylines until George pulled out the Kramer golf ball.

And that is exactly what a real software outage postmortem feels like.

Yes. Yes, yes.

There is the hero of the story who gets paged in the middle of the night, and that they tried to fix the issue, but then there’s the golf ball, some small change that shipped a long time ago that nobody mentally connected to the thing that is currently on fire. The hard part is not noticing the whale on the beach. It is realizing that, ah, it is actually the golf ball causing the issue.

Yep, yep. And that is what Sentry does. It takes the thing your users are yelling about and traces it back to the exact change that started it, which release, who was impacted, and the very commit or very golf ball with the developer’s name on it. Then all that context goes straight into whatever writes the fix, whether it’s Claude Code or Cursor or Sentry’s own agent, Seer, which finds the issue and opens the PR for a human to review.

This is why 200,000 organizations run on Sentry, whether it’s a solo side project or the engineering teams at Anthropic, Vercel, Linear, or GitHub. You can learn more about where software gets fixed at sentry.io/acquired, or click the link in the show notes and just tell them that Ben and David sent you.

All right. So here we are now in the fall of 1992, heading into season 4, the second full Seinfeld season. The show is this cult hit.

It’s maybe a little more than that. Season 3 averaged 18 million viewers per episode.

Yep, but it still hasn’t cracked the Nielsen top 30.

Which is crazy, though. I’ve got to interrupt you: 18 million isn’t in the Nielsen top 30? Today, you would never, ever, ever see 18 million people watching a single thing, no matter how good a show is, other than NFL and NBA games. There were 4 networks. That’s what you watched.

No internet, baby.

No YouTube, phones, podcasts, or short-form video. Cable had just started coming up, but most of America’s attention was still on one of those 4 broadcast networks in primetime. So 18 million viewers an episode not cracking the top 30 is nuts.

I think we’re still a year away from the Mosaic web browser, right? 1992?

Yep.

Yeah. There’s no competition.

Yep.

It’s a great time to be in television.

Yep.

Meanwhile, NBC has a problem because Cheers, the anchor of its whole comedy lineup, is in its final season, and Warren and the executives there don’t know what they’re going to do to replace it. Time magazine ran an article from this time: “NBC, the one-time kingpin of primetime, has seen its fortunes turn sour almost overnight. Its biggest hit of the ’80s, The Cosby Show, took an early retirement last spring. The network’s last remaining top 10 hit, Cheers, will call it quits at the end of this season. Highly regarded younger shows like Seinfeld have not lived up to ratings expectations. The network is desperately in need of a miracle.”

On top of that, Seinfeld is currently running on Wednesday nights. Going into season four, ABC moves its big new comedy hit, Home Improvement, to compete directly against Seinfeld in the Wednesday night slot. For the first time, Seinfeld not only has to prove that it can get a bigger audience, but it has to do so against a big challenge: direct competition in the same time slot from another network.

Yep.

And Home Improvement kicks its butt.

Yep.

By midseason, Home Improvement is pulling a 28% share of the audience in its time slot, and Seinfeld is down at 17%.

Not great, and it doesn’t feel to me like the future of the network. If you’re thinking, “Ooh, 17% versus 28%—they’re a close second or something like that,” they got so much of it for free.

Yeah.

If you’re going to turn on your TV, there are more or less four options that people are actually watching in this time slot, so it should be very competitive.

Yep. Larry and Jerry, though, and especially Larry, don’t care. They’re not making the show for the ratings. So this season, season four, they just go on an all-timer. They start with—I think the first season-long meta-arc ends up becoming a show-long meta-arc, where they have NBC, a fictional NBC, ask Jerry in to pitch a TV show—

Called Jerry.

—called Jerry.

They went with his other name—

Yeah, with his other name—

—because they didn’t want to call it Seinfeld.

And he and George come up with the idea of a show about nothing to pitch to NBC. That’s the first episode of season four. It continues off and on throughout the whole season.

And the “off and on” is important because each of these episodes can still stand on its own.

Right.

You don’t have to be invested in the multi-episode, season-long arc in order to get it.

Yep. Episode 7 of season four is “The Bubble Boy,” another classic.

I’m not sure you could make that now. If that was actually a news story right now, making fun of the Bubble Boy that everyone is writing articles about would be completely off-limits.

Well, speaking of completely off-limits, that brings us to the critical midpoint of the season, where everything changes: episode 11.

Isn’t “The Outing” also in season four?

Yes, but later, after episode 11.

Ah, I see.

Also so good.

Not that there’s anything wrong with that.

Not as good as episode 11, “The Contest.” We’ve alluded to this, but for anybody listening who hasn’t seen or heard of this episode, this is the “Master of Your Domain” episode, with the four characters making a bet to see who can go the longest.

The episode opens with George walking into a diner. The opening line he gives Jerry, Elaine, and Kramer in the booth is, “My mother caught me.”

I can’t even keep it together just talking about the episode.

They don’t need to do much from there. They go the entire episode without saying what they’re having a contest to try not to do. There’s this giant, unstated elephant. You know exactly what the elephant is the entire episode, and yet it’s perfect. It doesn’t break any rules, but they break all this new comedic ground.

Apparently, like all or almost all great Seinfeld episodes, this actually happened to Larry in real life too.

Of course it did.

And Larry was even scared of this episode. He’d been thinking, “Nah, we can’t do it. It’s too much.” But by season four, they’ve got enough confidence and a no-fear attitude. Larry talks to Jerry and tells him the idea, and Jerry says, “That’s funny. Let’s do it.”

So they write the episode, the two of them, in secret. Usually, in the office on the set that Larry and Jerry shared, they had a whiteboard. If you watch the Seinfeld reunion on Curb Your Enthusiasm, you can see the whiteboard in the office. On it, they had all the plot points for all the characters and the candidates, et cetera, et cetera. Anybody could come into their office—the other writers, the NBC executives—and see what was on the whiteboard. They didn’t put this one on. They just wrote it in secret. I don’t know if they put decoys on it. That would be even better.

Word did get out, though.

The story continues: They keep it secret throughout the writing process, and then it gets to the table read. The cast would do a table read of the script first, then some rehearsals, and then they would shoot the episode. This is pretty close to filming; you’re well into production week at this point.

We’re going to talk about the full weekly schedule of making a Seinfeld episode in a few minutes, but know this: when you’re at the table read, you’re 6 days from shooting the episode for real in front of a live studio audience.

Yep. You’re pretty close to the point of no return, or as close as Larry and Jerry could engineer getting—

Yes.

—before revealing what they were doing. The Broadcast Standards department at NBC, the in-house censor responsible for keeping all of NBC’s programming up to broadcast standards, of course hears about this right away. They’re just losing their minds. The woman who runs this department, Dr. Roz Weinman in New York, calls Warren and is just apoplectic. Warren’s like, “Well, it is Seinfeld. It’s the guys. They don’t say the word. It’s funny.”

Somehow—I don’t know if she was a fan of the show and got it—she said, “Well, all right. We’re going to keep a close eye on this. We could pull the plug at any time, but in this case, with this show, it might be enough that this show has a pact with its audience, that we can get away with this.” This is unbelievable.

Because Broadcast Standards really has 2 jobs. One is, are we literally going to fall afoul of any FCC regulations and get in trouble as a network? Two is, is there going to be any blowback on our network that hurts our brand?

Yep.

People don’t like us anymore, advertisers run, things like that. If you’re not running afoul of the first one, because no words are coming out of your mouth, then it’s really just about—

The question is only number two, yeah.

Right: do we think the audience will love or hate this?

Yep.

I think it’s a big risk, but a very perceptive one: Seinfeld has actually cultivated an audience where this is entirely okay, especially done this artfully.

Yep, yep. Broadcast Standards lets it through, and then Sales calls up and they’re like, “Are you out of your mind? We have to tell the advertisers what their spots are going to run against.”

Warren says, “All right, well, let’s let them keep going. We’ll get a rough cut of the edit before we have to put it on air.” The rough cut comes in, they give it to Sales, and Sales shares it with the advertisers. They come back and say, “Hey, we’ve got a bunch of advertisers who are going to pull out. They’re not okay with this. We’re going to have to cut the rates for this episode to backfill and get enough new sponsors at the last minute to fill the episode.”

Warren says, “Okay, how about this? There are these cable networks out there. MTV’s out there. They’ve got this same audience. They’re killing it with a bunch of alcohol companies as sponsors, and Nike’s sponsoring them. What if you guys go to all the advertisers on MTV and say, ‘Hey, we’ve got an opportunity to get you into Seinfeld this week’?” Which they do, and they fill the episode. That’s how Sales allows it to go through.

For all the advertisers who didn’t pull out, the regular sponsors who stuck with the episode, they end up having leather-bound copies of the script printed, autographed by the cast, and sent out as a thank-you for sticking with us. Then the episode airs. There’s no protest. It’s great. It becomes the first catchphrase moment for the show: “Master of my domain.” “Are you master of your domain?”

Yep.

It completely changed the rules for Seinfeld.

And it cemented Seinfeld as a water-cooler conversation show.

Yes.

This was something you were going to share with your friends.

You sure as hell were going to talk about this the next day.

Yeah.

Many years later, in 2009, TV Guide ranked the greatest television episodes of all time. This episode was ranked number one.

Yeah, of course. Had they moved to Thursdays yet at this point?

No, no. They’re struggling. They’re getting the pants beaten off them by Home Improvement on Wednesday nights. This is the crucible moment for the show. Right after this is when NBC makes the decision. They say, “All right, this is magic. We were right about this show. It’s just special. We’re going to have to bet on this. We’re going to make this our future. We’re going to move it to Thursday right now. We’re going to air it after Cheers, and then when Cheers goes off the air after this season, Seinfeld is taking our top slot.”

If it performs. This is the—

If it performs.

Audition.

Yep, yep.

Which, of course, Larry David is furious about.

Yes, yes.

His quote is, “If they didn’t watch us on Wednesdays, I don’t want them watching us on Thursdays. We’ve earned this weird niche audience that is our people. And you’re just about to blast us out to the mass public?” “Just going to go right from Cheers into Seinfeld? They’re going to get hit by a mental bus.”

Ah, yes. Famously, that was Larry’s reaction. Equally famously, this is why they were such a great partnership. Jerry’s response to NBC about the move to Thursday night was, “Thank you very much. We will take the new time slot.”

Yeah. Good business decision.

Yes, yes.

It is interesting thinking about Larry’s reaction here. Part of it is that he’s a purist in so many ways, and he has the element of George Costanza. He’s not as pathetic as George is.

No.

I think that’s fair. They’ve amped up George’s pathetic dial to 11. But Larry does have the sort of duality George has: thinking he’s the greatest thing to ever walk planet Earth. George isn’t, but Larry kind of is, coupled with extreme self-consciousness, self-loathing, and self-doubt.

Yes.

So to tell Larry David, “We’re going to promote you to this giant spot,” it’s like, “No, no. If people truly loved us, they would’ve sought us out and found us. I don’t need these people who aren’t going to do the work to watch my excellent, perfect television show.”

Right. Ah.

And I think it is true. We think about this a lot for Acquired. I think there’s a business strategy angle to growing slowly through word of mouth. It makes you more durable when you grow slowly through word of mouth and have a core of extreme fandom, versus quick mass exposure. The quicker you go up, the quicker you go down. I think Seinfeld taking four seasons across five—

Absolutely.

—years to break through is part of the durability. There was a real core to explode out from.

Absolutely. That is all true. And once you make the transition, you can’t go back.

That’s true.

You’ve got to go to Thursday night.

Yep.

You’ve got to be in the big leagues.

Yep.

It is a landmark moment.

Okay, so I never understood why Thursday nights were such a great business opportunity, or why this was such a big deal for TV. People would always talk about the Thursday night lineup, and I grew up watching Friends. When I watched Seinfeld, it was more in reruns, because I was born literally the month the pilot came out. To me, the whole arc was basically before I was of Seinfeld-watching age. I’ve now seen every episode, but mostly in reruns. For me, Friends was the anchor NBC show on Thursday night, and I kind of knew Thursday was the biggest night, but why? Why is it different from Tuesday? I get why it’s different from Friday. Friday’s the weekend. Saturday and Sunday are kind of about sports, going out, or living your life. But why are we discriminating between days of the week? It was your last chance to reach an audience before—

Before the weekend.

—the weekend.

Yep.

So if you’re launching a movie that’s going to come out on Friday, you need to be advertising. If you’re launching a product where you want to drive people to stores over the weekend, or you’re trying to hit consumers with a message before some set of weekend activities, Thursday night was your last shot. It was the most important night for recency bias to land a message.

If you’re NBC itself and you want to advertise that week’s NFL matchup, yes, it is the most important night. And the Thursday night lineup on NBC was more profitable than all of the other nights combined.

What?

Yes.

It’s that outsized?

Yes, it was that outsized. Part of that, too, was just because NBC was such a powerhouse on Thursday night. That’s where their marquee shows lived.

But wow, you have the same amount of ad inventory you’re selling each weekday night, and Thursday’s rates were high enough that they dwarfed the sales for all those other nights. Wow.

Yes.

Combined.

Yes. So Seinfeld moving into this hallowed time slot is huge, huge. And boy, does it work. The first week Seinfeld moves to Thursdays, in February 1993, NBC—by the way—had had the Super Bowl in January 1993. They used promos during the Super Bowl to announce the Seinfeld move to—

Ooh.

—Thursday night. So they went big on this.

And had they coined “Must See TV” yet?

No. So they rolled out the “Must See TV” slogan for—

Seinfeld as the anchor moving into Thursday nights.

And it was what? Seinfeld, Cheers had ended, so I guess Frasier, the spinoff, was just starting. I think Wings—

Right.

—Mad About You.

There’s a whole sub-drama: Wings was the golden child from the comedy department at NBC.

Ah.

The sitcom department was always trying to push Wings over Seinfeld.

But NBC did something really smart here, branding the night as—

Yeah.

—“Must See TV” and creating a network identity around NBC rather than just marketing the shows themselves. So you actually ended up with this affinity for the network.

For me growing up, NBC meant something because of this.

Yeah.

None of the other networks meant anything.

Yeah.

They just had stuff that I watched on them.

And that continued. If I think about what came after Seinfeld: Friends, The Office. In between the two, you had Will & Grace. Around the time of The Office and later, you had 30 Rock, Parks and Rec. There was this whole—

NBC comedy powerhouse.

Yes.

Yep.

And a lot of it used SNL talent.

Yes.

Which is also NBC.

Which is also technically true of Seinfeld.

Yes.

So, back to the actual move here in February 1993, when Seinfeld moves from Wednesday to Thursday, the show’s ratings rise 57%, and it goes from the 45th most popular TV show on air to the fifth in one week. Obviously, a huge part of that is the power of the time slot, but it’s also that after the transition, everything changes. You can’t go back.

And the thing that was shocking even to everyone at the network was that if you put something after Cheers, it’s going to get good ratings, but it’s going to be a drop-off from Cheers to that show. It’s just a matter of how much drop-off. Seinfeld actually gained audience over Cheers, in that they retained the Cheers audience and then new people tuned in just to see the next Seinfeld episode.

This is the punchline. Now here in the big leagues, on first-run Thursday nights, it retains all the audience, and by the end of the season, it’s bigger. It’s crazy.

It’s the new anchor show.

It’s the new king.

Larry was asked about this in 1993. The LA Times interviewed him. I think viewership hit an average of 30 million viewers per episode by this point, and Larry’s quote is, “This probably means that a catastrophe is imminent. Something terrible will emerge from this. I don’t really know how to account for it.”

Oh, man, oh, man. Well, a catastrophe was not imminent because the season continues. They just keep crushing it. “The Outing,” episode 17: “Not that there’s anything wrong with that.” Episode 20 is “The Junior Mint.”

Oh, of course.

Which really starts to foreshadow the absurdity that would come into Seinfeld in later years.

This is a great example of the concept: the episode is a joke in itself, the absurdity of Jerry and—

Kramer. Jerry and Kramer—

—get invited to observe a surgery from a balcony above the OR. They’re eating Junior Mints, and one of the Junior Mints gets fumbled and ends up falling into the patient.

Oh, man.

Which, fun fact, using the cameras at the time, the cameras would not have picked up a Junior Mint, so they actually used a York Peppermint Pattie for the slow-motion tumble.

That’s right. That’s right. Great trivia. Great trivia.

Yes.

And the cultural relevance, the catchphrases beginning with “master of my domain,” “master of your domain.” After that, we get “yada, yada, yada,” “double-dipping,” “shrinkage,” Festivus. And on and on. These are all words and phrases that Seinfeld invented.

And all this is happening as we head into 1994 and 1995, right as the internet is coming online.

That’s right. According to the book Seinfeldia, which is a great read, there were a bunch of early online communities about Seinfeld.

They were analyzing each episode the week it came out. It was crazy. Steve Case, the head of AOL, would talk about how AOL’s main competition was Seinfeld. They would never see AOL connection numbers dip except when Seinfeld was airing.

Wow.

Then they would go right back up as everybody came on AOL to talk about Seinfeld.

And you know who’s talking about stuff on the internet? Urban, well-educated, affluent young males.

Yeah. I mean, it was the most perfect timing you could imagine for this type of show to have that moment of cultural relevance, with the contest, the move to the marquee slot on Thursday nights on NBC, and then the internet hitting, all in quick succession.

It’s amazing. So this is all going really well, but what’s going on inside is basically killing the people who are making it.

Yeah.

The obsession that’s going into this, the—

The intensity.

Every word, the writing and the rewriting, and this obsession with the joke. Nothing else matters. These are real auteurs who attracted other people as psychotic as they were to obsess with them. And they needed to, because at this point, Jerry and Larry, after 5 years of writing a television show, weren’t experiencing the real world anymore. So they needed to keep bringing in young writers because they needed to mine those people’s brains for stories that happened to them.

They needed to find mini Larrys and Jerrys who still lived in New York, hopefully, so they could get some element of that. But what ended up being an amazing place to recruit from was the Harvard Lampoon. These young comics were super smart, but they were actually experiencing the world. For a while, they brought in a completely fresh crop of writers every year because they would basically steal all the best material from everyone’s life and then move on to the next one.

Festivus was a thing from someone’s life. George’s whole thing about whether he’s going to put a tip in the jar when they’re not looking, because he doesn’t get credit for the tip, was a thing from someone’s life. You kind of need all this fresh blood to come in and get material.

So how did it work to actually produce the weekly Seinfeld episode? Thank you to Alec Berg and David Mandel for talking us through this. They were writers on the show, and there are some great interviews with Jason Alexander that share a lot of the detail, too.

The typical sitcom schedule would start on a Monday with rehearsals, leading up to a Friday shoot. On Seinfeld, they realized, “Well, actually, we could start the week on Wednesday and shoot the following Tuesday. When the actors go home for the weekend, that means we can get some extra time to rewrite the episode and make it better.” That was fine, since they weren’t married and didn’t have kids. They had no personal life to speak of. They were obsessed with this, so that’s just what they did.

Day 1 starts with a table read. Everyone is there: producers, writers, NBC executives, and Castle Rock representatives. As Jason Alexander put it, they would then have a big powwow after the table read. They would give their notes, then Larry would quit. The notes would be thrown away, Larry would agree to stay, and then he would come back tomorrow.

Sounds about right.

That’s day 1. The actors start trying to rehearse, but it’s all going to change so materially, and they know it, so they’re not taking that rehearsal that seriously. They’re just familiarizing themselves with the material. Larry and Jerry would then do a bunch of rewrites overnight. The scripts don’t really have stage directions. It’s just dialogue, because they’re comedians. That’s what they write.

Right.

So the actors had to figure it out. Seinfeld had this really unique, collaborative way of working, where the actors would stay on set even when it wasn’t their scene so they could work through it together and trade ideas. They’d say, “Oh, actually, I think it would be funnier if Kramer’s at the fridge right now with the door open, going through it, rather than George,” and try to figure out the blocking together.

Yep.

Then day 3: more full rewrites overnight, more rehearsing, still just internal to the team. The network isn’t there yet. The actors are there, the writers, Larry, and Jerry. This becomes more or less the shape of the final script. Then, at the end of the day, NBC and Castle Rock come in. They watch a full run-through and give their notes. As Jason Alexander says, Larry would quit.

Yep.

Their notes would be diminished, and Larry would come back.

Day 4 is camera-blocking day. This is when the cameramen come in and start learning their shots: who’s taking what. The episode is finalized enough to figure out what shots they need and which cameras they’re assigning. It’s a very difficult thing, because it’s not like the 4 cameras just sit there and don’t change. Let’s say you’re camera 1. You’re responsible for a wide shot. It comes off you and goes to camera 3. You have 5 seconds to scramble, shift, and zoom, and get a two-shot on 2 characters, because when it flips back to you, that’s where you’re supposed to be.

Yep.

It’s a real ballet and art. They all rehearse as a unit, the cameramen and the actors, because the next day they’re in front of a live audience.

Yep.

On day 4, especially as the show got bigger and they were doing more on-location filming outside the permanent sets—the coffee shop and Jerry’s apartment—they’d do things like go to the fake New York street on a different lot for the outdoor street shots, or actual filming locations like the cemetery where George visits Susan.

Oh, boy.

Yeah. Then day 5 is rehearsal in the morning, and they bring in the live audience to film in the afternoon. They’d run the entire show in chronological order. If there were any scenes that weren’t on those permanent sets, the audience—who were sitting in big bleachers in front of the coffee shop and Jerry’s apartment—would watch a rough cut of what was shot outside on a screen they brought down. That way, they could record those laughs, just like we talked about earlier.

If they didn’t get a laugh, do you know what they would do, David?

Ooh, no, I didn’t find this.

If it wasn’t going as expected, even with the live audience there, they would pause production. They’d huddle all the writers, actors, and the director on stage. They’d bring out a live band that was just waiting on set to entertain the audience. They also had comics and other people warm up the audience.

Right.

They’d huddle and try to figure out a better joke.

Hmm, yeah. Why isn’t this working? Yep.

Or how to rewrite it live. The best example of this is in “The Marine Biologist.”

Yeah, yeah.

The episode is supposed to end with George walking into the ocean. If you’ve seen this episode, that is not the end.

This is the best story.

It’s so good. They bring down the screen to show the on-location shot. George walks into the ocean. The audience is confused. There’s been a lot of buildup, but there’s no joke here. So they all huddle and come up with the idea for George to have an additional scene in the booth, where he does a monologue. Then he finally produces the golf ball out of his pocket, which ties in a plot from earlier in the episode, where Kramer’s hitting golf balls into the ocean. That golf ball turns out to be lodged in a whale’s blowhole in George’s storyline, which is why the whale needed a marine biologist in the first place—the role George was pretending to have.

So good. It’s so good.

Larry goes off after their huddle and writes a full-page monologue on the spot. Jason Alexander tells Larry, “Yeah, I can do that. I’m a Tony Award-winning actor.”

Yeah.

I’m a theater actor.

Yeah.

This is “Put me in, coach.” This is what I do. Give me a monologue.

It’s already late at night at this point.

Yes.

So, yeah, he memorizes it and performs it on the spot. It’s incredible.

It’s the first time it’s ever been read. There was no rehearsal when George goes, “The sea was angry that day, my friends.”

Oh, so good.

It gets this giant laugh. Then, of course, when the laugh finally dies down after he produces the golf ball, Kramer looks at him and goes, “Is that a Titleist?”

Yep.

“Hole in one, huh?”

Oh.

So this happens, and then the next day they come in for a table read.

Yep.

Isn’t that insane?

Nonstop. Nonstop.

In parallel to this entire process is pre-production, where all the writers are paired up in groups of 2 or often just alone in their own offices, writing the next week’s episode, the week after that, the week after that, and then—

And Larry and Jerry are working with them and getting it ready for the table read.

But how are they working with them? They’re also full-time—

That’s the point. Yeah.

In a seven-day work block to produce the current episode. It’s crazy that no wonder they’re just looking over outlines of the next week and the week after, and why it requires so much rewriting the week of is because it really hasn’t gotten, especially Jerry’s, attention yet.

Yeah, the Seinfeld star is burning brighter and brighter and brighter, consuming everybody within it in the fusion reactor at its core.

Yes.

Which is a good time to flip back over to the business side of Seinfeld. Because also, right at this time, after the move to Thursday night, after the huge success, after the internet starts to come online, Seinfeld hits syndication.

So Jerry’s quote to the LA Times here is, “We’ll be in syndication next year, and that will probably help us further, the same way it helped Cheers. Most people are still just now discovering our show. Most of the audience watching the show on Thursdays have not seen us before. They’re new to us. There’s 60-some-odd episodes they haven’t seen.”

Yep. Ooh, boy, and were those 60 episodes going to be worth a lot of money—

Yep.

—to the ownership group that we discussed earlier in the episode. Because Seinfeld is basically the most perfect syndication show ever created. Because of the “no hugging, no learning” element, no character development, no relationship development, you can tune in anytime to any episode in any order. It doesn’t matter; you’re going to get a full, entertaining experience.

And because these characters are just vessels that you don’t really need to invest in their storyline, they’re just mirrors of the worst part of ourselves, the situations provide the comedy. So it’s a very internationally relatable show, too, in a way that not all comedy has.

Yep, yep, totally. So why now, and what exactly is this business of syndication? There’s sort of a magic unofficial number for TV shows back in this time: 100 episodes. That was when you entered into syndication.

And the 100-episode thing kind of stems from having a large enough number of episodes to demonstrate that people liked the show and that there was familiarity with it, or you wouldn’t have continued. There’s a big body of episodes you can license—

Yep.

—to someone to show. Because they don’t want to buy your 10 episodes. That’s not interesting. They want to buy a big block of them. Syndication, for those not familiar, is basically any time a show gets licensed to another distribution option besides the primary first-run TV network. Essentially, those options are international, off-network—

Yep.

—which is the biggest one for the longest time. I did not understand how this worked. When NBC buys a show, they’re buying it directly from Castle Rock. But once that enters syndication and the reruns are going constantly, that has nothing to do with NBC.

Yes.

That is just the local affiliates. And the local affiliates, you know, it starts with a K or a W; it’s a four-letter station that’s broadcast over the air in your city.

Yep, and it might be an NBC or an ABC or a CBS or a Fox station.

Right.

But they only take the network’s programming during primetime or sporting events, et cetera, et cetera.

The rest of the time, they have to go find their own programming. So either they need to make it, or they need to go buy it directly.

Mm-hmm.

And there are 1,000 of them. This is where Sony actually does something. This is where the distributor matters.

Yes, they earn their keep now.

For off-network syndication, what you’re really trying to figure out is how many of these individually owned local TV stations are willing to buy my 100 episodes, and at what rate. That is how off-network works. Then there’s off-network cable, same thing, but to cable stations. Fortunately, there are many fewer cable stations than there are local TV affiliates. Then, in the far future—but it hasn’t happened yet—is subscription video on demand, or streaming, which would become a very, very valuable part of syndication.

But the interesting thing about the TV business is just how large off-network syndication and streaming syndication could be relative to the original first-run business. If you think about what it actually costs to make a Seinfeld episode in season 1, probably less than half a million dollars.

Yeah.

Probably less than $400,000. You’re not paying the stars that much yet. Production costs aren’t actually that high. So then what’s NBC going to pay for it? $300,000?

Right.

You know.

80%-ish of whatever that number is. Not a lot of money.

So let’s look at season 2, for example: 12 episodes. That probably cost somewhere in the $5 million to $6 million to produce, which means somewhere in the $4 million range for NBC to buy. It’s actually kind of a small thing, but those 12 episodes, when they’re sold later in syndication, can fetch huge sums of money, especially if it runs for a long time, because the rights can be sold over and over and over again.

And the most important thing is that group, David, that you were pointing out, that sort of cap table of who owns the show. It’s a totally different split from who makes the money the first time around.

Yeah.

The first time around, there are all these people you’re paying on salary, especially the actors. The second time around, the people who are participating in all the syndication are that whole waterfall of who actually owns the show.

Yep, and this is back to why Larry and Jerry got the most valuable deal in television history, because they got huge amounts for creators in that backend waterfall.

Yep.

And then that backend waterfall would be billions and billions of dollars. And this is where it all starts.

At least reportedly. Again, this is a funny thing about doing this versus covering public companies: we’re relying on some reporting done by a few news outlets over the years, but I think we have to take that at face value.

Yes, but assuredly billions of dollars have gone through this waterfall. So, yeah, we sort of joked about Sony/Columbia earning their keep. In this first syndication cycle, which is just for local broadcast affiliates—they can’t take it to cable yet—Sony sells the show to a record 224 local TV stations across America.

Out of the 1,000 TV stations total. So basically, one station in every market in the country is taking the exclusive local rights.

And that generated an aggregate sum of $500 million in revenue—actually, over $500 million in revenue—in a single event here in 1995. That was just for the first five-year syndication window, and only on local TV affiliates, not even on cable yet.

Yeah.

And it turned out that those local affiliate stations that were paying all that money for Seinfeld were actually getting a pretty good deal. All of a sudden, reports start popping up as Seinfeld enters syndication that stations running Seinfeld reruns would end up winning the time slot in their local market. They would beat live programming on other stations at the same time. So, let’s say you’re a local affiliate TV station in Buffalo, New York. You decide you’re going to run Seinfeld reruns during a particular time slot when the other stations in town are running local news. Seinfeld beats the local news.

It’s the audience of people who never got to watch it on network, because it only ever aired twice.

Right.

You missed a big episode. Let’s say you missed “The Contest.” You were working the first night, and then you weren’t around because you were doing summer travel or whatever. The only chance to catch it is in syndication, and that’s a thing that everyone talked about. That could be a marketing event if you were a local TV station—

Right.

—trying to drive a bunch of attention. “We’re going to air that episode.”

Right. You could market that you’re going to be running “The Contest” on—

Yes.

—Tuesday night at 11:00 or something like that.

Yes.

I mean, that sounds way more compelling than local news to me.

Or whatever other local programming. I think Wheel of Fortune—there were a lot of game shows—

Yep.

—that would be, I think the phrase is, first-run syndication. That would skip the network altogether and be produced directly to sell to the local affiliates. Actually, Oprah was this.

Yes, we talked about this on our Oprah episode.

Yep.

And just to make it even more fitting, that same year in 1995, when Seinfeld hits syndication, is when Fin-Syn gets repealed.

Yeah.

So the door is now slammed: no other shows are going to have these dynamics, because the networks are now going to own their own shows. This is going to play out over broadcast television a little bit, and it’s going to play out big time in the streaming era.

Which, if you’re Castle Rock, it’s a good time to cash in your chips because you have this super-valuable library, which you own. You actually own it, and it’s guaranteed to make all this money in the future. And the regulation that was in place that let you make future shows—there’s no telling if you’re going to be able to sell the next hit show to NBC.

Right, right.

They probably should make it in-house themselves. So this is a very good time to sell the company.

Yep. So Castle Rock sells itself to Ted Turner and TBS as all this is going down.

It’s a little earlier, in December 1993.

Yes.

But the same general era.

But when it was announced that the Fin-Syn rules were going to get repealed—even though the repeal went into effect in 1995—Castle Rock sold to Turner.

It was $100 million in cash for Castle Rock’s owners, plus another $300 million or so to pay off the outstanding debt. So the total out of pocket that Turner paid for Castle Rock—which owns a huge share of Seinfeld’s profits and a bunch of other great stuff—was about $400 million. What an unbelievable steal—

Ooh.

—to get the Castle Rock library for that.

And, of course, that happened before the actual sale of the first syndication cycle for Seinfeld.

Right, right.

Ooh. Also, isn’t there a wild story that Steve Bannon was an investment banker on that deal and took some of his commission in equity on the Seinfeld waterfall?

The details are a little murky on this, but I have seen it reported that Steve Bannon still gets royalties from Seinfeld syndication.

Yeah, because of this deal. Wow. Wow. So Turner and TBS buy Castle Rock, and then they turn around and sell it to Time Warner amid all this consolidation. The net result is that Castle Rock, including the largest ownership slug of the Seinfeld waterfall, ends up in the Warner Bros. library.

All right, so Ben, you said now is a great time to sell. In the moment, yes, for Castle Rock. But actually, even if they had no viable future business—

From Fin-Syn ending.

—from Fin-Syn ending, they should have waited, because the value of the Seinfeld waterfall was about to become way more than the $400 million they paid for it once syndication hit.

I’ll spoil the ending for everyone. We’re pretty sure that Castle Rock, if you work through the whole waterfall, made somewhere between $2 billion and $2.5 billion on Seinfeld syndication over the years. But they captured almost none of that, because they sold the entire entity. So it was actually Turner and then Warner Bros., the IP’s ultimate resting place, that would have received—

Those dollars.

—the lion’s share of those proceeds.

Yeah.

So I’ll revise my previous statement. Castle Rock absolutely should not have sold, but no one could have known that Seinfeld would go through six syndication cycles and be as relevant as ever three decades later.

Yep. But importantly, Sony kept the distribution rights. We’ll come back to that when we get to streaming in a little bit.

Yep.

So that was the business story of Seinfeld from 1993 to 1995, culminating in that first syndication sales cycle, where Sony generated an astounding $500 million in revenue that hit the cap table, so to speak.

Right. Sony gets its cut off the top of that, but then there are probably $400 million-plus, maybe $425 million or so, that flow through to everyone else who owns the Seinfeld IP, just for this first cycle of syndication to the off-network affiliates around the U.S.

And then the next year, in 1996, Larry leaves the show.

Honestly, it’s hard to blame anyone after walking through the intense pace they’d been working at for six years.

Well, yes. And I think that is the reason Larry left the show. He was totally burned out. He’d gotten married at this point, and he was ready to move on with his life. But putting that aside, now that you know the economic history of the show, Larry leaving in 1996 makes sense.

Right. Why stay?

Everybody just got the payday from syndication in 1995. He’s in the money, and he’s not just in the money with a one-time payout. He’s in the money forever.

And it’s not like he was making a lot, I don’t think. Again, we have no access to these private contracts, but in general, a non-acting creator and lead writer isn’t drawing a giant paycheck on a per-episode basis for making a show. You own the show, so you’re expected to make your money on the back end, which is going to happen whether or not he makes any new episodes.

Again, to use a startup analogy, this is like the company went public and the lockup ended.

Yeah. That’s the right way to put it. Yep.

Yep. Yep.

There’s a lot more value you could build, but other people—

And they will, but—

—can build it too.

—but you’re going to have a life-changing event.

Yes. But for the show, this is brutal, because everyone else was just an input to Larry in the writers’ room, and we heard him referred to as the CPU.

Yes.

He would be the one who ultimately came in on weekends and did the rewrites. You could get a script most of the way there, and you could always be confident that Larry would make it great. Without Larry, they needed an entirely new process.

Right. And Jerry was there as the co-processor, but he was also starring in the show.

Oh, Jerry wasn’t available to play Larry’s role, because—

No.

—you can’t have a lead writer who’s also running the whole show as producer, starring in it, and doing all those rehearsals we talked about. So more people got involved in the writing process, and they just needed more hours. Now all the writers were coming in on weekends, not just Larry, like in the old days. When we talked to Alec Berg, who was a writer on the show, he told us he looked at his calendar at one point and realized he’d come into the office every day for some amount of time for 56 days.

Yep. Yeah, what was the story? They’d go watch the Super Bowl, and then they’d all go back to the office afterward?

Yeah. Jerry would rent a suite for everyone at the Beverly Hills Hotel, and then they’d go back to the office.

Yep. So it was a Herculean task after Larry left. Castle Rock and, by extension, NBC kept upping Jerry’s salary, the amount he was paid per episode for all of his duties: first to $500,000 an episode, and then, by the ninth and what would end up being the final season of the show, to an unprecedented $1 million per episode.

Per episode.

Per episode.

For one person, who also owns the show.

Who also, yes, gets all that back end we were talking about.

The tenor of my voice shouldn’t suggest surprise or that he didn’t earn it. I just want to underscore that these are separate things: getting paid as the person making the show and acting in it, and ownership.

Yep. The show, though—I mean, look, you can argue whether seasons 8 and 9 are as good as the Larry seasons.

They’re certainly different, but they’re more ambitious.

They are more ambitious, yeah. The only way they could find to move past Larry was to try to do bigger stuff.

And there are some classics—true all-timers in there. “The Bizarro Jerry.”

Yep.

“The Chicken Roaster,” the Kenny Rogers episode.

Yes.

“The Andrea Doria.”

“The Muffin Tops,” is that in there?

“The Pothole.”

“The Van Buren Boys”?

Yep.

Yep.

“The Yada Yada.”

Yep.

You’re right: “The Muffin Tops,” “The Summer of George.” Season 8—

Yeah, they—

—they’re firing on all cylinders. Season 9: “The Butter Shave,” “The Voice.”

Oh, “The Butter Shave.”

“Hello.” “The Serenity Now” is season 9.

Oh, that’s right. Yeah, Jerry—

“The Merv Griffin Show.”

—still ain’t got a bigger role.

“The Slicer,” “The Dealership,” “The Reverse Peephole,” “The Wizard.” These are all season 9.

Yeah. Yeah. So creatively, definitely different, but still excellent. Ratings- and ad-sales-wise, though, for NBC—

That changed quite a bit.

—the show definitely didn’t miss a beat with Larry leaving. In 1996, Seinfeld made $150 million in profits for NBC, after paying ad agency commissions and all the production fees they were paying to Castle Rock for, whatever it was, 80% of the actors’ salaries, sets, production, and all that. In 1997, the show made $200 million in profits for NBC.

So that’s the revenue they got from advertising minus the cost of paying Castle Rock for the show: $200 million that year.

And I think that also includes the cost of commissions to ad agencies for the advertising.

Oh, wow.

I think those were actual profits.

Because to put that in context, NBC’s entire profit during that era was about $1 billion a year. So 20% of the network’s profits were coming directly from Seinfeld.

And probably more than that, because those directly attributable numbers actually understate the value of Seinfeld. The way NBC sold its ads, let’s say you were General Motors and wanted to place a $30 million ad buy for Seinfeld that season. You couldn’t do that. The only way you could get $30 million worth of media on Seinfeld—

Hmm.

—was to buy $200 million of media in primetime at NBC that season.

Bundling, baby.

Bundling, yeah, exactly. Then there’s all the value that Seinfeld delivers in terms of launching other shows or propping up other shows, just like Cheers did for Seinfeld.

Right. So it’s how much revenue it catalyzed, and then also that it served as a launchpad for other shows.

Yep. That sets up the cast’s 1997 salary renegotiation.

Because they haven’t been making anything near what Jerry was making, and they have no back end.

Right.

It’s not like the cast of the show owns it, like the creators do. They’re paid actors. They’re employees.

They just get their union guild-standard residuals from the show, which are peanuts. I think Jason Alexander has been quoted as saying that each of them probably got $250,000 or so in standard guild residuals from Seinfeld over their lifetimes.

But they were making good salaries at this point.

Well, yes. Early on, it was nothing, but—

By this point, I think they were making $160,000 per episode—

Yep.

—now that they were big stars in the number one show.

But they start getting pretty nervous, because they’re thinking, “No, this show’s days might be numbered. We don’t know how long Jerry can keep this going, or how long Jerry will want to keep this going.” Larry’s already left. They’re both rich beyond anyone’s dreams here. They realize that after the eighth season, they have a now-or-never moment where they need to hold out and negotiate for much higher salaries.

Which is incredibly awkward, because the relationships between the actors and Larry and Jerry were always fantastic on set.

Yes.

It’s a notoriously professionally run show. There’s no drama between people. Whenever issues came up, they would resolve them and move on, and try to get to the root of it.

And they would actually help each other with their acting. On other TV shows, there was an unwritten rule that actors—

Right.

—didn’t give notes to other actors.

Right. So it creates this big awkwardness of, “We’re all going to hold out.”

Right. At the end of the day, Jerry holds all the cards, because he’s the one who decides whether the show continues and how.

Right.

Nonetheless, they get it all done by the deadline for the ninth season. Jerry supports the cast by telling NBC and Castle Rock that he’ll agree to come back for a ninth season, in 1997 into 1998, but only if the whole rest of the cast also signs on. He’s not going to come back if they aren’t able to sign all 3 of the other cast members too.

Yep.

So they reach a deal: $600,000 per episode for each cast member for 1 season, plus an option to extend that same deal for a second season—a hypothetical 10th season if the show comes back—which is all dependent on Jerry.

Yes. So in season 9, the cast effectively did secure what they had set out to do. It wasn’t the highest number they originally asked for, but it did get them to an amount of money where they don’t need to work again.

Yes.

Because all of them are extremely typecast now. It’s one of the worst things as an actor to be on a number one show in an extreme role, like any of these roles—

—and not have back end.

—and not have made the rest of your life’s income from that show, because it’s just hard to get other parts. At $600,000 an episode, that’s $14.4 million for each of Julia, Michael, and Jason that season. Good. Not what it would be if you had back end, but you could live the rest of your life on that, when you may have cut off your ability to make big money from acting ever again. So with Jerry now at $1 million an episode and each of them at $600,000, that means the cost per episode of talent is $2.8 million. That means the cost of each episode is, I don’t know, $3.5 million. But NBC is absolutely happy to pay this because—

—as we talked about—

—of the giant advertising profits. Yeah. So $70 million to $80 million in production costs for the season. Okay, we’re going to make $200 million directly from ad sales, let alone all the other secondary benefits that come from it.

Yep. And we should note here, too, that Jerry’s $1 million-per-episode salary made him the highest-paid TV actor in history at that point, here in season 9.

Yep. Without back end.

Yep, yep.

Just from the per-episode fees.

Just from the per-episode fees. So all of this leads, at the end of 1997, to Jack Welch inviting Jerry Seinfeld to brunch to discuss a hypothetical 10th season. Jack Welch—

—the CEO of General Electric, the conglomerate that was thought at the time to be the best-run company in America, and in the world.

Yep, and I think the most valuable company in the world by market cap at this point in time.

Hmm.

Yes. It is worth Jack Welch’s time to take this extremely seriously and invite Jerry Seinfeld to brunch.

And talk about a potential season 10.

Yes.

All right. So Jack Welch invites Jerry to brunch at the end of 1997. They set it up in the apartment of Bob Wright, then CEO of NBC, on the 38th floor of Trump Tower in New York City. In attendance from the NBC/GE side are Jack Welch and Bob Wright. Helping prepare for the meeting were Warren Littlefield, president of entertainment, and Don Ohlmeyer, NBC’s head of L.A. operations. That’s where the show was filmed, which I still can never get over—that Seinfeld was filmed in L.A.

Even some of the exterior shots of the apartment are recreations of New York buildings in L.A.

I know. I know. I don’t like to think about it because it feels wrong.

Right.

So that’s the GE/NBC side, and then Jerry is obviously there, and his talent managers and agents, George Shapiro and Howard West, are there too. They settle down to brunch, and the NBC/GE team brings out presentation slides. Jack Welch starts giving Jerry a presentation over brunch, arguing that the show has not yet reached its peak. It can go higher. It can get bigger. You can do more. “Jerry, we have the data. The audience wants you back. It’s not over. You haven’t reached the top.”

Wow.

Jack concludes his pitch to Jerry with this line: “You know, Jerry, I go all over the world. Everybody who talks to me, they only want to know one thing: Is Jerry Seinfeld coming back for another season?”

And that line about how it hasn’t peaked—that is one of the things going through Jerry’s mind, in addition to exhaustion and the fact that he really hasn’t started his life because he’s just been doing this for 10 years.

Yeah, he’s 43 years old at this point.

Right. There is the concern that the show will keep going past its peak, and he doesn’t want to see that. The only way to go out on top is to go out before you reach your peak, because you’re not going to time it perfectly.

Yep. Yep, yep. All that’s going through his mind. So Jerry starts demurring after Jack’s sales pitch.

He’s not outright declining, but he’s making noises. He’s like, “Gosh, I appreciate it, Jack, but I don’t know that I really can keep it going.” They say, “All right. Well, don’t make a decision now. Don’t make a decision now.”

The meal ends. Everybody stands up. Jack says, “Jerry, come over here for a minute. I want to talk to you one-on-one.” He takes Jerry Seinfeld to a corner of the room. Jack takes out a piece of paper and starts writing some numbers down on it: $5 million, 22 episodes, $110 million. He hands it to Jerry and says, “This is a firm offer for your salary for next season: $5 million an episode—”

“If you come back and do a 10th season.”

Jerry is already the highest-paid TV actor in history, at $1 million, and Jack Welch is handing him a piece of paper. Not just, like, GE executive Jack Welch, Mr. Operational Efficiency, Six Sigma Black Belt—

Yes.

People are replaceable. Go listen to our Home Depot episode about how cost-focused Jack Welch and GE are making Jerry an offer—a firm offer—to 5x his already record salary.

That $110 million is 11% of NBC’s total profit for the year—

Yes.

—that is being offered to him.

As salary to Jerry.

Yes.

Not as the budget for the show.

Who already has the back end and the show.

Yep. This is how valuable Seinfeld is to NBC, to GE. So Jerry says, “Well, all right. Thank you. I’ll get back to you.”

Keep in mind, listeners, that Seinfeld is the only show in history from this last season to ever command over $1 million a minute for advertising rates, a feat only previously accomplished by the Super Bowl.

Yep. So the group disperses, and Jerry says to Howard and George, “Let’s go for a walk.” They go for a walk in Central Park. They stop and sit down on a bench at 81st Street and Central Park West. Jerry looks at Howard and says, “Guys, when I was 21 years old, I sat on this same bench with my dad when I told him that after college I was going to go into stand-up comedy as my career. He thought it was a great decision. He backed me all the way. He said he wished he could’ve done it. So what do you think we should do?”

Howard looks at Jerry and says, “Gosh, if it were me, I’d love to do one more season.”

Hmm.

George looks at Jerry and says, “If it were me, I think it’d be great to go out while we’re on top.” Howard says, “You’re the guy making the show. It’s your call.”

A couple of days later, December 26, 1997, the day after Christmas, the New York Times runs an article.

Oh, they run this article on A1—

Yes.

—in the top-left corner of the paper.

Yep.

Front-page news.

“Seinfeld says it’s all over, and it’s no joke for NBC.” The article reads, “Seinfeld, the most popular television comedy of the 1990s and the centerpiece of the most profitable night in television history, will stop production at the end of this season. Jerry Seinfeld, the show’s creator and star, said yesterday.” Yesterday being Christmas Day, 1997.

Mr. Seinfeld said his decision did not hinge on money. Instead, he wanted to follow the tradition of stand-up comedians and leave the stage with the audience wanting more. Jerry would later say about the decision, “I thought about the audience. How are they feeling? Where are they? I was trying to perceive it like a comedian on the stage. When you’ve been on the stage for a pretty long time, and nine years is a healthy run, and they’re still screaming, if you can get off, they’ll scream even louder. They’ll never forget you.”

That was the best business decision Jerry Seinfeld ever made. On the surface, at the time, and for a long time after, the narrative around this was, “Oh man, Jerry, gosh, he was so burned out. It was comedic timing, it was artistic, it was personal, but man, it was a terrible business decision to walk away from $5 million an episode.”

And you’re about to make the argument that it’s because they went out on top that syndication went nuts. Is that what I’m hearing?

That’s the argument I want to make: that actually it was the best business decision—

Okay, so let’s explore that. In the hypothetical world where they do season 10, season 11, Jerry’s making hundreds of millions of dollars out of each one, they’re good, but it’s getting tired, kind of jumps the shark. You believe there would not be the staying power to go through six syndication runs at very high dollar amounts, including recently here in 2026 with Netflix. Maybe. I could see that.

I think so. I think this is—

—it’s the taste left in people’s mouths.

—it’s the taste left in people’s mouths, and the reason that three decades later Netflix has paid a billion dollars to the Seinfeld cap table this decade—

Over a decade.

—over a decade, is because of the cultural relevance of Seinfeld. And it’s Jerry’s quote: “If you can get off that stage when they are still screaming, they’ll never forget you.”

By our estimates, Jerry so far has earned somewhere around $750 million from ongoing syndication sales, DVD sales, and all the back-end deals of Seinfeld over the past 30 years. My argument is that a huge part of that value was set up and protected by Jerry’s decision here at Christmas 1997 to end the show and go out on top.

If you look at the data, over the 28 years since Seinfeld ended, and the 31 years since it first entered syndication, not only has Seinfeld never gone off the air, its viewership has basically remained constant—as in, very, very, very high.

There are many times the number of people—I’ve seen estimates of 3x to 5x—who have watched Seinfeld since it went off the air—

Right.

—compared to when it was on the air.

Right, right, right. So, if you take that, the majority of Seinfeld’s audience has come after that Christmas decision.

Hmm. Hmm. It’s an interesting hypothesis. A different hypothesis was put forward by the Harvard Business Review. Listeners, David and I read this quote, I want to say, like, a decade ago—

Yeah.

—and have referenced it a dozen times since, because we think it’s one of the all-time greatest business quotes.

No doubt it is.

And it is delightful that we get to do an episode on Seinfeld and bring it up.

So I’ve got the whole thing here. Somehow, Jerry ended up getting interviewed by Harvard Business Review in 2017 when he was doing one of the promotional cycles for Comedians in Cars Getting Coffee. The HBR interviewer says, “So you cut off the show when it was so successful, really as a result of the fact that you were burned out. Why didn’t you try to come up with a more efficient, more sustainable way to make the show? What would McKinsey have said if they’d come in and said, ‘There’s a better way to do this?’”

Jerry says, “Who’s McKinsey?” The interviewer says, “Well, McKinsey’s a big consulting firm.” Jerry says, “Are they funny?” The interviewer says, “No.” Jerry says, “Then I don’t need them.” The interviewer says, “No interest in efficiency or…” And Jerry says, “No, no. If you’re efficient, you’re doing it the wrong way. The right way is the hard way.”

Well, for him, it’s his extrapolation of the thing that he learned going on Carson when he was in his 20s: if you don’t just grind and find new material the hard way, and write and think and rewrite and go through all the pain, then you’re going to run out of material, and you’re going to become irrelevant. You must go through the fire.

And look, I think there are 2 things embedded in this McKinsey back-and-forth here that we love so much. One, for our purposes of the episode today, is the point that even in 2017, the consensus view was that this was a bad business decision Jerry made.

Two, more universally, Jerry is so absolutely right in what he says in response to the interviewer here. At least in any creative field—and I think any entrepreneurial pursuit is, by definition, a creative field—the efficient way is the wrong way. If you’re going to do the accepted, efficient thing that McKinsey will tell you to do, you’re going to get accepted, normal, efficient results. If you want outlier results, you need to take the hard way.

It’s the Bezos-ism: “Invent and wander.”

Yep.

Without wandering, you cannot invent. They are intrinsically linked.

Yep, yep. So we’re in the last season of the show. What happens next? Well, first off, the second syndication cycle kicks off. Sony goes to work again, and this time they can add cable syndication in addition to local broadcast affiliates.

Which is the thing that’s been true my whole life, which I said at the end of our last episode: you can’t turn on the TV without finding Seinfeld on some channel, be it broadcast or cable.

Yep. So here’s the amazing thing that happens. Remember we told you in the last syndication cycle that Castle Rock got acquired by Turner, by TBS? When Sony goes out to bid the cable rights, TBS, Turner, makes an over-the-top bid of $1 million per episode for 4 years of cable rights, which is almost $200 million.

Wait, so TBS is buying the rights from themselves, but they have to go through Sony to do it because Sony owns the distribution rights?

Yes. This is why the distribution rights remaining with Sony was so important to the business of the show, because it means bona fide, real bids always have to happen for Seinfeld rights.

I see.

TBS couldn’t just say, “Nah, it’s not going to market. We got it.”

Fascinating.

And then Turner, of course, gets acquired by Warner Bros. So fast-forward to today with the streaming rights, which we’re going to talk about in a second. Warner Bros. can’t say, “Ah, no, we’re just going to keep Seinfeld on HBO Max.”

The thing we own.

The thing we own. No, it’s got to go out to bid because—

Sony has the right to distribute it.

Yep.

So Warner Bros. doesn’t actually own the decision-making about whether it gets to go on their service. They have to make a bona fide bid, in addition to others like Netflix and the free market.

Free-market capitalism driving maximum shareholder value to the Seinfeld cap table.

All right. So what is the 1998 syndication fetch?

In total, across the renewed broadcast affiliate sales, cable now with TBS, and international, it brings in a reported $1.1 billion of total revenue here in 1998.

So, for those keeping track at home, the show’s not even over yet, and syndication has already fetched $1.6 billion.

Sure makes that decision at Christmastime for Jerry go down a lot easier when the second syndication cycle happens. Which brings us to the finale of the show. I think the thing people don’t realize about the Seinfeld finale, which I didn’t realize until doing this research, is that it’s a thank-you to all the guest stars who made Seinfeld what it was over the years.

Yeah. So what is the finale? For those who haven’t seen it or don’t remember, on May 14, 1998, they aired a special extended episode. They brought back Larry David to write it; he had been doing other projects for the last 2 years. The gang is put on trial for violating some sort of new law—

Violating the Good Samaritan laws.

—where they watch someone get held up in a carjacking and don’t intervene to help. They bring in dozens of past guest stars as character witnesses to attest to whether these people are good people or not, which is so perfect for the theme of the show. But when you’re watching it, you do think, “This might be a little excessive.”

Yeah, yeah.

This might be a little much. And the way it ends—spoiler alert, so stop this episode right now if you care about not knowing how Seinfeld ends—is that they’re convicted and go to jail for violating this Good Samaritan law, because the parade of Seinfeld guest stars over the years paints a very clear-cut case that these are not good people.

Yeah.

It’s perfect and poetic, and at the same time, I completely get the public outrage about how much people didn’t like it, and how much they hated that these characters all end up going to jail at the end of the episode.

Yeah, yeah. The fact that nobody likes it doesn’t really matter. If anything, maybe it adds to the lore of the show, because it’s the ultimate, “No, there’s no point. Nobody learns anything. There’s no development.”

Yes.

So much so that we’re not even going to give you a satisfying finale.

And yet it was watched by 76.3 million viewers, which was 58% of all viewers that night. The finale ad rates eclipsed the Super Bowl, so NBC sold 30-second spots for as much as $2 million. This was back in 1998. That’s about 54% more than the $1.3 million you would pay for the same 30-second advertisement during the 1998 Super Bowl.

Yeah. One of the advertisers during the finale is Apple, which is in the middle of its “Think Different” campaign.

Oh, that’s right.

And they run a special commercial where they add Jerry—

At the end.

—to the “Think Different” campaign.

He is the final—

Yeah.

—black-and-white person who flashes up on the screen, and it’s the only time they ever ran “Think Different” with Jerry in there.

Yep. So good.

Interestingly, this wasn’t the highest-watched finale, or even close to it. M*A*S*H, Cheers, and The Fugitive had much higher numbers for their finales. But to me, the interesting thing is I’ve never watched a single episode of any of those shows, and nobody’s paying anything to get their streaming rights now.

Yep.

They’re not relevant. They didn’t transcend generations. There’s something very interesting and intrinsic about Seinfeld that made it last, even though on its highest day of heat, light, and attention, it actually wasn’t the biggest finale ever.

Yep. And audience-reception-wise, the finale wasn’t loved, at least. But again, it doesn’t matter.

And to put a perfect comedic button on it, the joke Jerry makes in the jail cell is the joke that opened the pilot, where they’re talking about the second button on the shirt—

Yes.

—even while they’re sitting there in jail. And then the last perfect little piece of comedy: David, did you watch the Curb Your Enthusiasm finale two years ago, maybe in 2024?

No, I did not, but I did watch the Seinfeld reunion on Curb.

Oh, yeah. Everyone should know that on Curb they did a 4- or 5-episode arc with a fictional Larry David playing out the Seinfeld reunion. In the finale—again, spoiler alert if you’ve never seen the Curb Your Enthusiasm finale; I’ll give you 3 seconds to pause—the finale is a trial, just like Seinfeld. Larry gets convicted. Larry goes to jail. He’s sitting in the jail cell, and someone walks in. He has a visitor, and it’s Jerry Seinfeld. Jerry opens the door and says, “Hey, turns out it’s a mistrial, but you don’t want to end up here.” “But this isn’t where it ends. You don’t want this. Trust me, nobody wants this.”

Yeah, yeah, yeah.

And it’s a 25-year payoff from a joke that was set up in 1998.

So good, so good. I haven’t seen that clip. So good. All right, so I think let’s put a bow on the economics of Seinfeld’s first run on NBC.

Ignoring all syndication.

No syndication, just the first-run business for NBC. NBC in total made about $2 billion in cumulative advertising profit from Seinfeld during its run. But again, that vastly undercounts the actual value to NBC because of the dynamics of, well, you can’t buy Seinfeld; you’ve got to buy prime time, et cetera, et cetera.

But no ownership, because they rented it.

Yep. Castle Rock takes a loss on the show by design. By design, they lose money on 9 years of Seinfeld.

Kind of like the first 9 years of an early-stage venture portfolio.

Yeah, exactly. Exactly.

Although that’s not fair, because in year 6, they started participating in syndication.

Right, right, right. Yeah.

But you’re scoping this just to—

No syndication—

—first run.

—just the first run. Columbia/Sony, they’re like a did-not-play.

They make $0; they spent $0.

Again, by design. Cumulatively, Jerry made $50 million to $60 million in salary from all his seasons of Seinfeld as the star, creator, co-writer, et cetera. Huge, but peanuts compared to the back end. Larry’s salary during the show, as we talked about, has never been reported, but it’s safe to say it was much, much lower than Jerry’s, and only for 7 seasons. The rest of the cast, as we talked about, were just employees. In total, they each probably made $25 million or so, give or take. But from a syndication standpoint, the business is just getting started.

Right. In some ways, the story here on our episode is over, but the business is barely started.

To date, Seinfeld has had a record 6-plus broadcast syndication cycles, more than any other show in history for broadcast syndication.

No other show ever got 5, right?

Not on broadcast affiliates. Just on, you know, like—

Mm.

—cable TV—

TV Land.

—TV Land, et cetera. Over the 2000s, the show continues to do great. By 2010, the show had done $2.7 billion in total syndication revenue for off-network and cable. Three years after that, by 2013, that figure was up to $3.1 billion. Along the way, they also start to drip out DVD home-video releases. In a great business-model move, they release only 1 or 2 seasons at a time over several years, followed by the complete box set at the end.

Yes. For true collectors.

In total, DVD home video generates, we estimate, about another $500 million in revenue, so call it up to $3.6 billion in total post-airing revenue. There’s actually a fun coda to the cast economics with the DVD releases. They hold out again to get back-end participation in the DVD releases in order to come back—

Ah.

—for the commentary. I think this is part of why it takes so long to get the DVDs out.

Oh, interesting.

And that totally makes sense on their end, right? It’s just the last point of leverage they have. It’s reported that each of the cast members gets low tens of millions each out of the DVD sales.

Hmm.

Along the way here, throughout the 2000s and into the 2010s, I think Jerry and Larry start to realize that basically their main economic job from now on is to be on a permanent book tour for Seinfeld the show, like permanent ambassadors to the show’s continued cultural relevance.

Without being too on the nose, I’d say they both pursue their artistic passions, and a secondary benefit of the work they make is that it reinforces the relevance of Seinfeld. Curb Your Enthusiasm reinforces Seinfeld, especially when you put the Seinfeld reunion on Curb.

Yeah. Yeah.

And Jerry would be doing stand-up no matter what.

Right.

But it definitely reminds people that Seinfeld exists.

I think all of these things are true. Larry and Jerry made the decisions to do what they did after the show—the activities and projects they pursued—for personal and artistic reasons. If you look at this through the lens of our Disney flywheel from our Disney episodes, the way you maximize the value of IP in a flywheel is by generating lots of other IP around it, but not disrupting the core thing. That’s exactly what Jerry and Larry do. They never disrupt the sanctity of what Seinfeld is.

Jerry’s stand-up, Comedians in Cars Getting Coffee, the stand-up specials, and even Curb Your Enthusiasm—these things never compete with Seinfeld. They only focus attention back on it.

Yep.

And look, they’re probably making at least as much money from the increased attention on Seinfeld as they are directly from any of those things. Even Curb. Curb was great, but it was on HBO, so it didn’t make a lot of money. Larry David made a fraction as much from 25 years of doing Curb as he did from 7 years of doing Seinfeld.

Yeah. We can’t do this whole episode without bringing up the egregious racist remarks Michael Richards made during his stand-up.

Yep. In 2006.

Let’s scope this to the business, because that’s what this podcast is about. Aside from how absolutely awful the comments were, it’s a problem for the business.

Totally. It puts the business model at risk.

Right. If you’re a Seinfeld cap table member, like Castle Rock and these folks, the goal is to keep this asset going, to keep people loving it. That could have spiraled into a “Boycott Seinfeld” thing. I think everyone had to walk a tightrope between their feelings about the issue, their feelings about Michael as a friend, appropriately condemning the words, and making sure Seinfeld could be preserved as an asset as they went through that PR crisis.

Even if it just creates some subconscious—

Ick.

—negative associations and ick for viewers. The value is really sensitive to perception here.

So it was interesting going back and watching a lot of the commentary on that. Jerry offered things like, “Well, a comedian on stage is not actually that person. It’s sort of a person playing a role.” But from a pure communications and business-incentives perspective, you need to condemn the act enough to make people go, “Okay, good. Jerry doesn’t have his head in the sand here. He realizes how awful that was,” but not condemn it so much that people go, “Well, then I don’t like Kramer either, and I don’t want to watch Seinfeld because of that.” It’s interesting, the art of stewarding a business asset. It involves a lot of that tightrope walking.

Yeah. A business asset whose value is so tied to its present-day cultural relevance.

Yes.

And then there’s the internet associated with all this, too. It’s kind of amazing. Again, Seinfeld hit its stride right as the internet was going mainstream. The memeability, the catchphrases, the GIFs on the internet—

Oh.

GIFs. GIFs.

GIFs.

GIFs.

GIFs.

GIFs.

David.

Sorry.

Ugh.

Ugh.

It’s like hearing a sour note—

That’s a memeable moment right there.

—on an untuned piano.

I’m sorry. I apologize. The GIFs on the internet. The Modern Seinfeld Twitter account becoming one of the early big mainstream Twitter accounts, where the whole premise is Seinfeld episodes in the modern day—that’s all part of it, too.

Yep.

Which brings us to streaming.

Yes. Syndication is still a thing on broadcast networks and cable stations, but that’s not where the big money is anymore. It’s these streaming deals that really get started in 2015 with the Hulu deal. That was a $150 million, 5-year deal.

Yep. It would go up from there. Two years later, in 2017, Jerry signed a personal deal with Netflix to bring Comedians in Cars Getting Coffee onto Netflix.

It was on Crackle, right? It was a web series?

It was on Crackle. Do you know what Crackle was?

I have no idea what Crackle was.

Crackle was Sony’s early in-house web streaming network.

Ah.

That’s why it was on Crackle, and then that went away. So that sets the stage for this Jerry-Netflix deal to bring Comedians in Cars over and to do 2 new stand-up specials for Netflix. When the first renewal cycle for Seinfeld streaming rights comes around in 2019, Netflix does a landmark deal with Sony, reportedly worth well over $500 million, for 5 years of worldwide exclusive streaming rights to Seinfeld. That is a huge amount of money.

And this is because Netflix had Friends and The Office, which I think became their most-viewed shows, and they were losing them. Friends is so funny: all 3 of these shows were on NBC. Friends was produced, just like Seinfeld, in the Fin-Syn era, and it was produced by Warner Bros., which is exactly where the rights are held for Seinfeld. So you might say Friends and Seinfeld are the same.

But in the case of Friends, Warner Bros. also controls the distribution rights. Those were never owned by Sony. HBO Max is about to become a thing, and Warner Bros. is like, “Nope, Netflix, we’ll take Friends back. We’re going to use that on our streaming service, because we control the distribution rights.” The Office was produced after all the Fin-Syn stuff, so NBC actually owned it directly. They go, “Nope, Netflix, we’ll take that back. We’re going to put that on what’s about to come out and be called Peacock.”

So Netflix loses its top rerun sitcom shows. They need Seinfeld real bad, and Sony owns the distribution rights and isn’t coming out with a streaming service. So they’re kind of the only ones to go to and say, “Gimme 180 episodes of people loving their ’90s and 2000s sitcoms.”

Yep. So it all goes down that same year, in 2019. For Friends with HBO Max and The Office with Peacock, they have to announce a dollar value for the deals because they have to calculate all the guild residuals that come out of them.

And I think the creators did have some backend there.

Yes, yes.

It kind of sucked to have backend in a deal where the distribution wasn’t independently owned, because it means you just have to trust that the invisible wall between the sides of the company exists, and that the value is the real fair market value.

Yep. So they announce that the Friends deal is $425 million for 5 years, and The Office deal is $500 million for 5 years. But this is not real money.

So all 3 of these are in the same ballpark, but Seinfeld is the only one where there’s actually a company paying another company.

And then that brings us to this year, with the 2026 Netflix renewal, reported as slightly lower than the original deal of more than $500 million. But this time it’s exclusive to Netflix only in the U.S. and Canada, not worldwide. So Sony is basically taking the bet here that it can start selling international streaming rights for Seinfeld separately and monetize those better, which it will begin doing shortly.

Yep. In addition to that, they’re still doing the other forms of syndication, so basic cable to Paramount for about $45 million. They had a full cycle 4, a full cycle 5, and a full cycle 6. All told, with all the syndication ever, all the off-network, international, and cable deals, streaming, plus all the DVDs, this is around $5 billion to the Seinfeld cap table from all these deals. It’s real liquid cash changing hands every 5 years when they do a renewal cycle because Sony has no streaming service of its own.

Yep. And all of that is just so far. I think at the current course and speed, you can reasonably expect another billion-plus in streaming rights to get stacked on top of that every decade from Netflix or whoever takes it next.

Assuming it stays this relevant. But you would think if it were going to fall off in relevance, it would have happened by now.

Yep. And it definitely hasn’t. Total revenue: you stack the $2 billion in profits for NBC from first-run, and you’re at easily $7 billion-plus for this little TV show that shouldn’t have gotten made.

And by my calculations, David, this thing probably cost about $250 million to make in total, including everyone’s salaries, even that crazy-high last season. Those costs stopped in 1998. So this is an asset that’s now well above $7 billion in returns, and it keeps stacking another billion dollars every decade, while all the costs were paid 30 years ago.

It really is like a Silicon Valley startup-type story—

Yes.

As a TV show, I mean, it’s not Google or Facebook. We’re not talking about trillions of dollars or Nvidia here, but that level of investment would continue returning cash flows for that period of time, of that magnitude.

And it’s a 30× return on its costs.

Yeah. Incredible.

The other thing is, if you just divide $7-point-something billion by $250 million, that’s a 30× return.

All right. Should we transition to analysis?

Yes. One big thing I wanted to talk about is: Why is Netflix buying this? Why is this particular asset, and this category of asset—Seinfeld, The Office, Friends—so valuable to a streaming service? Streamers need content to do 2 jobs. One is acquisition, and the other is retention.

Yep. These are awesome retention vehicles.

Yes. Acquisition is a totally different thing. That’s what the new content is for: the super high-polish thing you can market to get people to sign up for your service. I’d be curious to get feedback from people in the entertainment industry. I think the reason every show is 8 episodes now instead of 22 to 24 is because, in broadcast, it was an ad-based business model. You needed something on the air all the time, and then you needed to sell ads for 8 minutes of every half hour. You’d take 22, 24, or 30 episodes if someone could make you 30 and it was a good show, because that suited your business model.

On streaming, the point of a new show is to get people to sign up for your service. I’d be willing to bet there’s not a big difference in how likely a great show with 8 episodes is to get someone to sign up compared with a great show with 20 episodes. These things are expensive now. It’s $8–10 million per episode for some of these high-polish shows. There’s no way the $10 million you spend on the 14th episode of a season is justified versus sinking it into the sixth episode of another show you could do instead. Once you wrap your mind around the idea that shows are now acquisition vehicles rather than ad inventory carriers, you understand why shows are so different now than they used to be.

Yep.

The other thing, in addition to the fact that these seasons are really short, is that they’re mostly not comedies.

Yes.

It’s really weird. Everything is a drama or spectacle or sci-fi, and I was grappling with why we don’t see more Seinfelds now. Why are there so few things that look like this? Part of it is that comedy doesn’t travel internationally, and these streaming businesses are all scale-economies businesses. Whatever you make, you want to expose it to the broadest number of people to justify its cost. It’s really hard to greenlight something when British humor doesn’t translate. When they brought the BBC’s The Office over to the US, it bombed, and they had to completely remake the show to make it appeal to an American audience.

Yeah.

So I think that’s part of why you get The White Lotus, but you don’t get Seinfelds anymore.

It might also be that, as you see in the Seinfeld story, when you’re just doing comedy, it takes a while to get the audience hooked. You can’t hook somebody right away with an incredible drama or flashy sci-fi or something like that. It’s a slow burn, and that just doesn’t make sense on the acquisition side of the business model for streamers.

Right. It’s not even obvious that I would sign up for a streaming service to get access to a new comedy. I watched Tires because I was already a Netflix subscriber, and it was awesome, but would I have signed up for Netflix on my own just to watch Tires? I would’ve needed a pretty strong endorsement, and people endorse comedies differently than they endorse dramas.

Yeah.

Because you’re less, to your point, sucked into the story.

Yep.

Now, flipping over to the other side: retention. That is Seinfeld’s job these days. It is the single perfect retention vehicle. I’m happy to subscribe to a service where, worst case, if I’m surfing around and I can’t find something, there’s always Seinfeld.

Ah, that sweet, warm Seinfeld.

It’s comfort food.

Yes, exactly.

It’s really weird, because it started as this jarring, crazy, daring show. And now it’s comfort food.

It’s the chicken pot pie of Netflix.

And it’s a churn reducer in 2 ways. One, maybe I signed up for K-pop Demon Hunters.

Yeah.

Then I realize Seinfeld’s on there. Okay, well, actually, I got hooked on Seinfeld, and I’m going to watch every episode of that while I fall asleep at night. So that’s one thing. But two, now that I know it’s there, I’m just not going to cancel. I don’t want to lose access to something that I think I might want and decide to watch at any given time.

Yep.

So, yeah, that is why it’s so valuable to streaming services.

Incredible retention tool for streamers.

While we’re on the topic of the weird incentives that fall out of subscription-based streaming versus advertising-based TV networks, this is a bit of a brain buster. Tell me if you agree with it or not.

Okay.

NBC’s ’90s advertising business model incentivized attracting a more educated audience than streaming.

Yep, I buy that because advertisers are willing to pay for audience demographics, whereas in the streaming world, everybody pays the same $12.99 or whatever it is a month. It doesn’t matter who you are.

Right. In the streaming world, you’re just a vehicle for your $12.99.

Mm-hmm.

There are lots of counterarguments to this that I’m open to, but it’s an interesting brain puzzle that streaming doesn’t incentivize you to get the most valuable viewers.

Well, you’re happy to take the highest-quality viewers. You just—

You just want viewers, though.

—you just need viewers. You want everybody.

Yeah, you don’t differentiate.

Yeah. And look, streaming is historically subscription-based, but they’re adding ad tiers now. Netflix is adding an ad tier.

Right, and those advertisers will care who the subscribers are.

Yep.

Okay, so my big question for you in analysis, before we get to Powers and Quintessence: We opened the episode by saying this couldn’t happen again today, that this was so anomalous it needed to happen at the exact time it happened, with the exact people who made it. I have a list of things that I think couldn’t happen today, and I’m curious about your thoughts on them.

Great. I’ve got a list, too. You want to trade back and forth?

Yeah, let’s do it. My first one: Arguably, the whole show was so creator-led, with essentially no design by committee. I bet that’s pretty hard to find today.

Well, it’s easy to find on YouTube or—

Yes.

—podcasts or creator media—

And completely outside the system.

Completely outside the system. And it is almost impossible to find inside the system because the stakes are too high now. Executives at some organization are involved, whether it’s the streamer, or the production company, or the studio. The budgets are so big. That was my point about the stakes being too high.

Right.

You want to make a TV show these days, you need a lot of freaking money. There’s no way something could start like Seinfeld did back in the day, with that budget and that set of episodes.

Right. I think It’s Always Sunny in Philadelphia did, but that’s now 23 years old or something. I think Tires did, too. Tires was pretty low-budget when it started.

Yeah. And it was creator-led and independent. So, yeah, I guess it can happen out there. But by and large, you want to make a TV show, you need a lot of money, which means you’re going to have suits weighing in on what’s going on.

Which is just going to make everything worse—

Yeah.

—those damn suits.

Yep.

All right, next for you.

No doubt the independent cap table and incentives associated with Seinfeld made it what it is today. The fact that Jerry and Larry, as creators, got this incredible deal and set of circumstances that let them get huge backend from the production company, and then they made the show artistically what they wanted, but they were always incentivized for the long run, made all the difference in the world.

Yes. It is probably impossible today to make a TV show that you, in any way, make $500 million from. You can make it in secondary ways. You can get famous from the TV show and then pick up sponsorships and get to invest in companies and stuff like that. But to truly own enough of a show’s long-term economics to make hundreds of millions of dollars, I think that’s over.

Yeah.

That would only exist in the creator world, like podcasts and YouTube.

Yep.

It doesn’t happen on TV. So the question is: why? Because both business models are totally viable. The old media networks one, where you’re like, “I don’t want to own the long-term upside. I just want to have a profitable business today,” or the one that the Netflixes of the world are doing, where they do want to own all the long-term upside. And follow me on this.

I think it’s because the distribution that happens today is on tech companies at their core, not on media networks, which I think were capital-constrained. Tech companies are very used to making big investments up front, the way you would in software, with very high margins when you get to scale. But obviously, you’re way in the hole for a while until you get to scale. Microsoft’s a terrible business with 100 customers but an unbelievable business with a billion customers. The modern media company wants to own all of that risk, like a tech company, and pay for it up front so they can own all the rewards later in the success case, which is the exact opposite of the traditional media business.

Right. Right.

Or the traditional networks business.

You know, what’s interesting is I sort of expected going into this research to hear over and over that NBC realized their great mistake in not owning any of the back end of Seinfeld, and they let so much value walk. It was this bitter lesson that, especially once Fin-Syn was repealed, they never allowed something like that to happen again. That’s the fact pattern. But actually, back in the day, the executives were fine with it. They were happy with the arrangement: “Yeah, you production companies, you’re essentially the VCs. You take the risk, you make money on the back end. We get this great stuff that we can put on our network, and—”

We have a one-year payback period on a multiple of our invested capital.

“—sell ad units.” We’re super happy. That works great.

Yeah. I think it comes down to tech companies being trained to seek operating leverage and attract investors who want operating leverage. That wasn’t a thing when media was distributed by networks. But now that’s the ultimate end state of media distributors being tech companies.

And back in the day, they were the only game in town, right? You were going to tune into—

Yes.

—NBC, ABC, or CBS, and then eventually Fox, too. That was it.

Yep. One other little piece of analysis before we get to Seven Powers. There’s a very real argument here that Fin-Syn being repealed is one of the worst things to happen to the industry in the last several decades.

Yep.

The networks start saying, “We’re gonna pick from the in-house things that we’ve sort of come up with to hit the airwaves.” It just means that you get bad stuff out there.

Yeah.

Whereas if you have this thriving free market of a whole bunch of independently funded small studios coming up with things, and you can buy from any of those, that’s a much better world for content.

Totally agree. And we heard that universally in the research: “Yep, those were the good days.” Fin-Syn being repealed ended that.

Yep, and consolidated where content can come from. Fortunately, the internet changed that, and we have YouTube and the explosion of creator diaspora now.

Yep. Powers. This is actually gonna be really fun.

So let’s see. Normally, the way we do this exercise, Seven Powers are the seven things that could give a company persistent differential returns, or the ability to be more profitable than its nearest competitor on a sustainable basis. Who’s the entity here? The Seinfeld cap table?

Yeah, I think we should talk about it from the cap table’s perspective.

And it’s what lets Seinfeld, the asset of the show, even when it was being produced and today, be more valuable than—

Other shows.

—anything that competes with it, other shows.

Yep. Yep.

Okay.

I think counter-positioning today might be the biggest one because it’s the last of these huge retention tools left that is not captively owned by a streamer. So it can come to market in a way that Friends and The Office can’t.

And you think that’s counter-positioning?

Well, if you were to say Friends and The Office are its competitors, they are structurally hamstrung—

Right.

—by their ownership situations now.

If they did compete with Seinfeld in the free market and were able to go anywhere, it would hamstring their parent company—

Their parent companies would be making value-destructive decisions to do that.

Yep, at least based on their chosen current strategy of needing to have owned-and-operated streaming services.

Yep.

Scale economies all over the place. I mean, the fact that the world has an installed base of 100 million-plus Seinfeld fans—

Oh, I agree, but I would say this is network economies, not scale economies.

Oh, that we’re all like—

The fact that you know all the memes from Seinfeld is extremely valuable to me.

You’re right. I don’t think they’re scale economies, because the definition of scale economies is when I can do something more profitably for the same input than one of my competitors can because I have more scale. But this asset doesn’t actually make any decisions or do anything. Netflix has scale economies. When Netflix decides to pay $500 million, it can make better use of the Seinfeld content and be more profitable on that acquisition than smaller streaming services.

Yep.

But yeah. Branding?

Eh.

Maybe?

It depends what you consider branding.

Right. Is the whole tenor of the show branding? Is it just—

Yeah.

—the logo? I’d much rather watch Seinfeld than The Big Bang Theory, but that’s not because it’s called Seinfeld and I trust Seinfeld more. It’s because I think the intrinsic quality of the show is higher.

Yep. Yep. I don’t think there are any switching costs here.

No.

I can’t even think of what that would be in this case. Cornered resource, obviously: they have the rights to Seinfeld.

And maybe that is the power. That might just all be cornered resource. We have a thing that we can sell that other people can’t sell and make a lot of money on it.

Yep. And then the last one, process power.

Not today, but there was. If you change this exercise to what Seinfeld had when it was being produced that other shows didn’t have, it’s absolutely process power in the way they were making it. It’s absolutely cornered resource in Jerry and Larry, and some of the other writers they had, too.

I think there was process power clearly in the act of making the show. I don’t think Jerry or Larry individually, or if they were to come together again now, could repeat it. It was a magic moment. And in fact, the evidence is right there in Curb, right? Larry had to run Curb differently than Seinfeld. He couldn’t do again what he did at Seinfeld. Curb was improvised. Larry couldn’t create the scripts and all of the intense effort and alchemy and magic that went into every week of Seinfeld in the same way. You just couldn’t do it.

All right. Should we bring this baby home and do Quintessence?

Let’s do it. I know where you’re headed.

So, listeners, the way that we decided we want to do our Quintessence this time is to answer the question: What made Seinfeld such a ludicrously good TV asset to own?

Yep.

What made it durable? What made it continue to get renewed for these really high rates three decades later? And yes, there are comps in The Office, which is actually my preferred thing to watch nightly. I grew up when it was on, so it’s more for me, and it feels more modern. Friends is arguably more valuable but is held captive. So Seinfeld is the one free agent in the top tier that actually can go and trade on the free market.

Yep. And look, of course there’s a whole list of these, most of which we talked about earlier in the analysis. But I think if you were to ask Jerry, at least, it went out on top.

I think the driver is viewership begets viewership. Seinfeld has been everywhere for the last three decades on a bunch of channels and streaming services. Because it has been omnipresent, there’s so much demand today to watch it because we’re so familiar with it. It is today’s comfort food, even though when it launched, it was very uncomfortable. During my childhood, teenage years, college, and adulthood, it was everywhere, and I have all the jokes memorized.

Mm-hmm. Always on every channel, every night. Yep.

It’s passed from generation to generation that way. I talked to my dad about it. In fact, we were prepping for this episode, and my three-year-old son was sitting on the couch with me because we had the DVD on. We were watching. He loves putting the DVDs in the DVD player. He points to the screen and goes, “Is that Jerry Seinfeld?”

No way!

I was like, “Oh my God.”

That’s awesome.

I just passed it to another generation. Then we’re watching the DVD interviews afterward, and he points to the screen and goes, “There, there’s Larry David.” I was like, “I’m so proud of you right now.”

Wow. Wow. Good for him.

I know, right? But it’s this thing. My parents liked it, I liked it, I like it. It’s so in the water in our society.

There’s a crazy stat from Nielsen in 2021: 41% of Seinfeld’s then-current audience had either been toddlers or not born yet when the series ended in 1998.

Amazing.

So you have to keep tracing it back. I think you might be right that it’s because it went out on top, but the reason, in my opinion, is the 1995 and 1998 syndication cycles—

Hmm. Were so ubiquitous—

—were so successful and exploded out of the gate—

Yep.

—that they created this “in-the-water-ness” to Seinfeld.

Yep. I think, at the end of the day, it’s a stew of all these things. But I just think that if they’d milked it for a few more years and the quality had gone downhill, this thing is so hypersensitive to the aggregate cultural assessment and impression of it that, if at the end it didn’t have that “greatest show of all time” vibe in the culture—

Yeah.

—the engine wouldn’t have continued like this.

Yeah, totally agree. We’re saying very similar things here. It’s ultimately that, coupled with quality. The situational jokes they set up just don’t feel dated. Even though a lot of these things could be solved with a cellphone, the intrinsic quality of the situations they’re in—

Yep.

—still feels relevant today.

Well, more than 20% of America agrees with you.

22%.

There you go.

All right.

On this one, we’ve got some fun trivia that we should include here that didn’t make the episode. Number one: the theme music.

Yes, that was mine.

The bass line.

Ba-dum, ba-dum, bum-bum, bum-bum-bum, bum-bum, bum-bum, ba-dum. I wish I had a “beep-beep-beep-beep, beep-beep. Ba-ba-ba-bum.”

Ben, tell everybody why the theme music is so distinctive.

In the pilot on my DVD, you can hear the original pilot with the original theme music, which is not what you’re familiar with. The bass riff composed by Jonathan Wolff is something completely different, and it interferes horribly with Jerry’s stand-up at the beginning. It’s tonally overlapping, and you almost can’t make out his words. So when Jonathan Wolff got the call about it, he said, “Oh, I know exactly what I’m gonna do. I’m gonna treat Jerry’s voice like the lyrics of a song.”

Yes.

“And I’m gonna compose around that,” like he’s carrying the melody. He even felt like there was a tempo Jerry did stand-up to, and it came in around 110 beats per minute. That’s how his jokes were told, in that rhythm. So he didn’t create a theme song. He created a theme-song system where he could uniquely compose on a synthesizer in front of him, with the bass guitar riff mapped to a bunch of different keys, and all of the little sounds, like all the mouth sounds—

Yep.

—that Jerry makes. He uniquely composes a theme for every episode that’s slightly different and fits around Jerry’s jokes in the intro. He has this great quote on this: “Every monologue was going to be a variation of the theme, so whatever I did, I needed to architect it modularly so that it could be shiftable, changeable like Lego music. It needed to not conflict with his voice.”

So great.

So great.

And so distinctive. I mean, it’s part of what makes the show.

Yes. It was so different at the time, too. Of course, like everything else, the network execs hated it because it wasn’t like anything else on the market.

Of course. That’s a signal of quality, when the network—

Yes.

—executives hate it. All right, that’s number one. Number two: this has come up on Acquired before. Julia Louis-Dreyfus is from that Louis-Dreyfus family, the very large French commodities-trading family.

Yeah. Big multigenerational business.

They’ve made an appearance before on Acquired in the Ferrari episode, because Julia’s grandfather was one of Enzo Ferrari’s first clients and raced his privately owned Ferrari 166—the first cars Enzo made—at Le Mans, back at the beginning of Ferrari.

Amazing.

All right, that’s number two. Number three: NBC had a corporate relationship with Nike.

Hmm.

So any of the stars of any NBC sitcoms could go to the Nike warehouse in L.A. and get all the swag they wanted. So how do you think Jerry Seinfeld started wearing Nikes on Seinfeld episodes?

Oh.

Freebies. We talked about this on the Nike episode: they had their athlete strategy, then they got into entertainment, and this was part of it. Jerry Seinfeld was one of the first big parts of Nike’s “get into entertainment” strategy.

All right.

All right, that’s what I got for trivia.

Carve-outs?

Carve-outs. For this one, appropriately enough, I decided I’ve got to do Seinfeld episode recommendations. The Marine Biologist, number one by far. It’s just the most masterful piece of 22-minute episode crafting I’ve ever seen.

It’s great.

A couple of deep cuts I’m partial to: one, The Jacket, which I already mentioned, and two, the first Seinfeld episode I ever watched. I vividly remember it like it was yesterday. I was 9 years old when this episode came out. I saw it air live on TV. I had a babysitter for the night, my parents were out, and I got to stay up late with the TV on. It was The Dinner Party, which is the episode with the black-and-white cookie. I’ll always remember Jerry eating a black-and-white cookie and talking to Elaine: “Elaine, the world needs to look to the cookie. Racial harmony here in the cookie. What we can learn from the black-and-white cookie.” Then, at the end of the episode, he throws up due to food poisoning from the cookie.

Oh, Jerry.

Oh, Jerry. All right, what you got?

For me, I have another Seinfeld-related one. If you have a browser open right now, go to seinfeld.visualizingdata.com. There’s the most insane web project I’ve ever seen, called The Seinfeld Chronicles: An Unnecessary Data Exploration by Andy Kirk. It’s a coffee-table book that the author then put online, a full data visualization of a zillion different ways you could slice and dice Seinfeld. What laughs happened when in each episode? What do the patterns look like? How do they accrue to each character? It goes episode by episode. The thing’s 121 pages, showing when various characters got screen time. It walks through why he thinks the show worked and what makes it unique. But the most wild thing to note is that it’s all hand-labeled. He watched episodes on his couch with a spreadsheet open, pausing every five seconds to label who’s on screen and who’s getting laughs. The whole thing is astonishing: a human did this manually before AI.

Wow. I have The Marine Biologist up right now. There are 23 scenes in The Marine Biologist.

Yeah, it’s crazy.

There you go. Seinfeld and the internet, made for each other.

My second carve-out is Buck’s in Woodside.

Oh, yeah.

Incredible restaurant. David and I just went there for a meeting this week, and I was reminded of just how special that place is, especially if you like Silicon Valley lore and ephemera. They’ve got an Apple I up on the wall. They’ve got a signed Jensen jacket, the first one he ever wore on stage. You can tour around the place and get a history of the tech industry, which is very fun.

It’s like a Silicon Valley version of Monk’s Café, you might say.

Yes. And my last carve-out is a company called Tin Can. My son is obsessed with it. He’s 3, but it’s more for 5-to-12-year-olds. It’s a phone, a landline with no screen that uses Wi-Fi, built for kids. They can call preprogrammed numbers, and if they need to call 911 or an emergency contact, it stays plugged in at home. It’s exactly the type of phone we had when we were kids, and they get to call other kids without all the smartphone stuff. The weird coda to this one is that somehow I ended up being the first investor in this company—

No, yeah.

—because it was a completely different company first. It was the last check I wrote when I was a professional VC.

You’re like the NBC network executive.

It accidentally pivoted and turned into this company—

Yeah.

—and became this massive viral hit. They’re on Good Morning America. It’s the face of this movement around great ways for kids to communicate without screens, and my son is loving it. For a while, I was sitting on it, thinking that at some point I should carve out Tin Can, but I don’t want to be too self-promotional and promote a company I invested in. This thing is just really fun to watch all these kids use.

Ah, so good.

Among the books we read was Seinfeldia by Jennifer Keishin Armstrong.

Yep.

Great, great book. And a few people to thank in particular.

Research thank-yous. Speaking of books for the show, first and foremost, thank you to Warren Littlefield, the NBC executive responsible for the decision to officially pick up Seinfeld. Warren spent a great amount of time with us, which was wonderful. He also wrote a fantastic oral history memoir of his time at NBC called Top of the Rock, which is well worth reading. It covers Seinfeld, Friends, Mad About You, Cheers—all the great stuff from NBC in that era.

Famously, right after Seinfeld ended, Warren got fired from NBC and went on to have an amazing second career as a producer. He executive-produced Fargo, The Handmaid’s Tale, Dopesick, and now The Testaments, which is doing incredibly well. It was great to talk to him. Thank you to Alec Berg, David Mandel, and Jeff Schaffer, 3 of the writers behind some of the most legendary episodes of Seinfeld, especially in the second half of the show.

Thank you to Jeremy Zimmer, former head of the UTA talent agency; Michael Lynton, former chairman and CEO of Sony Pictures Entertainment; our friend Ravi Nandan at A24; and Brian McAndrews, a longtime television executive, first at Capital Cities/ABC and then at Disney. And thank you to our friend Jeremy Giuffre for helping inspire this episode with his original recommendation, which I made a carve-out on our last episode: Jerry Seinfeld’s movie Comedian.

Thank you, Jeremy. I’ve got a couple of thank-yous: one to Arvind Navaratnam at Worldly Partners for his great mini-study on Seinfeld for this episode, and another to our good friend Danny Passman, an entertainment lawyer who has spent his whole career around deals in this industry. If you liked this episode, go check out other episodes on TV and entertainment. Taylor Swift, Oprah way back in the day. More recently, much higher quality episode because we got better over time, Disney part one and part two.

Yep.

And, uh, for a tie-in on Coca-Cola.

That’s right.

You can visit library.acquire.fm to get access to all the visuals associated with this episode, charts, tables, and illustrations. You can join the email list at acquire.fm/email. That’s where we will send out behind-the-scenes photos from research, episode corrections, and vote on future episode topics. And come talk about this episode with us and the whole community in Slack after you listen, acquired.fm/slack. With that, listeners, we’ll see you next time.

We’ll see you next time.

Who got the truth? Is it you, is it you, is it you? Who got the truth now? Huh.