Generated Transcript

[00:00:15] David Hornik
Hello and welcome to Movie Phone. Did you. I was at a Good Morning Vietnam. Yeah, Neither of these is our tagline, but I was at an event last night, the Startup to Startup event, and the CEO of returnpath was speaking, and it turns out he was one of the early Moviefone guys. Remember that thing, you dial up an 800 number, 888 movie phone or whatever the heck it was, and it would give you the times that the movies were playing. That was awesome. When there was no Internet and completely meaningless there.

[00:00:46] Howard Hartenbaum
I wonder what their business model was.

[00:00:47] David Hornik
They sold tickets eventually, and then they, you know, so it was like early Fandango. Oh, no, no, no. That’s not what their business model was. Their business model was they played an ad for a movie. Yeah, that was their business model eventually. Right, exactly. That’s right.

[00:01:03] Howard Hartenbaum
Theater. We have Jaws and. Right.

[00:01:06] David Hornik
I would say, brought to you by. And then if you’re afraid to go in the water, Jaws 3. And then, you know, they’ve made a bunch of money on that. I remember that.

[00:01:18] Howard Hartenbaum
So probably not a great venture bet.

[00:01:20] David Hornik
Well, you know, could have been a good business. What about Fandango? Like, you know, turns out that’s a big business. And who would have guessed?

[00:01:27] Howard Hartenbaum
I use Fandango every single time I go to the movies. And I don’t care that I pay him a couple of extra bucks to do it. When I leave my house, I have my tickets in my hand.

[00:01:35] David Hornik
Know you’ll get in the movie and you walk. Right. You know, I’m waiting line. You walk up to the front of the thing, you. The only time I’m annoyed is when their little scanners are down and you have to get the ticket from the line. I’m like, give me my buck back. I paid for convenience, not for, like, a guaranteed ticket. When you have tickets that have seats associated with them, like in Europe, wouldn’t you spend 20 bucks on a movie?

[00:01:59] Howard Hartenbaum
When I was a boy and I lived in Japan, I went to a movie theater once when I was in 1989 in Japan. And the thing that I found most shocking was they didn’t understand fire safety. And it was some new western hit. I don’t remember what the movie was, but you go in and you get your seat, and then more and more and more and more people come in until eventually it’s standing room only. Like in the aisles next to you, there was people standing and the doors opened in. So had there been a fire or an earthquake or a panic, it would have been one of those crushing deaths. I’M sure they changed the law since then. But I remember sitting there going, this isn’t like the movies at home.

[00:02:41] David Hornik
See? And I was thinking you were going the other way, because I was. When I was. This is in 1990. 91. And I was studying Europe and I went to visit a friend of mine, Steve Boom, the wonderful Steve Boom, formerly.

[00:02:54] Howard Hartenbaum
Of Yahoo, now CEO of Make33.

[00:02:57] David Hornik
And I went to see Mr. Boom. He was studying in Paris. And we went to a movie on the Champs Elysees. And they had these huge seats, and it was like the most comfortable, beautiful theaters. And you got. You could buy your particular seats. And the only problem I had with that theater is that they let dogs in. People brought their freaking little dogs to the movie theater. That made me crazy.

[00:03:20] Howard Hartenbaum
So it became like a smellorama.

[00:03:22] David Hornik
Yeah, I was just down in. I just drove down to Pasadena or. No, first we went to Santa Barbara and then went to Pasadena, and in both hotels that we were in, there were dogs. They were dog hotels.

[00:03:34] Howard Hartenbaum
So dogs don’t work in the movie theater. But my dog is trained to bark when somebody rings the doorbell.

[00:03:38] David Hornik
Oh, that’d be.

[00:03:39] Howard Hartenbaum
So now we’re watching the TV and somebody rings the doorbell on TV and the dog goes wacko. Crazy. This is a big German shepherd. Can you imagine? In the movie theater? And there’s a. The doorbell rigs are like.

[00:03:50] David Hornik
That’d be very bad.

[00:03:51] Howard Hartenbaum
The French, they’ll allow your dogs, but not your kids into some restaurants.

[00:03:55] David Hornik
Yeah, exactly. Great.

[00:03:58] Howard Hartenbaum
We can go on like this all day.

[00:03:59] David Hornik
So. Welcome to VentureCast. I’m David Hornik of August Capital, and.

[00:04:04] Howard Hartenbaum
This is Howard Hartenbaum of August Capital.

[00:04:06] David Hornik
I mean, if you’re listening to this, you probably know we’re David Hornik and Howard Harttenbaum, and you probably know that we’re Of August Capital, but we like.

[00:04:12] Howard Hartenbaum
To say August Capital a few times.

[00:04:14] David Hornik
As many times as possible. Exactly. If this were a movie we’d be showing, we’d be walking back, back and forth in front of the entranceway with August Capital sign.

[00:04:22] Howard Hartenbaum
Yep. Brought to you by August Capital.

[00:04:24] David Hornik
Exactly. The finest purveyors of venture money. Do you need funding? Come to us here at August Capital. You know, despite the appearance, the excellent appearance that I’m a. That. That I’m a brilliant marketer with this fine venture cast. This widespread often listen to venture cast. They just came out with the latest rankings of the top venture capital blogs.

[00:04:50] Howard Hartenbaum
Yeah. And to be in the top, you have to blog.

[00:04:52] David Hornik
Yeah. Shut up, Howard. Although that’s sort of the message that.

[00:04:57] Howard Hartenbaum
Was the message you were top, top, top, like three or two or five or something for a long time. And now you’re not even on the list?

[00:05:03] David Hornik
No, it depends on how long the list is. I went from his first. Larry. First list was three. I was number three, then I was number five. And then this one I was. Do you have any idea? Would you like to guess? 1128. I hadn’t blogged in two months.

[00:05:23] Howard Hartenbaum
Yeah, but if you blog once, you go back to, like, number three.

[00:05:26] David Hornik
I don’t know. We’ll find out. Because I’ve made a commitment to, like, okay, look, that’s unacceptable. You know, And I’ve been blogging now for eight years. Like, the idea that it would. I’d just fall off a cliff, like, that is brutal. It was. It was an ego thing completely. But it was brutal to look and say, I’m 28th, you know, on the list. So I wrote a big blog post about how it sucks to be number 28. And then. And that was earlier in this week. And then I just wrote a blog post last night about this Procter and Gamble event I went to. That’s two blog posts in a week. People are gonna get tired of that.

[00:05:59] Howard Hartenbaum
You’re gonna ask me to guest blog again?

[00:06:01] David Hornik
Yeah. Have you ever written anything for venture blog? I used to say, why don’t you do that?

[00:06:05] Howard Hartenbaum
I gave you some good ideas.

[00:06:06] David Hornik
Yeah, you gave me ridiculous, controversial ideas I could never write about. Do you remember that?

[00:06:11] Howard Hartenbaum
Yeah, I do remember that.

[00:06:12] David Hornik
Do you think I could write about the things you proposed?

[00:06:15] Howard Hartenbaum
Can I write about them if I’m a guest?

[00:06:17] David Hornik
No, you’re supposed to be attracting people, not scaring them.

[00:06:22] Howard Hartenbaum
Yeah, well, we all have our own.

[00:06:24] David Hornik
Techniques, but we’ll see. I mean, I am. It’s sort of fun to be back to blogging. And actually, it was interesting. I went to this Procter and Gamble, had this innovation summit of sorts out here where they got together a bunch of the investors, and in. It seemed to be not in a particular technology. It was sort of across the bar to talk about how Procter and Gambrel is using technology, etc. And I remember sort of sitting there. I remember because it was so far ago yesterday, but I was sitting there and I thought, oh, this would be an interesting blog post. And it’s been a while since I did that, right? Been a while since I said, okay, I got to take notes on this, because this would be a good blog post. So I’m going to get back in that mode. Howard, for back in journalistic Mode. How do you like them apples?

[00:07:09] Howard Hartenbaum
I had a job interview for Procter and Gamble in Cincinnati, Ohio.

[00:07:13] David Hornik
Yeah.

[00:07:14] Howard Hartenbaum
And it was for a very nice gentleman named Michael Tafuri, who was the inventor of the Pringles.

[00:07:21] David Hornik
Awesome.

[00:07:22] Howard Hartenbaum
And Pringle has a P and G in it. That’s part of its name. Ever noticed that? And he was running the paper products division. He was a paper guy. And it was actually paper slurry technology that came up with the idea to make the Pringles. They kind of made the chips in the similar way they make how you make slurry and squish it. And it’s kind of a neat thing. But the thing I remember the most about it is I went to Procter and Gamble and, well, one is they made me take a test, like an aptitude test, which I was young, like 25 years old, and it was kind of weird to take an aptitude test. And then I had to use the restroom. And I go to the restroom, and in the bathroom, there was like, five different rolls of toilet paper. And each one had the name of, like, what brand it was that was made by Procter and Gamble. And they wanted their employees to vote with their butts, to basically try them so that they would know the products. And I’m thinking that’s kind of weird. Like, anyway, so then I go and I wash my hands and I look at the wall and there’s five different types of paper towels hanging on the wall. Like Bounty and Bounty Plus. No. Is this the paper products?

[00:08:30] David Hornik
Oh, you were in the paper division.

[00:08:31] Howard Hartenbaum
And that’s what I remember. Procter and Gamwell, like, that They. I never thought of it as vote with your butt and vote with your hand, but I just thought it’s great when companies have their customers actually use their products.

[00:08:43] David Hornik
Totally.

[00:08:43] Howard Hartenbaum
Like, if you have to go to the bathroom, you have to use our paper towels to dry your hands.

[00:08:49] David Hornik
That’s how it should be. I think it’s kind of. What would we have in an aptitude test to be a venture capitalist? Like, if we were going to have. We’re going to hire an August Capital Associate. And so here’s the aptitude test.

[00:09:01] Howard Hartenbaum
What would you test would be to determine if they have Attention Deficit disorder. And if they do, they pass.

[00:09:07] David Hornik
Perfect. Yeah. That’s step one. Right. If they’re as ADD as we are, if they can’t stop spinning in their chair, then we’ll actually potentially hire them because the two of us are like, you know, tapping our feet.

[00:09:17] Howard Hartenbaum
Add positive check.

[00:09:21] David Hornik
Maybe we’d like make them go sell someone on an idea. Like, I don’t know what, what.

[00:09:26] Howard Hartenbaum
Or I think a variety in background is interesting. Like, you know.

[00:09:31] David Hornik
Yeah. So they’d have to come up with all sorts of interesting random thoughts about, you know, none of this straight as an arrow. Oh, this is the path that.

[00:09:39] Howard Hartenbaum
I had another test for a job when I was younger. It was for a. To be a grocery bagger at Safeway. And I went there in high school and I needed a job because like I was in high school and my parents gave me like three bucks a week or whatever it was. I needed gas money. And they were like, okay, well you could be like in the bagging program. And then they gave me a test that was like for four year olds. It was a box which had different shapes. And then they gave me these plastic things that had to fit into the shapes they were checking. Like if you knew that a star went into a star holder and the circle.

[00:10:14] David Hornik
You’re kidding me.

[00:10:15] Howard Hartenbaum
And they did this test and they timed it and if you couldn’t do the test within 10 seconds, you could not go on.

[00:10:21] David Hornik
Couldn’t be a bagger.

[00:10:21] Howard Hartenbaum
The bagger.

[00:10:23] David Hornik
That seems fair because I assume you passed and I. Bagging test. Yeah.

[00:10:28] Howard Hartenbaum
And they said, I said, well, what’s with the test? And they said, well, because we get some people and then first they put in the eggs and then they drop the cans on top of them and they can’t understand the difference between eggs and cans. Well, anyway, venture capital test.

[00:10:43] David Hornik
Yeah. You’d have to deal with people. You’d have to like solve a crisis. You’d have to understand a cap table.

[00:10:50] Howard Hartenbaum
Yeah, I know. You say to them, how many mobile devices do you currently have on your person?

[00:10:54] David Hornik
Yeah, right. Show us now.

[00:10:56] Howard Hartenbaum
And they have like, if they can’t whip out at least three different platforms, they’re out there.

[00:11:02] David Hornik
Exactly. Although I have to admit this. I was, I was. I have the Nexus one. Got the Nexus One, courtesy of our friends at Google. And I appreciate that carrying three phones is a real pain. I mean, maybe you only have two front pockets, right? So what am I going to carry one in my back pocket? I think I’ll break it. One of those little dongle or whatever. No, Then it was so I had my iPhone and the Nexus one in one pocket and the trio in the other and it was just ridiculous. I guess I need one of those tool belts.

[00:11:34] Howard Hartenbaum
No, one kind of the space belt where you have like the things all around the front.

[00:11:38] David Hornik
Who? There’s a, there’s a vc who has one of those. Darn. I’m not remembering who it is. Who literally has, like, you know, utility belt of devices.

[00:11:48] Howard Hartenbaum
So it took a European to explain to me why Americans put their stuff on their belts. I was talking with him, and he’s always like, we figured out what it is with you Americans and your holsters. And then he grabbed his hand and he made like he was drawing his gut.

[00:12:05] David Hornik
That’s what he thought it was.

[00:12:06] Howard Hartenbaum
It’s like, Americans have to have. It’s like the Wild West. You have to have a holster there. You have it. But now we’re all copying the Europeans and we’re putting them in our pockets.

[00:12:17] David Hornik
I do. But then someone was explaining to me that actually there may be some suggestion that I’m gonna get testicular cancer from having so much. So much radiation sitting next to my penis.

[00:12:30] Howard Hartenbaum
Don’t you know the difference in a penis and testicles?

[00:12:33] David Hornik
Why is it I knew that that was coming back at me?

[00:12:35] Howard Hartenbaum
I don’t want to disappoint you.

[00:12:36] David Hornik
I’m just.

[00:12:37] Howard Hartenbaum
I just wanted to say that word on this.

[00:12:39] David Hornik
I’m just describing proximity. I wasn’t saying I was gonna get penile. Even get cancer of the penis. You never hear about penis cancer.

[00:12:46] Howard Hartenbaum
You always hear it’s because everybody’s too embarrassed to talk about it.

[00:12:48] David Hornik
Well, why are people talking about testicular cancer?

[00:12:53] Howard Hartenbaum
Let’s get out of this, because I can really get into this.

[00:12:57] David Hornik
So, Howard, I’m looking at your iPhone, and it has some little taggy thing on the back. What’s up with that?

[00:13:03] Howard Hartenbaum
Yeah, So I met this nice young entrepreneur who was formerly at Skype, and he started a company called Tiger Tag. And Tigertag gives you these little. Well, they make you pay for them, but they’re basically their cost and shipping. So you get a sheet of them for a buck 99 or something like that. And there’s these little stickers. Little stickers. And each one has a code on it. And you put the sticker on one of your devices that you could easily lose, like a cell phone or a laptop or whatever, your pen or your child. And the sticker sticks real nice. And then you go online to Tiger Tag’s website, and you type the code, and then you go through a little menu to pick out what item it is. It’s a Canon IXI 401 camera. And you basically register all your stuff. A lot of companies have tried to get people to register all the stuff that they own, and in this case, it’s the basis of getting it returned to you if you lose it. And on the sticker it says tiger tag and it has this little code that’s individual to each device and then it says return for reward. Tigertag.com and they’ve done some testing where they take 10 cell phones and they give them to some blogger and they say put a tag on each one. They say go spread these around the city and let’s see what happens. And about eight of them come back through the tiger tag mechanism. So it’s kind of a neat thing. They’re building an app now for the iPhone so that when you hit the button and turn the power on, it will say on the picture whose it is, tiger tag, return for reward or whatever. So kind of a neat thing.

[00:14:36] David Hornik
So I have this key keychain, right? It’s like these keychains, my Stanford Alumni association keychain says on the back of it deposit in any mailbox. Stanford Alumni Association. Then it hasn’t, you know, whatever, and then it has my member number. It’s the same kind of thing, only there’s no reason to do this except for the fact that there’s no utility in having my keys. So maybe go, alright, fine, I’ll throw those in a mailbox. But that was if they found your.

[00:15:01] Howard Hartenbaum
Wallet, they keep it, but if it’s your keys, they put it in mailbox, they feel good about it.

[00:15:04] David Hornik
Yeah, exactly. But if they find a laptop, then there better be a reward, otherwise forget about it. So what is a reward then?

[00:15:12] Howard Hartenbaum
It becomes a negotiated reward with really.

[00:15:14] David Hornik
It’S not personal access.

[00:15:16] Howard Hartenbaum
So they’ve done it where it’s still a young company, so they don’t have a lot of use cases yet, but they’ve done it where you get into a lottery for a big reward or it’s different, they’re working on it. But the thing I think is neat about the company is so I got this sheet of stickers and I put one on my phone, I put one in my daughter’s Nexus one phone and I put one on my wife’s digital camera and one on my wife’s Nokia. She got the new N97 mini.

[00:15:46] David Hornik
You could pass the VC test with all these devices.

[00:15:49] Howard Hartenbaum
You know, we put them on the digital cameras, we put them on the Game Boys, we put them on everything. And then I’m looking at this database when I’m logged in. And Tigertag now knows that I have these 11 devices. It knows when I, you know roughly how old they are based on what model they are. They know what I’m likely to Buy in the future.

[00:16:07] David Hornik
They know where you live because there’s got to be a return address, right?

[00:16:12] Howard Hartenbaum
You put in all your stuff. And so I think it’s the data that’s actually really interesting here. And I think if they figure out how to give, like, their next step is they’re going to give out these stickers for free. There won’t be any $1.99, because there’s a bunch of companies that approach them and want them to stuff advertisements in their envelopes with it, and the advertisements will cover the cost. And so their services, really. I think it’s all about the data.

[00:16:34] David Hornik
Yeah, there are lots of. Well, first of all, data is unbelievably valuable. We saw this in Tickle, right? I mean, one of the things about Tickle was we funded this company. Those of you who don’t know what Tickle is, we funded this company. And it was quizzes, right? And it started out with things like, what breed of dog are you? Or who’s your celebrity match? And so you take this 20 question. Oh, is it nice? Are you just guessing? You’re just.

[00:17:00] Howard Hartenbaum
And I’m a German chef.

[00:17:01] David Hornik
Go take the. Go take the test. I’m a bichon Frise. So sad. Embarrassing. Anyway, those aren’t true. We haven’t taken the test recently. We should take them again. So you take the test. You take. You’d answer 20 questions, but they were all sorts of questions, right? I mean, you know, you could. And you could ask people practically anything and they’d answer, which, which car are you most like? Or what car would you most like to drive? Or if you’re alone on a Friday night, which thing you like to do the most? Or what? I mean, just didn’t matter. You could ask them anything and they would answer these questions. And in the end, I think that Tickle had more than north of a billion answers. And the data was, you know, was wildly valuable to marketers, etc. So these data businesses are pretty interesting.

[00:17:44] Howard Hartenbaum
Yeah. In Tickle’s case, their business was that they would show you part of your profile and then you pay money to get the rest of your profile, which was a very. And they were bought by Monster, and as Bills Draper calls it, the Tickle.

[00:17:55] David Hornik
Monster, that was the answer.

[00:17:58] Howard Hartenbaum
So John and I met a woman earlier this week.

[00:18:00] David Hornik
John would be our partner, John Johnston.

[00:18:03] Howard Hartenbaum
We met an entrepreneur who was pitching and she said, you know, James Currier, she said. And John goes, yeah, you know, we invested in Tickle. She goes, he and I wrote the business plan. I was the co founder of Tickle, but didn’t follow through with it.

[00:18:18] David Hornik
Wow.

[00:18:19] Howard Hartenbaum
It was kind of fun. You know, everything comes around eventually.

[00:18:21] David Hornik
Exactly. Here I thought Rick Marini was the man. Well, this rock star and you know, he, he showed up after the scene. I don’t believe that I’m still with you, Rick Marini. And you did, you did that. You, you hung in there, Rick and.

[00:18:36] Howard Hartenbaum
Stan, and you guys made money from it. And she decided it wasn’t the right thing for her.

[00:18:41] David Hornik
All right. Hope her next thing’s interesting. So, you know, James, you should go help her write that business plan and claim a piece of it quickly. But there are a bunch of these businesses, so we spent a bunch of time with, with our friend Peter Pham over at, @billshrink. And that one’s a data driven business. Right. I mean, ultimately, what kind of cell phone plan is good for you? What kind of credit card. They get a bunch of granular information about you in order to make that determination. And I have to assume that that data is really valuable to someone.

[00:19:09] Howard Hartenbaum
Yeah. The value proposition for coming in for billshrink is as simple as you tell us what cell phone plan you’re using and we’ll look at your usage, your profile, where you live, what the coverage is and what other plans are, how long you’ve had the plan, what the switching penalty is for doing it. And we might be able to propose to you, oh, if you switch from AT&T, family and friends, blah, blah, blah, you can now go to the T mobile friends and family and you’ll save over the next two years $762.12 or whatever. And it’s fantastic way of weeding through all of the complexity of the system. But in the meantime, they also do it for credit cards. Based on credit card rates and credit card fees and point programs that they have, they’re doing it for where you should be buying your gasoline. Opportunities for all sorts of insurance, what type of car insurance you have. They learn more and more and more about those people who are engaged with the service. And there’s companies out there who are saying, oh, we’ve got a person who lives here. They have a really expensive cell phone plan. They have three people on their plan. So we know they’re a family and maybe we should offer them car insurance. And the marketing benefit to the company is the data. The data. It’s the data.

[00:20:31] David Hornik
Well, look at mint. Holy cow, that’s all data. How much data is sitting there? Right. There’s just a ton of data. But you Know, I have to think that if that’s the case, that if data is king in the land where data is king, Facebook is king. Think how much data they have about. Now, I know you’re not a huge. You’re not a huge Facebook user, are you?

[00:20:54] Howard Hartenbaum
I have 472 friends. Most of them I’ve never met. Actually, I know everybody.

[00:21:00] David Hornik
Definition of friends.

[00:21:01] Howard Hartenbaum
I actually know everybody on my Facebook friend list. People I don’t recognize their names. I don’t. Friend.

[00:21:06] David Hornik
No, that doesn’t make any sense.

[00:21:07] Howard Hartenbaum
To answer your question, I don’t use it a lot. I do use it on occasion. I think it’s interesting. I’m amazed at the amount of complexity that goes into it. But I have to believe that they have so much data, it’s impossible for me them to really pull the valuable stuff out.

[00:21:21] David Hornik
No, of course it’s not impossible. Well, then they should be using Splunk, right? Because then you can pull. I can you sift through all the data and incredibly, simply. And anyway, I think that. So it’s interesting. When I was at this Procter and Gamble thing, there’s. There one of their social media guys was talking about their strategy with respect to advertising, etc. And they are huge believers in Facebook. Just, you know, they have a mandate that every one of their brands gets. Has a presence on Facebook, you know, this year. And they. And real presence. Not like, oh, yeah, there’s like a fan page and nobody’s there. But that there’s real activity and that they’re really tracking what people are thinking and saying. People who are friending, you know, whatever the hand towel is or whatever.

[00:22:08] Howard Hartenbaum
I’m friending Crest toothpaste.

[00:22:10] David Hornik
Exactly.

[00:22:12] Howard Hartenbaum
Toothpaste is my friend.

[00:22:13] David Hornik
I love Crest. It’s so friendly. But they’re spent. But they didn’t tell me the number. But they are spending tens of millions of dollars on Facebook. It would not surprise me one iota if they were approached if they would approach something like $100 million and spend on.

[00:22:30] Howard Hartenbaum
I wonder how much of that Facebook is getting.

[00:22:33] David Hornik
What do you mean? It’s all Facebook. No, I mean in advertising. In, like relationships and advertising.

[00:22:38] Howard Hartenbaum
I was thinking you were saying in terms of constructing their whole.

[00:22:41] David Hornik
Oh, I’m sure they’re spending well more than that on, like, building. Because each brand is supposed to come up with its own strategy to create a presence. And Basically what the PG folks said was, look, it. Facebook went from zero to 350 million people in five years. It’s going from 350 million people today to 5 billion people over the coming years. It is the. They believe it will be the platform for communications.

[00:23:06] Howard Hartenbaum
Maybe it will be the Internet. Yeah, maybe all this other stuff that we have no control over, which has viruses and bugs and unreliable delivery and all that stuff. Maybe Facebook just takes that all over and we don’t ever go to the Internet anymore. We don’t use the Internet. We just use Facebook. We privatize the Internet into Facebook.

[00:23:27] David Hornik
Yeah, I don’t see it. I was so maybe. I’m sorry. That’s possible, Howard. Which means we should be investing in things, building on top of the Facebook platform. What we should have done is vested in Facebook, but given that we’re too late for that, we should be investing in things that invest when they go public. Good, I’m in. I mean, I’m gonna bet my 401k. But this is interesting. So you say, well, maybe people will shift everything, all communications to Facebook. But I was at this startup to startup dinner last night, and then we get to the table conversation. And so the question that was asked was, if someone wants to get to you to catch your attention, what is the communication channel that is most likely to capture your attention? Is it set your cell phone or SMS or email or Twitter or Facebook or whatever? What do you think was the predominant answer? And these were young people. I was easily the oldest one at the table. Facebook, email to a person, everyone said, send me an email. Isn’t that interesting?

[00:24:39] Howard Hartenbaum
I would think it wouldn’t be email because there’s so much issues with delivering and spam filters and all that type of stuff. You never really know if it’s been delivered.

[00:24:49] David Hornik
Well, see, and that was again, this is return path. This was the conversation. This is why we’re having this conversation at the. At the table. But basically everybody took the view that, you know, if you really wanted to catch their attention and that they could have that information and that they would deal with it. They would have it at their fingertips until they dealt with it. That email was the answer, and that’s clearly my answer. And in fact, if you send me a Facebook message, or you send me a direct message, or you send me a Message in. In LinkedIn, it all comes to my email, right?

[00:25:18] Howard Hartenbaum
So I noticed, you know, six or eight months ago, I started to get a few, every day, a few emails from Facebook with a message that somebody sent to me and it’s completely stopped.

[00:25:29] David Hornik
That’s because you must not respond to them in the Facebook context of Facebook or something.

[00:25:35] Howard Hartenbaum
I usually do. It’s usually somebody who hasn’t been in contact with me for a while or. Yeah, they’re not trusting email or they tried. It just seemed like a phase for me for a while.

[00:25:43] David Hornik
You would be amazed what proportion of my wife’s email traffic is. Is coming from Facebook. Easily more than half of the messages that she receives in her email are Facebook messages, notifications, etc. It’s unbelievable. What. What is the point? Forget email. Just go to Facebook.

[00:26:03] Howard Hartenbaum
So maybe I was at Facebook today. I had to pick up Baba Marc on.

[00:26:07] David Hornik
Oh, you were actually there.

[00:26:09] Howard Hartenbaum
I went to pick him up and I was. They have this new big campus, I guess. What was it? HP before.

[00:26:16] David Hornik
Yeah, I think that’s right up on there.

[00:26:17] Howard Hartenbaum
And it’s on this. Up on this hill on California. And right at the corner, there’s like, it’s in a residential neighborhood. And like, there’s literally from the entrance to their driveway there is 15ft away, the houses start and there is just traffic and cars and waiting on the road. And I got to imagine the people living in those houses are bummed.

[00:26:35] David Hornik
They’re miserable. They’re miserable. They’re very angry and miserable. It’s. It’s the neighborhood next to my neighborhood that that building is in. They got so fed up with what was going on, in particular with parking, that they. After it took them seven years to get permit parking in that neighborhood. So that you can’t just. We can’t show up to go to a meeting at Facebook and park in the neighborhood. There’s. There are limits and you need a pass and all this stuff.

[00:27:01] Howard Hartenbaum
I think what they house owners should do is wait till the day Facebook goes public and just put their houses up to for sale. There’ll be some geek in Facebook who’s like, I just want to be able to go. I want to go across the street and take a nap in the middle of the day.

[00:27:14] David Hornik
Right.

[00:27:15] Howard Hartenbaum
I’ll pay 2 million for that house. I know it’s only worth 1.8, but I’ll pay an extra 200k and they can move.

[00:27:20] David Hornik
Then they can move to another neighborhood.

[00:27:22] Howard Hartenbaum
Or Facebook will get bigger and they’ll move.

[00:27:24] David Hornik
Well, they are actually. They’re already outgrowing, you know, this. This pretty big space. So it will be very interesting to see. But they’re shuttling people in. And what I’ve noticed is there was this theory that it was gonna be really good for California Ave. Which there are lots of restaurants and stuff on that because there’s gonna be so many more people. It’s a. Nobody leaves Facebook. It’s just like when Google had its own cafeteria. Yahoo. Had its own cafeteria. Everybody goes up there. They feed you. There’s soda, there’s snacks. Nobody leaves. They drive there and then they drive home.

[00:27:55] Howard Hartenbaum
And it’s just a little bit far to walk down to California Avenue. Just a little bit.

[00:28:00] David Hornik
Right.

[00:28:00] Howard Hartenbaum
It’s 15 minutes instead of five minutes.

[00:28:02] David Hornik
Right. So lazy Americans. No one’s walking that.

[00:28:05] Howard Hartenbaum
Yeah.

[00:28:06] David Hornik
So I don’t know.

[00:28:07] Howard Hartenbaum
So I’m friends with some guys who work down at Honda Strategic Ventures. I used to work at Honda.

[00:28:12] David Hornik
You think you’re friends with.

[00:28:13] Howard Hartenbaum
I think I’m friendly.

[00:28:14] David Hornik
You’re friendly?

[00:28:15] Howard Hartenbaum
I’m friendly with. Yeah. They let me buy them lunch every now and then.

[00:28:20] David Hornik
All right. Yeah. Okay. That’s friends for Howard. That’s friends.

[00:28:23] Howard Hartenbaum
And they always have some interesting technologies and stuff. It’s always something that’s going to end up on the automobile, and that’s what they’re looking for. They’re looking for really cool technologies that will eventually make their cars better. And we discussed how, you know, I asked them from the time you guys invest to the time it ends up on the car, and they’re like, yeah, it’s usually like, I don’t know, seven years.

[00:28:49] David Hornik
Oh, yeah. Yeah.

[00:28:50] Howard Hartenbaum
It gets to be a really long time, like how long you’ve been investing. And they’re like, seven years.

[00:28:56] David Hornik
Our first product may.

[00:28:58] Howard Hartenbaum
So that’s a strategic initiative. Right. They’re not looking purely for financial gain. They’re looking for stuff that will improve their products. And I regularly get. I’m kind of a car lover. I get pitches from guys who have really neat technologies. And I got one earlier this week, which made me think about it, which was you basically replace your rear view mirror with this special rear view mirror, and you program it once, and it helps you park your car parallel. And it is pretty cool. So they have a Demo video on YouTube and you can pull up on the street, and it tells you when to stop. It says, put it in reverse. Turn your back up, stop. Turn the wheel all the way to the right. Back up, stop. Turn your wheel all the way to the left. It tells you if it’s enough. So it knows the figures, and it does it perfectly every time. And I said to the guy, this is fantastic. I mean, there are devices like this around the world, but this is literally a $250 device that works. And it’s all in the rear view mirror, so it doesn’t mess with anything in your car. So I introduced it to the guys at Honda. Maybe they want to take a look at it. But we have this problem sometimes it’s really cool stuff that we just can’t invest because by the time it ends up on a car and it’s gone through safety testing and it’s gone through production evaluation and it’s gone through design into the vehicle, it’s four, five, seven years.

[00:30:14] David Hornik
Well, this is, I mean, you know, I’m amazed at these biotech and medical investors because that’s their path. Their path is very different from ours, right. That it takes that long. And it’s true of all and device manufacturers, right? How long does it. You go to CES and you. We just saw this year in CES a bunch of 3D televisions. But I think five, seven years ago we were seeing those pitches here and we looked at them and they were sort of interesting. But again, man, it’s, you know, first of all, there’s the technology problem, then there’s the supply chain problem, how do you get them into market and all that stuff. So it’s just hard to envision a venture backed company with that kind of lead time, with that kind of technology risk. Those are tough.

[00:30:55] Howard Hartenbaum
So five years ago I went on a trip to Japan with the Skype guys to look at proposals from some Japanese companies about how to integrate Skype. And one of them was a demo from Panasonic about how Skype would be built into your tv. So when you’re watching TV and you got a call, it could turn off the program, turn on the video camera built in the TV and put you in a video call. They just came out with the device. And this is five years. It’s a similar kind of thing. It was really cool and we’re like, that’s really cool. Can you have it out?

[00:31:24] David Hornik
Yeah, do it. When’s that? Last spring.

[00:31:26] Howard Hartenbaum
And they’re like, well, yeah, but what spring? We don’t know.

[00:31:30] David Hornik
Well, look at how many WI FI phones, right? There were going to be all these sort of standalone WI FI phones and they trickled into the market a couple years ago and then last year and now of course. Why would you do that? Because the WI FI phone is software in your phone, right? It’s going to run on Android, it’s going to run on the iPhone. Oh, that reminds me, this buddy of mine, a guy named Wade McNary, I think I’ve talked about him, he’s got this device that’s going to make the universal remote, make your iPhone into a universal remote. So he came by and he showed me the thing. The hardware is a Little IR thing that plugs into your thing. But the thing that was completely awesome was how you program it. You just basically tell it what you know. Oh, okay. I’m now going to program the play button, and then you press a button on your iPhone, and then you press the play button on the. On the remote, and then it learns, and then you say, okay. Yeah. And it. So it took.

[00:32:23] Howard Hartenbaum
I wanted for a garage door opener.

[00:32:24] David Hornik
It would work. Totally. There’s no reason it wouldn’t work exactly the same way for a garage.

[00:32:29] Howard Hartenbaum
That’s the way you. I program my garage door opener. When you put in a new battery, you have to, like, push a button and then push the button.

[00:32:34] David Hornik
Yeah, right. Silly, right? But I bet you that. I bet you I’ll. Hey, Wade. Wade McNary. I hope you’re listening.

[00:32:39] Howard Hartenbaum
Can I get a sample?

[00:32:40] David Hornik
Make it. Make it work for garage doors. There’s no reason. It’s still ir, right? Oh, no. Garage doors aren’t ir, though. They’re something different. Create the garage door thing. Yeah, but you just have it sitting in your car and just plug it into your thing and press the button. That’d be sweet.

[00:32:57] Howard Hartenbaum
I’d pay money for that. I’d pay $4.99 for an application to make my iPhone open my garage door.

[00:33:08] David Hornik
You wouldn’t pay 100 bucks because it’s not advice. It requires a piece of hardware.

[00:33:13] Howard Hartenbaum
Oh, with a hardware piece.

[00:33:15] David Hornik
Oh, yeah.

[00:33:15] Howard Hartenbaum
Okay.

[00:33:15] David Hornik
Yeah. You might pay more for the hardware.

[00:33:17] Howard Hartenbaum
I might pay 50. 50 for the hardware. $4.99. Sense for the software that makes it work.

[00:33:21] David Hornik
Exactly. So now you’re up to 55 bucks. That’d be cool. So whenever it’s out, Wade, then I’ll pitch it for real. That was like a half pitch. That was a half pitch, but it was cool.

[00:33:31] Howard Hartenbaum
That was just to get the press excited about it.

[00:33:33] David Hornik
Yeah, exactly. Get them all warmed up. Wade McDarray. So this is the thing about Wade. Wade and I went to Stanford together, and Wade was the guy in the. In the product. There’s a product development group or major at Stanford and all. And these guys, all. They’re. They’re the guys who end up working at ideo, and they just think differently than the rest of us. Like, you know, we. We try to solve a problem by being very linear. Oh, how do you get to. How do you solve that problem? Well, of course, you have to pick up the bucket, you fill it with water, whatever. And Wade and his brethren, who became the. The design gurus, they would say, why do you need a Bucket. What if we had a. Do you have a tube? It’d be great. It would be great if we had a long enough tube or whatever. You know, they just. That’s how they thought. I always think it’s amazing to spend time. Actually spend time at ideo or spend time with these design. With the design folks at the D school at Stanford because they just think about things so differently. It’s really. It’s valuable to shake your brain. It’s sort of why I like the TED Conference. The TED Conference is coming up in three weeks. Four weeks coming up, and it’s the same one. It’s kind of like, you know, you see a bunch of different disciplines and you go, oh, that’s really interesting. And that makes you feel, forces you to think a little differently. There you have it.

[00:34:47] Howard Hartenbaum
There you have it.

[00:34:50] David Hornik
That’s all I got.

[00:34:53] Howard Hartenbaum
You had enough today?

[00:34:54] David Hornik
I don’t know. You know, I mean. I mean. Oh, yeah, we should talk about that. Let’s talk about.

[00:35:01] Howard Hartenbaum
David likes. David likes art.

[00:35:03] David Hornik
I do. I do like art. Although you’re just gonna give me crap because Howard thinks that. Howard thinks I love buying stuff. You always give me a hard time. You come in my office and you look at my boxes by my door from Amazon and you say, I’m just.

[00:35:17] Howard Hartenbaum
Telling you, every single day there’s three or four new cardboard boxes by your door with stuff that you buy. I mean, how big is your house? Did you read that article in the New York Times this morning? Did you read this article about how the. Was it the Times, how the American dream is all a big farce and they, the government and the big companies just want you to have a house that’s large so you have a place to put all that crap you buy.

[00:35:43] David Hornik
I think that’s perfectly fair assessment.

[00:35:46] Howard Hartenbaum
But I’m just wondering, you must either have a large house or you live down the street from Goodwill, like every three months cycles through, Cycle it Through.

[00:35:55] David Hornik
But again, you know, this is the problem with having so many children. Howard. It was my son Beckett’s birthday this week. Turned eight.

[00:36:02] Howard Hartenbaum
Nice.

[00:36:03] David Hornik
So I had to buy him crap. I bought him, you know, all sorts of really awesome things.

[00:36:08] Howard Hartenbaum
He would have rather just gone outside and thrown the old ball around with dad.

[00:36:12] David Hornik
That’s why I bought him a ball. That’s why he got a football. No, I do. But. So anyway. So, yeah, so I’ve been. So we’ve been looking at art like, I’m completely in love with art. Art is awesome. And I noticed that art is increasingly finding its Way to the web. Right. You can find out all sorts of information about art, but you can also find new art on the web. And we spent some time with, with Angelo, the founder of DeviantArt. And DeviantArt is a huge site. It’s crazy huge. Did you have any sense of how big DeviantArt was?

[00:36:45] Howard Hartenbaum
Not until he told me.

[00:36:47] David Hornik
But you said your daughter’s aunt has looks at DeviantArt.

[00:36:50] Howard Hartenbaum
Yeah, see, it’s.

[00:36:51] David Hornik
It skews very young. So we are definitely not the. We’re not the model.

[00:36:57] Howard Hartenbaum
So we probably can’t give out any of his data.

[00:36:59] David Hornik
No, probably not, no.

[00:37:00] Howard Hartenbaum
But it is the, the amount of new submissions is just incredible on a daily basis that they’re getting and the number of people that are using it. It is basically the place in the world where you go and display artwork or view artwork and you can have a stream of artwork coming out of there. If you like the Japanese manga Naruto, you can like basically have a feedback, subscribe to it. Naruto like stuff coming at you and you can just be like, wow, oh, look at that one. Ooh, that’s cool. And there’s so much being submitted. It’s just a constant stream of new content that’s being put up that’s in line until you get tired of it and then you subscribe to something else.

[00:37:41] David Hornik
Well, no. I went home and I showed my kids and my oldest went on and looked up some band and there was a ton of art around that band. I said, oh yeah, you should check out Green Day. I bet there are a million things. And sure enough, Green Day, there were like thousands of paintings and drawings and photographs and all about Green Day.

[00:38:01] Howard Hartenbaum
He called it Pandora for art.

[00:38:03] David Hornik
Yeah. Which is really cool.

[00:38:04] Howard Hartenbaum
And I always think it’s neat when people use some other company as the descriptor. Like we’re the ebay for this or we’re the Google for that.

[00:38:12] David Hornik
And every now when it makes sense.

[00:38:14] Howard Hartenbaum
But Pandora for art?

[00:38:15] David Hornik
Actually, no, that’s what I’m saying. Looks great in that context. I hate, I hate it when it’s like where the, you know, Google for PEZ dispensers and you go, what the are you talking about? You’re new, not you’re nothing. Like that doesn’t make any sense.

[00:38:28] Howard Hartenbaum
We have high margins like Google and we have network effect like ebay. And we.

[00:38:33] David Hornik
Yeah, we’re the ebay of Google. We’re the Google bay. But no, it was, it was, it was fun. It was a fun conversation. And, and what is cool about that? Site is that Angela has built it up over the last almost decade. And he said very carefully, very systematically, very meaningfully to give the best possible experience to the people who are the artists as well as the people who are looking for art.

[00:38:57] Howard Hartenbaum
And that’s, you know, and he has scale now and he is the clear market leader. Yeah, it just, there is. Nobody’s going to touch that.

[00:39:04] David Hornik
But it’s sort of interesting to think so he’s got that. And then you look at something like art.com which is selling. They’re north of 100 million in revenue, selling posters and kind of, you know, those sorts of things.

[00:39:16] Howard Hartenbaum
My wife got me this and gladly she won’t listen to this podcast, but she got me this framed poster for Hanukkah. And I kind of look at this, go, oh God, where do I got to put that? And I go, bring it into work. That’s what I’ll do with that. So I bring it into the office and I show it to Kirsten who, who helps me out. And Kirsten like has that. Oh, that’s nice.

[00:39:41] David Hornik
Oh, that’s nice.

[00:39:43] Howard Hartenbaum
I’m like, oh, I can’t hang that. So I’m thinking of putting it in my car and then just like taking my car to a bad neighborhood and leaving the keys. And if I say, honey, that picture, it’s gone. Somebody stole my car. That might be one way to get rid of it. But the only problem is she’ll go back to art.com and buy another one, buy it again.

[00:40:01] David Hornik
So on the other end of the spectrum, so you have DeviantArt just this vast amount of user generated and user user created posted art. And then you have this art.com which is sort of a different beast altogether. And then you have something like 20 by 200. And 20 by 200, if you haven’t seen, is just completely awesome. Now I’m maybe this is like the premature shameless sucking up portion of the program. But Jen Beckman, who is the CEO of 20 by 200 is, is just a great entrepreneur and she started, she had an art studio in New York and she liked and she was working with small artists, etc. And it struck her that there would be better ways to use the Internet to sell real art. Not, you know, that art collecting isn’t something that should be an elitist experience, but that you could. That real art should be made available to larger groups of people. But, but it’s still curated by her. In fact, 20 by 200, I think says a Jen Beckman experience or something like that, like, she. It’s important to her. She picks artists who she thinks will appeal to people, will be valuable, and. And then sells a lot of art on this, on the site and increasingly large amounts of art. And the art’s great. Like, I’m. You know, there’s this artist, Claire Grill, who, Who has a couple of pieces that are up there now that I just love. Like, the stuff is beautiful and, and, and, and you can spend 50 bucks and get a great piece of original art or you can spend 2,000. You know, it depends on how much money you got. You should check it out. 20 by 200.

[00:41:41] Howard Hartenbaum
I’ve checked it out. I will check it out again. Thank you for reminding me.

[00:41:44] David Hornik
20X200. It’s good. I like it.

[00:41:51] Howard Hartenbaum
Want to talk more? We go on forever. I think we’ve done.

[00:41:54] David Hornik
I think of it. Yeah. The pregnant paws. That’s, you know, that’s. I’m just looking outside to see if the rain has stopped so that we can. You can move on with our lives.

[00:42:04] Howard Hartenbaum
We need more rain.

[00:42:05] David Hornik
More rain.

[00:42:07] Howard Hartenbaum
I heard that Tahoe is epic skiing right now.

[00:42:10] David Hornik
Epic.

[00:42:10] Howard Hartenbaum
Did you see this picture? I saw it on Arrington. Mike Arrington sent this picture last weekend. He went skiing up in. In Tahoe with his team.

[00:42:19] David Hornik
Was he with his team or was it with Chris Sacca? Sacca lives up there.

[00:42:23] Howard Hartenbaum
I think it was his team. But it’s a picture that he took, obviously, while sitting in the driver’s seat of the car over the steering wheel of terrible conditions on the road, snow and sleet and such. And he’s typed a title into it, which is Tahoe Drive, and then emailed it to posters. No texting, taking pictures and emailing while driving. Anyway.

[00:42:51] David Hornik
Exactly. So Chris Sacca. All right. I’m not really done. I have one other thing. I love Chris Sacca. Sacca’s. You know, he was. He was an early Google guy and he did a bunch of their early deals and telecom stuff, and now he’s an angel investor. And what I love is that he. He really believes in the stuff that he invests in, but that he’s completely shameless about this. Them. So he had a tweet today. He’s. He’s on the. I don’t know if he’s on the board or if he’s an advisor to Twitter, but he’s been very involved in Twitter. And he’s an investor in Koala. And so his. His tweet this morning was, like, amazed by the incredible speed at which Koala is growing. It’s Growing like crazy by, you know.

[00:43:29] Howard Hartenbaum
So you better hurry up and get on.

[00:43:30] David Hornik
And it said, are you on goal? Like, question mark? Like, are you a loser or are you on goala? And I just thought that was so great. Like, you know, Zach is out throwing it out there.

[00:43:40] Howard Hartenbaum
He’s got, like, hundreds and hundreds of thousands of Twitter followers, too.

[00:43:44] David Hornik
Yeah. Oh, yeah, because he was one. I think he must have been on the. Recommended. Recommended. Recommended. On the recommended list. They just updated the recommended list. That’s actually big news.

[00:43:54] Howard Hartenbaum
I’m sure I’m not on there.

[00:43:55] David Hornik
No, you’re not. Howard, have you ever tweeted anything?

[00:43:59] Howard Hartenbaum
Shameless tweets, you know.

[00:44:00] David Hornik
Yeah, all right. Those are fine. Good. Yes. No. Yeah. So they redid the recommended list.

[00:44:09] Howard Hartenbaum
It was interesting. Gwala and Foursquare and this fierce competition, and then Yelp jumps in. That’s always one of the fears of venture investors, is what you’re doing is so cool. But what if Google does it? What if Facebook does it? What if somebody else does it? And in this case, Yelp did it. And, you know, it remains to be seen what happens from it, but it’s quite possible Yelp just, you know, did 100 times the volume of Koala and Foursquare combined. We don’t know the numbers.

[00:44:42] David Hornik
Yeah, no, it’ll be interesting to watch, right? I mean, Yelp certainly has way more. A way larger install base on the iPhone. And what they did was added check ins on their Yelp iPhone app. So it’ll be very interesting to see. I mean, you know, who’s going to win this Geo.

[00:44:57] Howard Hartenbaum
Well, I think Foursquare and Guala. They’re just gonna add, like, restaurant recommendations then, so there.

[00:45:02] David Hornik
Take that. Now we’re even. All right. Well, Howard, it’s been a pleasure. I appreciate it, as always. I am David Hornik from August Capital.

[00:45:12] Howard Hartenbaum
And this is Howard Hartenbaum from August Capital saying thank you to David Hornik from August Capital.

[00:45:19] David Hornik
On the August Capital Show.

[00:45:21] Howard Hartenbaum
The David Hornik show from August Capital.