Generated Transcript

[00:00:15] David Hornik
Hello and welcome to VentureCast. I am David Hornik from August Capital.

[00:00:20] Howard Hartenbaum
And this is Howard Hartenbaum, also from August Capital.

[00:00:23] David Hornik
We are from August Capital.

[00:00:25] Howard Hartenbaum
We had a presentation. Not a presentation, a proposal from a guy whose name is August. Did you see that?

[00:00:31] David Hornik
Yeah. So we got an email. Do you want to meet with this guy? And his name is August? So we said yes, period. That was that.

[00:00:36] Howard Hartenbaum
So if you want to get a meeting with August Capital and your name is August, you’re in.

[00:00:41] David Hornik
Or you could change your name to August. August Wilson can meet with us anytime he wants.

[00:00:47] Howard Hartenbaum
Fine with me.

[00:00:47] David Hornik
Yeah. So, Howard, it’s 2010.

[00:00:51] Howard Hartenbaum
Have you noticed that I’m still working on my New Year’s resolution?

[00:00:55] David Hornik
You mean like, you’re working on living up to it or coming up with one?

[00:00:59] Howard Hartenbaum
Coming up with one. Do you have one?

[00:01:02] David Hornik
No. I mean, ideally, I’d like to stay less fat. That’s sort of a namby pamby kind of resolution. Like stay less fat.

[00:01:10] Howard Hartenbaum
I was thinking about making it to sleep more, but I already sleep enough.

[00:01:15] David Hornik
Yeah, well, that’s not useful.

[00:01:17] Howard Hartenbaum
I like sleeping.

[00:01:19] David Hornik
You do? All right.

[00:01:22] Howard Hartenbaum
All the normal resolutions are like, you know, lose weight or eat healthier food or spend more time with your kids or run more, whatever it is. My New Year’s resolution is to fund 10 companies this year.

[00:01:34] David Hornik
Whoa.

[00:01:35] Howard Hartenbaum
Not gonna happen. But it’s my resolution.

[00:01:37] David Hornik
And how about just one awesome one?

[00:01:40] Howard Hartenbaum
Yeah.

[00:01:41] David Hornik
I had this conversation. I teach this business school class, and I don’t even remember the context of the conversation, but basically I said, look, if you did one Google and every other thing you touched was a total piece of turd. You were a brilliant venture capitalist. Like, you’re a genius. That’s. And one of my students was infuriated by this. He said, that’s ridiculous. Of course not. If you. If one out of 20 investments that you make is good and the other 19 are total garbage, then you’re a terrible VC.

[00:02:15] Howard Hartenbaum
Dollars in and dollars, that’s all that matters.

[00:02:18] David Hornik
I said, look, you know Google’s most successful venture investment ever? If you were to put money in it and you never did anything else that worked, you’re still a brilliant venture investor, so. Well, no, maybe you. You still are a sucky investor, even if you’ve made a bunch of money. What do you think of that?

[00:02:36] Howard Hartenbaum
So if you judge successful by. You would want to emulate that person. I would want to emulate that person.

[00:02:43] David Hornik
So I would judge success because you’re just worried about the outcome.

[00:02:47] Howard Hartenbaum
I would rather have one Google and 19 zeros. Than 22 x’s or 3 x’s or 4 x’s.

[00:02:57] David Hornik
Well, we should do the math. I wonder if 24 x’s would get you there.

[00:03:00] Howard Hartenbaum
Actually I don’t think so. Who was about $1809-960000-00000 today. Whatever.

[00:03:07] David Hornik
Well, but not at that. Not when you know, they probably distributed when it went public. What did it go public?

[00:03:12] Howard Hartenbaum
Yeah, but the investor probably kept half of his shares or at least that in the public market for the write.

[00:03:18] David Hornik
Up for a while.

[00:03:19] Howard Hartenbaum
Yeah, yeah, you can do the math.

[00:03:20] David Hornik
100 billion.

[00:03:21] Howard Hartenbaum
Stick with that deal.

[00:03:22] David Hornik
100 billion. If you owned, let’s say you even got diluted down to. Oh, they started out with what, 15 a piece or something? No, I think 10. So let’s say you went down to seven and a half or something. That means they.

[00:03:36] Howard Hartenbaum
So 10.

[00:03:37] David Hornik
15 billion. Seven and a half billion dollars at 100 billion dollar valuation.

[00:03:41] Howard Hartenbaum
But it’s a 200 in return.

[00:03:43] David Hornik
Well no, but that’s not how it’s calculated. Yeah, okay, so let’s say it’s. Okay, fine, I’ll give you a little bit. Let’s say 10 billion. Yeah, they made $10 billion in gain. So what would it take? 20 deals, that means to do 10 billion in gain over 20 deals means you’d have to make.

[00:04:03] Howard Hartenbaum
So if you had 20 deals at 10 million each at 200 and they were all 5x, that would only be a billion. You’d only be at 10% of the gain for doing the Google deal.

[00:04:11] David Hornik
20 deals at a billion.

[00:04:14] Howard Hartenbaum
A billion in profit. Right. 10 million bucks a piece times 20 is 200 million and 5x is a billion dollars.

[00:04:21] David Hornik
Yeah. So the person who did Google’s a genius period. Like this just doesn’t matter. So why don’t we just resolve to do the next Microsoft or Google this coming year?

[00:04:32] Howard Hartenbaum
So what about. So that’s a good news resolution. But I’m not done with the prior topic.

[00:04:36] David Hornik
Oh, okay, okay.

[00:04:38] Howard Hartenbaum
So what about, you know, the guy who does the deal like that and then never does another deal versus the guy who just keeps beating, he does that deal and then he just keeps beating his head against the wall to the point where people just say please stop. So it’s one thing to do that and then do 19 deals. It’s usually not the first deal that that happens on. But you know, sometimes there’s very successful, not just investors, but very successful entrepreneurs who do very well on a company and then tank 2, 3, 4, 5 companies afterwards and don’t recognize much like this wizard investor Potentially that maybe luck is a piece of it. Luck and timing.

[00:05:15] David Hornik
Look at our partner, Dave, whose very first investment was Seagate. So you say, wow, that’s good. Good start. Of course, then he went and did Microsoft and Sun a relatively short period of time after that.

[00:05:26] Howard Hartenbaum
Timing. That’s what.

[00:05:27] David Hornik
Yeah, right. Yeah, right. The outliers argument.

[00:05:30] Howard Hartenbaum
Yeah.

[00:05:30] David Hornik
My first investment was. Was Pay Cycle, which turned out to be a good deal. We sold it for a couple hundred million to Intuit. Not quite Seagate, though. But I feel like, you know, my plan is to sort of build. It’s like a rolling thunder. That’s just the guy. I’m just getting started. And then there’s, you know, like, growing and growing and growing. This year, when I invest in Google or Microsoft 2.0, fulfilling my resolution.

[00:06:01] Howard Hartenbaum
The best fun in this business is you meet a company and you look at it and it’s young and there’s not much there. And you can think of all these reasons why not to invest, but then you say to yourself, but it could be. And that’s the hard call.

[00:06:15] David Hornik
That is the hard call. But because the problem is how many. How many companies do you think you meet with in a year? 100.

[00:06:22] Howard Hartenbaum
Meet with.

[00:06:22] David Hornik
Yeah.

[00:06:24] Howard Hartenbaum
More.

[00:06:25] David Hornik
Yeah, probably more than that. But if we did. If we met with a couple of. If we met with a couple a.

[00:06:30] Howard Hartenbaum
Week, it’d be between the two of us. 500, probably.

[00:06:34] David Hornik
All right, so let’s say that. So we’re gonna meet with 500 companies over the course of this year, and, you know, some big proportion of those, you could reasonably say, well, what if, you know, like, oh, what if this one’s it? So we can’t exactly put in. Let’s say it’s just 10%. We can’t put money into 50 companies.

[00:06:54] Howard Hartenbaum
Well, some guys do that.

[00:06:55] David Hornik
That’s true. Jeff Clavier was just here talking about his deals or Ron Conway or, you know.

[00:07:01] Howard Hartenbaum
But if one of them hits, he’s a genius.

[00:07:04] David Hornik
See, maybe that’s the plan.

[00:07:07] Howard Hartenbaum
And if it doesn’t work.

[00:07:07] David Hornik
That’s not what we do, though. No, that’s not our model. Our model is two a year. Last year was crazy. How many deals did you end up doing last year? Three. And I did four.

[00:07:20] Howard Hartenbaum
I did one in January, one in December, and one in between.

[00:07:24] David Hornik
What did I do?

[00:07:25] Howard Hartenbaum
You did like four.

[00:07:27] David Hornik
I did four. And they were. But they’re same, kind of spread out. So. Yeah. So we should. We could. Because this is our podcast. We should talk about our deals because we are allowed to.

[00:07:37] Howard Hartenbaum
Sure. And when Jeff Clavier’s here. We ring a little bell each time he promotes a company, but we won’t do that for ourselves. And we’ll just say right ahead of time, we’re about to blatantly promote our own deal.

[00:07:46] David Hornik
Well, look, here’s the thing, actually, people. It’s the new year, right? So people can say, what are you excited about? And I always have this problem, right. Because the things I’m excited about, I invest in. Right. I mean, obviously there are some things, like, am I excited about Facebook? Yes, I’m very excited about Facebook.

[00:08:05] Howard Hartenbaum
Because they might buy one of your companies.

[00:08:06] David Hornik
Did I invest in Facebook last year? No. But they grew 200 million users. That’s unbelievable. So that’s awesome. And I’m. And that’s great, but it has nothing to do with my job. So what am I excited about? The stuff that I did last year. That’s what I’m excited about.

[00:08:24] Howard Hartenbaum
Then what did you do? Okay, your last one. What was that?

[00:08:28] David Hornik
Yeah. So, no, I think the thing that’s interesting is I think you and I both kind of closed a deal. Kind of. December. November. December. Right.

[00:08:35] Howard Hartenbaum
For me, it was December 19th. Seriously, I was skiing that.

[00:08:39] David Hornik
You do understand that the lawyers and everybody hate you?

[00:08:42] Howard Hartenbaum
No, they loved me because they finished it right before they. On Friday before the holiday. They were like, actually, that’s pretty good.

[00:08:48] David Hornik
That’s pretty good. That’s pretty good. If it had been that following Monday, they’d hate you.

[00:08:52] Howard Hartenbaum
Yeah. If you want to get a deal done fast, tell them it’s going to be December 19th and they will get the deal done.

[00:08:58] David Hornik
I was on the phone with a lawyer working on a deal, working on getting something sorted out up until 7pm on New Year’s Eve. I literally had to leave dinner to go sign it.

[00:09:14] Howard Hartenbaum
Was he charging you double?

[00:09:15] David Hornik
7Pm I don’t know. Mike Patrick over at Femmican west was the attorney. Mike, were you charging us double for New Year’s Eve? I hope not. But I will say this. Those of you who are listening, Mike Patrick is a fantastic attorney. He was incredibly responsive over that entire week. So I have nothing but incredible appreciation for Mike, because while I was answering my phone and checking my email or whatever, he was doing the work. Right. You were off skiing, and he goes, hey, did it close?

[00:09:45] Howard Hartenbaum
Yeah, No, I got off the lift and I looked at my email, like, at the top of the mountain and said, it’s closed. And I closed. And I ski down the mountain.

[00:09:52] David Hornik
Yeah, that’s good.

[00:09:54] Howard Hartenbaum
But all being fair, we had that Day closed in the office because we were having some construction in the office. Otherwise, I would have been at work.

[00:10:01] David Hornik
Oh, that must have been. Must have been it.

[00:10:04] Howard Hartenbaum
I broke my rib that day. That was punishment for taking the Friday off.

[00:10:08] David Hornik
That is punishment.

[00:10:09] Howard Hartenbaum
But it’s almost bad.

[00:10:10] David Hornik
Broke a rib.

[00:10:10] Howard Hartenbaum
Anybody cares?

[00:10:11] David Hornik
I didn’t break a rib skiing, but that’s because I was skiing in, like, the bunny slopes with my kids. They were like, oh, let’s not. I don’t want to go down the diamond. Scary. I did think it was interesting. It’s probably telling. Like, it’s a little bit like the battered wife syndrome, that my whole family was completely unsurprised when, as I sat down for New Year’s Eve dinner, I look at my. My phone and say, oh, excuse me, I have to go sign something. I’ll be back in 20 minutes.

[00:10:38] Howard Hartenbaum
You literally got up and went for a fax machine or something.

[00:10:41] David Hornik
Yeah, I had to go home to sign it because I had to scan it.

[00:10:44] Howard Hartenbaum
You’re in a restaurant when you got to go.

[00:10:45] David Hornik
Yeah. So I had to leave. But my. But I actually thought to myself, it is a very bad sign, although good for me, that my kids didn’t even. They’re like, oh, all right. See you when you get back. Like, that’s true. Sign that. They were trained as children when I was a lawyer.

[00:10:59] Howard Hartenbaum
Why didn’t you just write on a piece of paper that you accept the terms and sign it and take a digital picture with your iPhone and just email it?

[00:11:08] David Hornik
Yeah, that would have been fine.

[00:11:09] Howard Hartenbaum
That would have been good enough.

[00:11:10] David Hornik
That would have been good enough. But I wanted it to be official. I want it to be, you know.

[00:11:14] Howard Hartenbaum
So you’re going to tell us about this deal you closed.

[00:11:16] David Hornik
Oh, yeah. So my. My deal. And I’m not going to talk about it much because truthfully, it’s pretty early. But we did a seed deal, which I think is fun, a company called WePay, and it’s a Y Combinator company, and it’s founded by these two really great young entrepreneurs in their early 20s who basically had this realization that it’s incredibly hard to figure out how to pay for bills that are shared. Right. If you’re in a house with a bunch of guys or you’re in a fraternity or you’re in a.

[00:11:46] Howard Hartenbaum
You.

[00:11:46] David Hornik
You are trying to collect the money for a soccer team or whatever, or, like, ski house, and you want it, and you have a bill for 2,800 bucks or whatever, and you want to divide it among six people. How do you do that and collect it efficiently and track it and manage it and measure it.

[00:12:00] Howard Hartenbaum
That’s the key. Track it and manage it and make sure that.

[00:12:02] David Hornik
So you actually get paid. Right. And so these guys have figured out a very clever, simple solution where with an email, you can essentially open up a bank account and get started and. And send out emails to people and say, hey, pay up. And so I’m. I’m psyched about it. And it’s a great group of people. This guy, Eric Dunn, who I worked with over on PayCycle, he was an inventor. He was actually the angel lead. And PayCycle was the former CFO of Intuit. And Eric’s working with me on this and Mark Goins and Max Levchin from PayPal. I mean, just like a bunch of people in the payment space, but it’s super early, and that’s the most fun as far as I’m concerned. I just, I like the early.

[00:12:46] Howard Hartenbaum
So if you’re sitting at dinner with all your friends and you got to collect, like, who ate what and how much you got to pay, and somebody doesn’t have the cash, and they say, well, I’ll pay you back later. Instead you should just use this.

[00:12:58] David Hornik
Boom, we pay, send off.

[00:12:59] Howard Hartenbaum
And then they can’t weasel later and say, didn’t I pay you on that? And wait, you owe me change. And that’s bullshit.

[00:13:05] David Hornik
Yeah, right. Or who, you know, like, who’s paying electricity? No one ever paid the electricity. Yeah, no. So that’s. So we pay. They’re good guys. So Bill and Rich. Good job, guys.

[00:13:15] Howard Hartenbaum
Rich. That’s a good name for a finance company.

[00:13:17] David Hornik
Exactly. Rich is the man.

[00:13:18] Howard Hartenbaum
Bill and Rich.

[00:13:19] David Hornik
Bill. I had never thought about that.

[00:13:27] Howard Hartenbaum
High five. David can take them. Because if you’re going to find a new finance company, it might as well be done by Bill and Rich.

[00:13:33] David Hornik
Yeah, exactly. Sure, if your name is August, that’s one thing, but if you’re Bill and Rich, and if you’re in a payments company. Done.

[00:13:41] Howard Hartenbaum
It’s funny how it took us that long to recognize that.

[00:13:45] David Hornik
Well, so your deal was a company called Livemoka, right? That’s the one that closed December 19th. I don’t think they have names that are quite as conducive.

[00:13:56] Howard Hartenbaum
Yeah, I don’t know what they do. You ask me, what does the name have anything to do with it? And they have a great team. And when I wrote it, Live Mocha with capital L and capital M, they came down on me hard, like the brand. Please. There’s no capital M. It’s capital L. Live Mocha with little M. And I’m like, what does it matter?

[00:14:18] David Hornik
Yeah.

[00:14:18] Howard Hartenbaum
But anyway, it all matters what the company does.

[00:14:21] David Hornik
I would have put the capital M we pay as capital W, capital P.

[00:14:26] Howard Hartenbaum
Until they change it. And then they come down on you.

[00:14:28] David Hornik
They’ll let me know.

[00:14:29] Howard Hartenbaum
Live Mocha is based up outside of Seattle and Bellevue, and they are the market leader in the world for online language education. And if you want to, their primary language that they’re offering now is a free service to learn and practice English. And then if you want to get their premium service, once you’re beyond a certain level and you want special content and more technology to help, like record your voice and put you in specific scenes or have people get corrected, then there’s a premium piece to it. And they’re about 2 years old. They’ve got pushing 5 million registered users, a couple million on a monthly basis. Interesting company market leader. Did I say 200 countries? We got distracted because David’s stupid phone started beeping.

[00:15:28] David Hornik
It was an all in intercom, all note register, like all announcement. Did you even know you could do that?

[00:15:34] Howard Hartenbaum
Probably the guys in there doing the construction dropped the phone or something like that. So Live Mocha is.

[00:15:40] David Hornik
So are the most people who are learning English in China right now?

[00:15:45] Howard Hartenbaum
The largest market for them is Brazil, and China is coming up. And, you know, the number of people learning English is an incredible number. You know, there’s more people studying English in China than there are people who speak English in the United States. Oh, man, just fascinating. And they’re also branching in other languages, and they’re going to load course content for German and French and Italian and Spanish and all those traditional ones. And their goal and vision in the future is that no matter what language you’re in, you can learn another language. So if you’re living in Portuguese to French, Portuguese to French, and they’ll have the content available, whatever it is. That’s their goal, that if you want to do language, you do it online and you do it live Mocha. And cost is low and the quality is high, and they’re already the global market leader, and you can’t touch that.

[00:16:35] David Hornik
Sweet.

[00:16:36] Howard Hartenbaum
So you said no singing.

[00:16:41] David Hornik
No, I said I always sing.

[00:16:42] Howard Hartenbaum
He said he always singing. I said, if you sing, I’ll sing, and that’ll be the end of the show.

[00:16:46] David Hornik
All right, well, that was a threat. I’m sailing away Howard’s been studying guitar. They looked up the guitar chords too. I’m sailing away by sticks. Sticks. But you don’t have the voice because that. That part is like, I’m silly, you know, let’s hear you sing that.

[00:17:05] Howard Hartenbaum
No, you got that low. I have a very low voice.

[00:17:09] David Hornik
Yeah, but you can’t sing, so, you know, forget it.

[00:17:12] Howard Hartenbaum
Anyway, so that’s my. That was my Christmas deal.

[00:17:14] David Hornik
Very nice. Oh, that’s right. We had the Christmas deals. We got them done.

[00:17:17] Howard Hartenbaum
Yep. And the team was very happy because they all wanted to go away on holiday and know that they’re bank account was full and that they had, you know, years of opportunity to build their company without cash. And they have a plan to be profitable on this money, and we’ll push them to it.

[00:17:35] David Hornik
That’s good. No, I always like getting these deals done at the very end. In fact, pay cycle. I think the first round of pay cycle that I did back a bunch of years ago, we closed, like, right before the holidays, and everybody was psyched because, like, oh, you know, what a good way to end the year. Going to start on a high note and all that. So. So, you know, I noticed that it’s, what, Friday the. Whatever it is, Friday the 8th, we’re sitting here podcasting, and everybody else is in Las Vegas at ces. Are you. Do you feel. Have you been reading all the coverage and have you felt left out?

[00:18:09] Howard Hartenbaum
I don’t feel left out because I went there before, and there’s just too many damn people there.

[00:18:13] David Hornik
It’s awful.

[00:18:15] Howard Hartenbaum
And there’s too much sensory overload. Like, you walk through there and it’s just bright and loud and people. And I just don’t deal well with that type. I lived in Tokyo for a while. Going to CES is like going through Tokyo station at rush hour. It is just. Except in Tokyo, at least you’re taller than everybody and you can see.

[00:18:31] David Hornik
Yeah, maybe you are. I’m five, four. I’m not taller than any population on this planet. Is there any population where the average height is lower than 5 foot 4? Other than the pygmy people?

[00:18:45] Howard Hartenbaum
Probably the Lilliput.

[00:18:47] David Hornik
The Lilliputians. My son was looking at a story on Yahoo. News. Very excited. The Oompa Loompas. Yes. That Yao Ming has. Has married a woman who is six foot one and. Or six two, and she’s pregnant, apparently. And there’s speculation about how big their child is gonna be, genetically speaking. That child should be a very tall child. Girl or boy?

[00:19:11] Howard Hartenbaum
Nice.

[00:19:12] David Hornik
Yeah. So you’re not. So you aren’t. You aren’t feeling like I should be at ces because I do have some of those pangs like that everybody’s there. And what’s good about CES is because everybody’s there and there’s some interesting fun parties and you get to catch up with lots of good people, whatever.

[00:19:25] Howard Hartenbaum
But we also get this general sense. Like a few years ago, you went and there was flat panel TVs everywhere. And you could walk around and say, ah, flat panel TVs are coming. And within 12 months you could not find a tube TV in the world. Just they don’t exist.

[00:19:41] David Hornik
And in fact, what was interesting and.

[00:19:43] Howard Hartenbaum
You know the reason behind that, is because they can put more of them in Best Buy and formerly at Circus City, that they could put them all up on the wall. So per dollar square foot in profit margins was better for them. When they had tube TVs, they took up floor space, took up too much space. Push was actually like Best Buy saying, wait, if I have a high ceiling and I can line eight TVs from here to there, and I only sell one of them every month, I’m making good money.

[00:20:07] David Hornik
But there was also a cost advantage per square inch because we invested in this company that was doing the chips behind, you know, kind of low cost rear projection tv. And it was amazing how that market went away in a heartbeat. Right. Like this is a great example. If you invest in great people building technology that works and is smart or whatever. And then all of a sudden some, you know, shift just changes the. Changes the landscape. And literally in the course of a single CES, it went from big screen rear projection TVs were interesting and at a price point that was rational to. There is no such thing. You cannot get one if you wanted one. Oh, could I. I just need that. One of those rear projection. No. Yeah, you’d have to buy like an antique, you know. And how long has that been? Three years or four years, something.

[00:20:59] Howard Hartenbaum
I probably have one of those in my house, if you want it. Yeah, it’s so heavy. If you want to just take it away.

[00:21:04] David Hornik
If you can get it. Yeah, if you could pull it out.

[00:21:06] Howard Hartenbaum
Get out of there. £40.

[00:21:08] David Hornik
Crazy. So. So I will say that with blogs and podcasts and everything else, I mean, just frankly, you just have to read tech meme, you know, what’s going on at CES. Right? Right. What. What is happening at CES? From what? Well, let’s start with TVs. The only interesting thing that’s happening in CES and TVs is 3D this year, and we’ve seen 3D TVs, but this year there are actual sort of production TVs that are using the same kind of technology that makes avatar and 3D possible. And so it’s pretty good 3D. You have to wear the glasses.

[00:21:44] Howard Hartenbaum
I saw a company five or six years ago in Budapest called Holographica which does 3D TVs and you don’t need glasses.

[00:21:53] David Hornik
Yep.

[00:21:53] Howard Hartenbaum
And it is bizarre.

[00:21:55] David Hornik
Cool.

[00:21:55] Howard Hartenbaum
You could walk up and look at it and the image comes out of.

[00:21:58] David Hornik
The screen was this one. You could walk around. We saw one where that you could literally walk around. So they were projecting up from the bottom. It was like a city. And you walked around. It was. That was awesome.

[00:22:09] Howard Hartenbaum
You’re looking down into the thing.

[00:22:10] David Hornik
You can see like the planes flying.

[00:22:12] Howard Hartenbaum
And you can imagine the 3D game.

[00:22:13] David Hornik
Oh my God. So awesome.

[00:22:14] Howard Hartenbaum
I almost invested in that one.

[00:22:15] David Hornik
We did too, I guess. It was so awesome.

[00:22:18] Howard Hartenbaum
Almost, but not quite.

[00:22:19] David Hornik
But we didn’t either. No. So 3D is sort of happening, but it’s, you know, as long as it’s sort of glasses and all that stuff, it’s not really, you know, it’s. It’s just. I don’t think that’s going to be a mainstream technology. On the other hand, I’m a little bit surprised at how important 3D is in the MOV world now.

[00:22:36] Howard Hartenbaum
Did you see Avatar in 3D? I did see it in 3D.

[00:22:39] David Hornik
Yeah.

[00:22:39] Howard Hartenbaum
Yeah. I haven’t seen it.

[00:22:40] David Hornik
It was great. It’s totally stupid story. In fact, I was just on, I invested in this company, Gravity and Gravity is about to come out with, you know, sort of their. Out of beta of their product. Anyway, I’m on this beta and one of their things was a kind of discussion around funny stuff on the web. And one of the things that that was linked in Gravity was a Pocahontas write up. A write up of the movie Pocahontas. Here’s what’s happened. Here’s what happens. And then they just crossed out all the Pocahontas names and put in avatar names. That’s exactly the same story. Yeah, it’s like, you know, I don’t want to ruin it for you, but you can imagine. But the technology was waiting for it on dvd. It was really fun. No, you gotta just go, oh, you so have to go.

[00:23:25] Howard Hartenbaum
Crowds.

[00:23:26] David Hornik
What are you? You’re agoraphobic. What are you?

[00:23:29] Howard Hartenbaum
Is that the word?

[00:23:30] David Hornik
I think it’s when you can’t. You don’t want to leave the house here.

[00:23:32] Howard Hartenbaum
Oh no, I’m not that bad.

[00:23:34] David Hornik
You’re kratophobic.

[00:23:35] Howard Hartenbaum
I lived in Tokyo for a long time.

[00:23:36] David Hornik
Yeah, seriously, you’re just beaten. So TVs. But, but, but the real thing, as far as I can tell here not being at ces, is that this year ces, amazingly, is all about mobile. It doesn’t seem it’s all about mobile, it’s all about smartphones and, and all that.

[00:23:52] Howard Hartenbaum
Well, the timing of the Nexus One relating to that was, was perfect.

[00:23:56] David Hornik
Yes.

[00:23:57] Howard Hartenbaum
I have one.

[00:23:57] David Hornik
I know you do.

[00:23:59] Howard Hartenbaum
It’s nice you’re believing. My friends at Google Ventures sent one over for me to play with and I got it a few days before it was launched and we passed it around the office a little bit and now my daughter has it and she’s playing with it.

[00:24:12] David Hornik
It’s total. It’s total.

[00:24:14] Howard Hartenbaum
She likes sock and cayman. The sock, it comes in a little neoprene cover and she was like, that’s a pretty nice cover.

[00:24:22] David Hornik
I will say the design is good. So is it htc? Who’s, who are the guys?

[00:24:25] Howard Hartenbaum
Htc.

[00:24:26] David Hornik
They did a nice job again and the design is cool. It looks like a great, I mean truth. It looks like a great phone. The challenge I have is that I remain committed to a keyboard. And these smartphones that are coming. Yeah, well, these smartphones that come back, coming out are not solving the keyboard problem. So I still have a keyboard smartphone in my right pocket.

[00:24:47] Howard Hartenbaum
Have you seen an N97 Mini?

[00:24:49] David Hornik
No. This is the Nokia one.

[00:24:50] Howard Hartenbaum
I’ll bring it in for you. My wife has one. You flip it up, it’s about the same size of a normal iPhone, maybe a little bit thicker and you just push it up and the thing pops up and you got a keyboard underneath.

[00:24:59] David Hornik
Alright, let me play with that. Because I need the real estate of an iPhone or a Nexus One, but I need a keyboard.

[00:25:09] Howard Hartenbaum
I think the most interesting piece of the Nexus One launch was their advertisement on the Google homepage.

[00:25:16] David Hornik
Here’s what I want to know. I’m going to launch a product next. How much, how much do I have to pay Google to get my ad on the front page of Google?

[00:25:24] Howard Hartenbaum
$100 billion.

[00:25:25] David Hornik
Do you think it’s, do you think that there’s any dollar amount that would get my ad on the front page of Google?

[00:25:31] Howard Hartenbaum
But it’s in the billions.

[00:25:33] David Hornik
It’s gotta be. So basically they gave themselves a billion dollar ad on their.

[00:25:40] Howard Hartenbaum
I would love to know how many they sold off of that. God, that would be interesting.

[00:25:45] David Hornik
So those of you listening who have that information, email us here at august capital hornickustcap.com or are you Howard or you, Hortonbaum? And just Howard. Howardgustcap.com and we promise not to tell anybody. We promise only to tell the people who listen to our podcast. And it’s such a small number that.

[00:26:05] Howard Hartenbaum
Zero. In fact, if it’s zero, they won’t even hear this offer.

[00:26:10] David Hornik
Let’s hope it’s at least one and that that one person knows how many they sold off of the homepage of Google.

[00:26:15] Howard Hartenbaum
Well, I want to say thanks again to Bill Maris at Google Ventures for having it sent over. It’s very nice and we enjoyed using it. And thank you.

[00:26:22] David Hornik
No, it’s awesome. No, totally. Like, you know, it just was really fun to get an early look at.

[00:26:28] Howard Hartenbaum
It, and everybody was talking about it. And I walked. I had it in the box and I took it out, and I walked into Dave Marquardt’s office to show him the device, and he’s sitting at his desk watching Walt Mossberg talk about the next one. And I walk in and go, there it is. He’s like, whoa.

[00:26:48] David Hornik
So, you know what would be. Even. Would. Would. Would qualify in that same kind of realm is if suddenly what appeared tomorrow was the Apple tablet. Yeah, but Apple doesn’t have Ventures. There’s no Apple Ventures. You know, maybe there is. Where’s Bill Maris of Apple?

[00:27:09] Howard Hartenbaum
Well, maybe Bill knows of.

[00:27:10] David Hornik
Bill, do you know, if you’re on.

[00:27:12] Howard Hartenbaum
Apple and you want. And you want us to try out your nice Apple tablet, we would happily. In fact, we’ll even send it back to you after we’ve tried it out.

[00:27:18] David Hornik
No, I won’t. I guess I will, because I’ll buy it. I gotta say, I’m such a. I’m such a. Look, I’m gonna buy a Nexus One. I’m gonna buy entry. I’m gonna buy an Apple tablet the second it comes out.

[00:27:29] Howard Hartenbaum
Did you go to the Google homepage and click on the Nexus One ad and then buy one?

[00:27:33] David Hornik
I did click on it and I looked at it. My problem is right now. This is unbelievable.

[00:27:38] Howard Hartenbaum
You already have two devices in your pocket.

[00:27:40] David Hornik
I have three. I have three networks. I have an iPhone on the. On, AT&T in the left pocket. I have a trio on the Sprint network on my right in my right pocket. And I got. Have you. Surely you’ve noticed all these people come into our office with this Wi Fi, evdo, Mi fi hotspot thing.

[00:28:02] Howard Hartenbaum
Yeah.

[00:28:02] David Hornik
So I got that over the holidays because I needed to travel and have WI Fi and I was gonna be in places that weren’t gonna have it. So it’s on Verizon now. What?

[00:28:13] Howard Hartenbaum
And what is all your.

[00:28:14] David Hornik
And what’s the neck and what’s the Nexus One on T Mobile? Right, Exactly. Killed me.

[00:28:22] Howard Hartenbaum
The only problem I have with the Nexus One is I cannot figure out how to adjust the clock. It’s like on the wrong time. It’s not obvious how to fix it.

[00:28:29] David Hornik
There must be a control panel.

[00:28:31] Howard Hartenbaum
Haven’t found it yet.

[00:28:32] David Hornik
T Mobile. So yeah, I guess I’ll. I mean the good news about the Nexus One. Oh, here’s the other thing about the Nexus One that everybody’s talking about and I do think is interesting, which is this disaggregation of the phone and the network that hey, I’ll buy the phone, it costs 500 and whatever dollars for the device.

[00:28:49] Howard Hartenbaum
539.

[00:28:51] David Hornik
539, 2949, something like that. And then I’ll go figure out what network or here are network offers. Right, I’ll buy it on T Mobile. Well that’s another. I mean it’s a problem with networks in this country, right, that there are no quad band networks. Except for what, except for T Mobile.

[00:29:08] Howard Hartenbaum
The phone that makes it work. I mean the average user doesn’t care. All they want to do is buy it and have it work. And there’s going to be a lot of people who buy the phone from Google for 539 and pull out their AT&T SIM card and plug it in there and can’t figure out why it doesn’t work perfectly. And they’re calling customer service and bitching and moaning.

[00:29:25] David Hornik
Well, this is an interesting challenge for a Google who, you know, they’re a software company, they’re not a consumer.

[00:29:31] Howard Hartenbaum
They should just buy all four networks.

[00:29:35] David Hornik
You joke, but I think Apple’s gonna buy AT&T soon. I think that Apple will buy one and I think Google will buy one. And then the big question is does, does Microsoft need to buy one? Meanwhile, Microsoft is supposed to launch some.

[00:29:48] Howard Hartenbaum
Startup that’s building a startup network. We’ll just give them like $80 billion.

[00:29:54] David Hornik
Our special opportunities fund, Howard, is $250.

[00:29:57] Howard Hartenbaum
Million and then we can sell it for 30 billion.

[00:29:59] David Hornik
The most, the most we can invest in a single deal is what, 380. Can we do 15%. So anyway, like 310 million bucks. We couldn’t build a network in my neighborhood, you know, and now in the Palo Alto district. Neighborhood. Yeah, but I think, I think the Nexus One super interesting. And then, and oh, I was gonna say meanwhile Microsoft has its new mobile platform that’s supposed to come out, but they’ve, but They’ve punted until the, like, mobile congress in a month or something.

[00:30:37] Howard Hartenbaum
Now that Google’s done the advertisement on their homepage, you can imagine every Windows machine in the world. When you boot it up, while you’re waiting, it will say, buy the new Microsoft phone.

[00:30:46] David Hornik
So you’ve just hit on exactly why Microsoft won’t do it and why eventually Google will not do it. Because, you know, can you imagine the EU and the US Government if Microsoft did that? They would lose their minds. There would be such crazy antitrust screaming.

[00:31:07] Howard Hartenbaum
There may be some issues around Google. Well, we will see.

[00:31:11] David Hornik
Hey, I’m no antitrust attorney. I’ve just played one on TV for a while.

[00:31:16] Howard Hartenbaum
I’m not even an attorney, but we’ll see.

[00:31:18] David Hornik
So that one’s pretty interesting. But I am looking forward. Even though it’s possible that the Apple tablet is like a big iPhone that is really not useful or whatever, I’m incredibly excited about it. I look forward to it and I will buy it.

[00:31:33] Howard Hartenbaum
One of our partners here, Vivek Mera, was in the Newton project, right? And this is sort of like the. Follow on to that and he’ll like, get this and say, see, I told you it would work.

[00:31:42] David Hornik
I built this.

[00:31:43] Howard Hartenbaum
It was just early.

[00:31:44] David Hornik
We built this city. Oh, sorry. Just some more singing for you, Howard.

[00:31:49] Howard Hartenbaum
Thank you.

[00:31:51] David Hornik
And then it will be integrated. The tablet will be integrated with the lovely Apple itunes and it will have the same damn DRM that everything else does coming out of itunes and make me crazy.

[00:32:03] Howard Hartenbaum
So I’ve had enough with itunes and their drm. It’s so easy to buy stuff, but then my kids, they want a copy and they buy different music and they want to share with me. It’s my family and I’m paying for everything. Why the hell is there DRM and all that stuff in my household? It just doesn’t seem right. So sorry, Apple. Amazon it is.

[00:32:21] David Hornik
No, it’s. My son, Noah has just started his. His blog, Indie Rock kid blog, indie rock kid.typepad.com and. And he. His recent post. Well, our partner, Dave. Hey, Dave. Come in.

[00:32:38] Howard Hartenbaum
Come join us.

[00:32:38] David Hornik
Oh, he’s not gonna do it.

[00:32:39] Howard Hartenbaum
Oh, he will. We’re on.

[00:32:40] David Hornik
Do you really want to be. Be a guest on our podcast here, Dave?

[00:32:44] Howard Hartenbaum
I have to take off. I gotta. I gotta go get up to the city.

[00:32:47] David Hornik
All right, well, good. Good to see you. We almost got him. That was close. And that would have been miraculous.

[00:32:53] Howard Hartenbaum
Well, we did get him. We got him saying, I gotta take off the city.

[00:32:57] David Hornik
So anyway, Noah, my son Noah, has this Indie Rock Kid blog and one of his recent posts was why I Hate Itunes. And it was just a rant about the fact that he had three. He had three points. One was that he hates the drm. It’s crazy. And the reality is our house is admittedly an outlier house, but we have more than five Apple computers floating around the house, which means that we cannot have the music authorized on every Apple computer in the house.

[00:33:28] Howard Hartenbaum
We have four computers, two iPod touches, and an iPhone.

[00:33:32] David Hornik
It’s just, that’s just doesn’t work. Right. So that was his first thing. Second thing is he complained about pricing. Fact is that Apple went up from a buck to a buck 29. And, and, and, and maybe that some of that’s around drm, but that doesn’t make any sense. And then the last objection was that they called, they named some album that he didn’t like, album of the year or something. But anyway, but he said, which is which I agree with. If you buy it on Amazon, there’s an Amazon downloader, it costs a buck a song or five bucks for a CD or whatever, and it comes DRM free. It’s an MP3 file and it sends it directly to itunes. So why would you buy. I mean, look, look, I love Apple. I have plenty of friends at Apple and in the itunes group. But why would you buy it from Apple?

[00:34:19] Howard Hartenbaum
I wouldn’t.

[00:34:20] David Hornik
Nor will I. I’m out. Indie Rock Kid.type bad.com youm can hear Noah’s. You can read Noah’s top 10 top 10 indie bands releases of 2009. So this is my, this is how manipulative my children are. And I suppose I should like realize that it’s not surprising at all that they are, you know, that they’re trained by me to be, to, to come up with schemes. But basically Noah then says to me, look, look, I have this new blog and it’s great, but I want to write more stuff. If we go to more concerts, I’ll have something to write about. So, so, Daddy, you know, like, we should go, go, Vampire Weekend’s coming. So can you get tickets to Vampire Weekend?

[00:35:07] Howard Hartenbaum
And what difference is that from when you just said we’d like to write about the new Apple tablet, but if only I had one, then I would be able to talk about it more.

[00:35:16] David Hornik
In more informed way. No, that’s it. So actually we’re going to see Cake this weekend. So he’ll probably write about the Cake concert and then I’ve just bought Vampire Weekend tickets. You never heard of Cake? It’s great. Cake’s great.

[00:35:31] Howard Hartenbaum
In the pitch this morning I saw the album cover for Cake. I just know I don’t know their music. Wait, let me go to Amazon and.

[00:35:42] David Hornik
Listen to the trailer.

[00:35:46] Howard Hartenbaum
Hey, a friend of mine, Paul Bragell, sent me an email about their new IO ventures. You looked at that?

[00:35:54] David Hornik
Yeah, it’s cool. I mean, you know, it’s good. You’d been talking with him a bit about it as he was thinking about building it.

[00:36:04] Howard Hartenbaum
Yeah.

[00:36:04] David Hornik
What is it? Yeah, like what, what is it that made him think to do it? And what do you think makes it different than kind of the stuff that’s out there?

[00:36:16] Howard Hartenbaum
Well, there’s this natural, natural tendency of entrepreneurs who have a lot of experience and success to look at, you know, new guys who are starting up companies and just say, God, if only you didn’t repeat the same stupid mistakes that I made out of naivete and innocence along the way. So basically, mentorship programs and the one that they put together, if you go down and look at the list of all the folks behind it, it’s a pretty impressive list of people. They’re up in San Francisco. They’ve got. David will pull up a list.

[00:36:51] David Hornik
Yeah, here. So our, they say mentors. Our friends in San Francisco will stop by frequently. Aaron Patzer from Mint, Anthony Suhu from Dot Spotter, Jameson Sue, Kevin Rose, Mike Marquez, Philip Kaplan, you know, Russ Simmons. Mike. Mike Arrington. Actually, I read Mike put. I forget whether it was a tweet or a post, but he basically said, you know, he’s excited about what these guys are doing. They’re building out this really funky space in the Mission. And Arrington said that he’s going to spend a couple or a few days a month working out of their offices up in the city. So that’s, you know, it’s pretty interesting. Ted Reingold out of Dogster and Jarrett Kopf, who is building AD roll, who’s a great guy. I mean, just a bunch of Akash Garg who’s at high five. I mean, just a bunch of really smart people.

[00:37:43] Howard Hartenbaum
If you look at some of the other programs that this is sort of similar to like Y Combinator for an example. The success of Y Combinator is due to Paul Graham’s quality mentorship of the entrepreneurs that are there. And you know, Paul has a lot of experience. He’s done it before, he’s seen a lot of different things and he brings in people who, you know, are smart. They just don’t have. There’s no school for going out and learning how to do this stuff. So he mentors them. And I’ve always told entrepreneurs, if you’re new to this, first thing you should do is go find some guy who’s been through the thick of it and get him to be an advisor or mentor for you. So that when you’re talking to VCs, you’re trying to hire people, you’re talking to lawyers or whatever it may be, you have somebody who’s done it before. These guys are institutionalizing a little bit more and they have a great group of people and I think it’s fantastic for entrepreneurs who want to start something to get in touch with them and see if it might be a fit and so see what they can learn there.

[00:38:40] David Hornik
Yeah, so they’re, they’re, they’re four founders over there. It’s, it’s Paul, but it’s also Jim Young, who was one of the two guys who created Hot or Not. And then I love that site. Well, Hot or Not is brilliant. It’s so simple because it’s so simple and because it’s so. Because it appeals to exactly the right need, which is you say, oh, she’s hot. And then she says, oh, he’s hot. And then they say, give us money and you can find out who you are. Like you. And then you go, really? Like, how much money would you, how much money would you give for that? 100 bucks. Like, I don’t care, like, whatever, you know, so that was brilliant. So Jim, so Jim Young, Ashwin Naveen, who was one of, was over at BitTorrent, was one of the co founders of BitTorrent. And then Abra Witcom, who was one of the founders of co founders of MySpace. So you can imagine there are a bunch of good guys coming out of MySpace, early days of MySpace, who are going to come by and spend time over there. And obviously the stuff that these guys have touched is just really interesting.

[00:39:43] Howard Hartenbaum
And they have some out of area guys too, like Chris DeWolf from MySpace as well, even though he’s probably still based in his beautiful house in Malibu. Yeah, probably you can go hang out with him there right on the beach.

[00:39:54] David Hornik
And he’ll give you mentorship. IO guys can. If, if you get accepted into your program, can you go hang out in DeWolf’s house?

[00:40:02] Howard Hartenbaum
I heard you can stay there over the weekend.

[00:40:04] David Hornik
Sweet.

[00:40:05] Howard Hartenbaum
I just made that up.

[00:40:07] David Hornik
We’re making facts up. We’re making facts up here.

[00:40:09] Howard Hartenbaum
Sorry, Chris.

[00:40:11] David Hornik
Anyway, so that’s. I agree. I think that these programs are all about having great mentorship and, you know, like Tech Stars is about folks like Brad Feld being really good mentors and and Y Combinator, obviously, Paul and Jessica. And now we have this one that is about having a big network of folks who are going to help out. So that’s pretty cool. So we’re psyched about that. And what’s their website? They are ventures IO http://www.ventures.IO so check it out. Here ends our commercial for Ventures IO, the IO Venture Accelerator.

[00:40:53] Howard Hartenbaum
We know they’re going to be a big success and we’re expecting some wonderful, fantastic company that’s gone through there to come out and say August Capital, my name is August and I would like to pitch you.

[00:41:05] David Hornik
It’s as if we’ve jumped in early to our sucking up portion of the program. Is that necessary? I mean almost. I mean the only thing that we’ve got going on really coming up is we’re going off to the Crunchies tonight. Tonight.

[00:41:22] Howard Hartenbaum
But by the time you guys hear this, the Crunchies will be over.

[00:41:24] David Hornik
So you’ll know who won. Aardvark is nominated for a bunch of stuff. So I’m psyched about that. I hope that Aardvark wins because of course I invested and love them and so that would be, you know, that would be good.

[00:41:38] Howard Hartenbaum
Does Max still have that Mohawk?

[00:41:40] David Hornik
You know, he, he, it was growing out and it was sort of getting a little scraggly looking. So I think he actually finally got around to cutting his hair so that.

[00:41:48] Howard Hartenbaum
He’S in a Mohawk again.

[00:41:49] David Hornik
No, I don’t think so. But you never know. I guess we’ll see.

[00:41:51] Howard Hartenbaum
To walk around in a Mohawk, well, you gotta have some self confidence about your confidence.

[00:41:55] David Hornik
You do have to have to have confidence. You have to have. You know, we saw these three guys on, on the slopes, they were hanging out all in their Mohawks and my, my kids were horrified and you know, like, oh, those guys. I was like, that’s right. Don’t get me wrong.

[00:42:11] Howard Hartenbaum
Could you imagine that if you didn’t if you’ve never had a Mohawk before? Which would describe both of us.

[00:42:15] David Hornik
Yeah.

[00:42:16] Howard Hartenbaum
Or at least me and you decide you’re gonna go skiing and get a Mohawk and the first time you fall on the powder and your head, which has never touched anything cold in its life, is suddenly sitting in the snow. Brain freeze. It’s like ice.

[00:42:29] David Hornik
That’d be like hardcore brain freeze. Alright.

[00:42:31] Howard Hartenbaum
We’re gonna have the August Capital Mohawk ski trip.

[00:42:34] David Hornik
Well, we are gonna have the ski trip. We’re gonna get together. I like skiing. The thing about skiing, that’s great. And that’s a little bit like golfing. I mean, you and I are terrible golfers, and we golf, what, once a year or something? But the thing about it is that there’s downtime. The key to an activity that’s useful as a business activity is that there has to be a downtime where you’re with different people. And you could. So in skiing, you’re sitting on a lift and you spend a bunch of time, you mix it up, you sit with different people, and you actually get a lot of downtime hanging out. Just like.

[00:43:04] Howard Hartenbaum
It’s not like you’re on the lift and say, with a stranger. And it’s like, so, how’s the weather? Where are you from? That was an awesome run. But when you’re with your partners, it’s like, hey, what deal you gonna do?

[00:43:14] David Hornik
Hey, I got a question. What would you do if blah, blah, blah happened? Or, you know, it’s good, it’s fun, but yeah. So we’re off to the Crunchies. So Crunchies are really cool. I mean, it’s interesting that you remember the. Remember when TechCrunch was, like, just the beginning. It was just this new little blog and nobody cared about it. And if you said the Crunchies, people go, what kind of stupid ass good brand.

[00:43:38] Howard Hartenbaum
Brand is really powerful brand.

[00:43:39] David Hornik
Powerful brand. Yeah.

[00:43:41] Howard Hartenbaum
I see. I see a big company.

[00:43:43] David Hornik
I mean, the Crunchies aren’t just TechCrunch, right? I mean, the Crunchies are actually Gigaom, Venture Beat, and TechCrunch. Right.

[00:43:52] Howard Hartenbaum
Except it just happens to be named.

[00:43:54] David Hornik
But it’s called the Crunchies techcrunch. But anyway, I mean, all three of those are great blogs with, you know, that. That I read all the time. So that’s great. But anyway, it’ll be interesting. The one thing I will say I’m hoping for, we’ll see if it could. We see how it goes that the Richter Scales will be singing the nerd acapella group that includes folks like James Currier, the founder of Tickle, and, you know, a bunch of, you know, but just excellent former acapella singing nerds.

[00:44:26] Howard Hartenbaum
So you could fit right in there.

[00:44:27] David Hornik
Totally. Count me in.

[00:44:29] Howard Hartenbaum
Booby. Boom, boom.

[00:44:32] David Hornik
Don’t worry, be happy. This is my audition tape. I think I’ve just been kicked out of the group. It was feeling so. I was feeling so good up until that moment.

[00:44:47] Howard Hartenbaum
What else we got?

[00:44:48] David Hornik
I think. I think we just get on with our sucking up and call it a show.

[00:44:52] Howard Hartenbaum
All right, so one thing I think is really fantastic for. For people in the software Business is every now and then go and see a factory where they manufacture something. Like go and get a tour.

[00:45:06] David Hornik
Real stuff built.

[00:45:07] Howard Hartenbaum
Go and get a tour of a car factory or of a. Where there’s robots in work.

[00:45:12] David Hornik
So you used to work in a car factory. Right. Didn’t you get. You were forced to. How long did you have to spend on the Honda Factory floor?

[00:45:18] Howard Hartenbaum
Six weeks.

[00:45:19] David Hornik
Seriously? Six weeks.

[00:45:20] Howard Hartenbaum
Six weeks. 5:30am Shift.

[00:45:22] David Hornik
And you actually did real, you were like assigned a real task.

[00:45:25] Howard Hartenbaum
For four weeks I was on the line doing the cabin harness installation, which.

[00:45:30] David Hornik
Is the one that’s hard, hard.

[00:45:34] Howard Hartenbaum
And you all. In a Japanese factory, you wear these white cotton gloves so that you protect your hands and you protect the paint and everything you’re touching. And they like to tease the young engineers there so they don’t tell them the important things. So the cabin harness is very heavy and it’s hard to wire. And you’re putting it through like cut out holes in the body frame.

[00:45:52] David Hornik
Very sharp.

[00:45:53] Howard Hartenbaum
Yeah. And so at the end of the first day, maybe half of the flesh on the sides of your fingernails are bleeding and it’s coming through the gloves. And then the manager says, oh, I forgot to tell you, you need to wrap band aids around all your fingers before you put the gloves on.

[00:46:06] David Hornik
Snicker, snicker band aids. How about duct tape?

[00:46:13] Howard Hartenbaum
Well, that would work too. Duct tape is harder to take off. So that was, that was an interesting job. But I was commenting that, you know, if you’ve never been to like a factory before where they, where they build stuff and you see people in an assembly environment and you see how they never stop because the line is moving. If you want to go to the bathroom, you wait until the 10 minute break that comes in two hours. It doesn’t matter if you’ve got to go number one or number two, you wait because the line is moving by at something like $10,000aminute in lost costs if you, if you leave the line. So you hold it.

[00:46:46] David Hornik
Yeah. I went to, I got to visit the GM factory in China when I was on a trip with the business school students. And it was awesome. Actually. I just heard that more US Cars are being sold into China than any other market at the moment.

[00:47:00] Howard Hartenbaum
Pretty soon it will be more than the U.S. yeah.

[00:47:02] David Hornik
Amazing.

[00:47:02] Howard Hartenbaum
So the factory piece comes up because you had brought up Alfred Lin.

[00:47:08] David Hornik
Yes.

[00:47:09] Howard Hartenbaum
And he’s got some serious distribution centers which are sort of like a factory. It’s a big assembly process line with pickers and, and that would be a really cool factory to See, yeah, we’ve.

[00:47:19] David Hornik
Been talking with Alfred. So next time Alfred’s in, I think he’s in. I think their. Their distribution center, primary distribution center is like, in Kentucky. So next time Alfred’s out in Kentucky, we’re gonna go meet him out there and go check it out. See. See how it works? Because I think it’ll be awesome. But. But yeah. So we decided that the person we wanted to suck up to this show, this is the sucking we suck up to you portion of the program is Alfred, because. So those of you who don’t know Alfred’s CFO over at Zappos, he and Tony Hsieh built that company for a decade. And before that, Alfred and Tony in the early days had built this company called Link Exchange. And then Alfred did other stuff, including.

[00:48:01] Howard Hartenbaum
Is that the one that Rack 10 bought?

[00:48:03] David Hornik
Did they ultimately buy it? Microsoft bought it from them at first. And I don’t know if they’d end up. No, no, I know which one you’re talking about. No. Link Chair.

[00:48:13] Howard Hartenbaum
Yeah.

[00:48:14] David Hornik
But anyway, the thing that I like about spending time with Alfred is like, he’s really. He actually loves business and the, you know, and the idea of building a better business and being more thoughtful and that people are part of company building and that you should be careful and thoughtful about how to incorporate them and. And, you know, it’s not just numbers. Despite the fact that he’s a CFO or whatever, and he’s just a very smart business person and incredibly nice guy and obviously has been wildly successful, he and Tony, you know, sold Zappos for a lot of money.

[00:48:49] Howard Hartenbaum
Zappos. So fantastic. I was getting ready to go skiing a few weeks ago, and it’s. I’m leaving on Tuesday. It’s Sunday night at 6pm and I realize I need some snow boots. So I go to VIP.Zappos.com I pick two snow boots of two different sizes, but the same boot. Monday afternoon, 24 hours later, they show up on my doorstep. I open them up, I try them on. One fits, one doesn’t. Back goes the other one.

[00:49:13] David Hornik
Bought the boots, Bought the boots.

[00:49:14] Howard Hartenbaum
I didn’t have to leave my house. I didn’t have to go to REI and get in some huge line where they wouldn’t have my size anyway. It was just unbelievable.

[00:49:22] David Hornik
I would hate to say how many pairs of shoes the Hornick family. I have four children. Do you have any idea how many pairs of shoes come out of Zappos.

[00:49:31] Howard Hartenbaum
On a normal basis? My daughter came a couple weeks ago and said, dad, I went to Nordstrom, and these are the three shoes I like. And she had them written down. And we just went on to Zappos. She’d already gone. I said, honey, you gotta at least buy one pair from Nordstrom’s. She said, but then I’d have to carry them home. Well, so I’m gonna go to Nordstrom’s and buy something else to be nice. But Zappos ended up getting the order.

[00:49:55] David Hornik
Well, is that shirt from Nordstrom?

[00:49:57] Howard Hartenbaum
Is that shirt from Nordstrom?

[00:49:59] David Hornik
Yeah.

[00:49:59] Howard Hartenbaum
Mine is the closest department store to our office, so.

[00:50:04] David Hornik
All right. So that’s it. We’re sucking up to. We’re sucking up to Alfred. Happy New Year.

[00:50:08] Howard Hartenbaum
I buy from them and I think.

[00:50:10] David Hornik
They will do you yet. I don’t know. Anyway, we’ll ask. We’ll ask Alfred. They got all sorts of other stuff. You could buy all sorts of stuff from. From Zappos. But now Zappos is Amazon.

[00:50:19] Howard Hartenbaum
I interrupted your. Happy New Year.

[00:50:21] David Hornik
Yeah, that’s. I was saying.

[00:50:22] Howard Hartenbaum
Sorry.

[00:50:23] David Hornik
Forget it. Happy New Year to you. I was talking to you too, Howard. Happy New Year. Happy New Year, and thank you once again for listening to venturecast.

[00:50:33] Howard Hartenbaum
I am David Hornik and this is Howard Hardenbaum.

[00:50:36] David Hornik
And we’ll see you in a couple weeks.