Generated Transcript

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

[00:00:19] Howard Hartenbaum
And this is Howard Hartenbaum from August Capital.

[00:00:21] David Hornik
This is an exciting moment, actually, because this. Ordinarily we have these things on our calendar and we, you know, this was just Howard said, do you want to do a VentureCast? And I said, oh, I have have time to do that. And so here we are.

[00:00:35] Howard Hartenbaum
We need to have a polling mechanism because I want to know what’s wrong with my voice.

[00:00:40] David Hornik
What’s wrong with your voice?

[00:00:41] Howard Hartenbaum
Did I tell you about my voice thing?

[00:00:43] David Hornik
No, what are you talking about?

[00:00:44] Howard Hartenbaum
I went to lunch at Kegetsu with the Memolane guys after a board meeting.

[00:00:49] David Hornik
Yeah.

[00:00:50] Howard Hartenbaum
And then we walked next door to the frozen yogurt shop, and I was facing away from the one customer sitting in the frozen yogurt shop, typing on her laptop, talking with Eric Lagier from Memolane. And this girl goes, that sounds like Howard Hardenbaum. And I’m like. I turned around, I didn’t recognize her. And I’m like, you recognize my voice? And she says, yeah, this is Juliet Weiss from Santa Monica High School. And I’m like, wow, that’s a long time ago.

[00:01:21] David Hornik
This is the thing. You must have had that deep voice in high school. I said, I wish I had that voice.

[00:01:26] Howard Hartenbaum
All I know is that I must.

[00:01:27] David Hornik
I wish I had that voice.

[00:01:29] Howard Hartenbaum
Not many people have a voice you could recognize over a long period of time. And it made me like a little bit self conscious about my voice.

[00:01:34] David Hornik
Is it like, please, I mean, at least you have a. My voice is like this super whiny, you know, whatever. So, yeah, you can recognize my voice, but it’s not like, oh, there’s that great voice David Hornik has. It’s like, oh, man.

[00:01:47] Howard Hartenbaum
So I walked out of there. I couldn’t decide if it was my voice was odd or she was stalking me. I still don’t know.

[00:01:51] David Hornik
Yeah, I think your voice is fine, Howard. We need to get over it.

[00:01:55] Howard Hartenbaum
Well, that was. Since we’re on a podcast.

[00:01:56] David Hornik
How are the Memolane people doing? So Memolane, we funded. These are guys who, what, used to be in Skype? Yeah, you met them when you were working.

[00:02:03] Howard Hartenbaum
Eric was on the board of Skype.

[00:02:04] David Hornik
And then this happened. What happened?

[00:02:06] Howard Hartenbaum
And Eric, we. Eric, we hired in like 2000 and something 2004, maybe to manage International Business Development, maybe director of International Business Development. He’s a great guy based in Copenhagen. And he started this company in the middle of last year and he pitched us and we liked him and we invested along with the Skype founders the Atomico fund. And the product is still early. But a neat thing about it is everybody loves it.

[00:02:36] David Hornik
So when you see it, it’s just one of the most compelling things.

[00:02:38] Howard Hartenbaum
It’s nice. It’s beautiful. When you read people, if you search on Twitter for it, you just see all these nice comments, like, I love it, it’s great. And you see people write blogs about it. It’s so nice. It’s so wonderful. I don’t even know if they have a business yet, but I love the guys and the product is awesome.

[00:02:53] David Hornik
We’ve been doing a little bit of that recently. We’ve been doing a little bit of, we love this product. You guys are really smart. So we’ll just sort it out.

[00:03:02] Howard Hartenbaum
Yeah. And in that case, we invested just a million dollars in the deal. So I guess we’re early stage venture capitalists.

[00:03:08] David Hornik
Exactly. We’re doing another kind of million dollar deal and same thing, super early. I was reading an article I was on, I think it was in the United magazine and it was an interview with EV Williams. And it was talking to Evan, you know, about the origins of the company, et cetera. And then. And one of the things he said in the interview was that he just can’t stand the idea of talking with people about a business model because of course it’ll, you know, of course there’s plenty of opportunity to make money. Don’t be so stupid. Reminded me of my first conversation with Ev when he was raising money. When I said, so how are you thinking about making money? And he gave me that look, guy. He and Jack gave me a look at it like, listen, you’re an idiot. Like, is that really what we need to talk about here? And it wasn’t like I wanted to know a definitive answer. Of course. I’m not that stupid. I was just curious how he was thinking about it. Like, is this an ad driven service or are you gonna charge people for access to information or whatever else? But now I feel like I, you know, man, I must have really annoyed him.

[00:04:08] Howard Hartenbaum
And I mean, if you’re an entrepreneur and the VC is asking, what’s your business model? You go like a markdown right there.

[00:04:14] David Hornik
Well, now I know. I wasn’t trying to ask. I wasn’t even asking. I was just, how are you thinking about the economic of your business?

[00:04:21] Howard Hartenbaum
So there’s an Evan Williams bourbon. You know that?

[00:04:24] David Hornik
I do know that.

[00:04:25] Howard Hartenbaum
Can you imagine, those guys are like in the middle of Kentucky or something brewing bourbon and they can’t figure out why sales keep going Up, Right, Exactly.

[00:04:32] David Hornik
Nobody wanted to drink this before.

[00:04:33] Howard Hartenbaum
It’s still just from me. Like if you go online and you type Evan Williams, like there’s a lot of hits, so it must be good.

[00:04:39] David Hornik
I know, but you wonder like, do they suddenly. They used to be at the top of the. Maybe, maybe it’s the Evan Williams. Now they’re like 40 pages in to get to Evan Williams bourbon.

[00:04:50] Howard Hartenbaum
And so I bought a bottle like a year ago or six months ago.

[00:04:53] David Hornik
I was supposed to give it to Ev, but it’s been sitting in your.

[00:04:55] Howard Hartenbaum
Yeah, I said when you come to the TechCrunch party or something at our office, you know, you can pick it up. And he didn’t show, so I haven’t been drinking it. Ev, you’re welcome to pick it up anytime you want.

[00:05:04] David Hornik
I know that tells you this is what this place is like. I was at a company that will go unnamed today. We were having the board meeting and they said that the way they.

[00:05:12] Howard Hartenbaum
The company’s called Voldemort.

[00:05:15] David Hornik
Yeah, exactly. And they said that they’ve had. That they’ve done really enjoyed working with their accountants, that they’ve been doing the audit and the audit’s been very efficient, mostly because they’ve told the auditors that if they don’t get it done quickly that they will not have access to the alcohol. So this has been sufficient to motivate them to do it.

[00:05:35] Howard Hartenbaum
And the alcohol comes out at 3:30 in the afternoon.

[00:05:37] David Hornik
So you know, you got to get. Right, you got to get a week’s worth of business done in a day so you can move on to the things that focus on things that matter.

[00:05:45] Howard Hartenbaum
Nice.

[00:05:46] David Hornik
So did you see that Eric is. Eric Schmidt is stepping down as CEO of Google. This just happened today.

[00:05:55] Howard Hartenbaum
Yeah, I caught the headline, but I didn’t read it. Did he get thrown out or just did he step away and go retire with happy billions?

[00:06:02] David Hornik
Exactly, exactly. He’s remaining the chairman. Maybe he’s going to be an active chairman. What I read was sort of he over the holidays decided that Larry was ready to run the company and that he was going to be chairman and let Larry run the company that he started. So, you know, there you go.

[00:06:23] Howard Hartenbaum
That’s awesome. So you know, many of the best companies in the world still have the founders kind of running the ship. And here’s a great example of that.

[00:06:30] David Hornik
Well, this is what’s interesting, actually. I don’t know of any other instance in which it was started by really smart, strong founders. They built an amazing business. Then they brought in a CEO to manage a process of growth. And then the founder came back. Although that’s Apple.

[00:06:48] Howard Hartenbaum
Yahoo.

[00:06:49] David Hornik
Well, that one didn’t work out so well, Larry. You know, I’m just.

[00:06:53] Howard Hartenbaum
It’s an example.

[00:06:54] David Hornik
It is an example.

[00:06:55] Howard Hartenbaum
Yeah.

[00:06:55] David Hornik
Look, you know, I think that was a bit. I think that was a bad deal for Jerry.

[00:06:59] Howard Hartenbaum
I don’t think he, he was in a no win situation.

[00:07:02] David Hornik
Right. He didn’t want to, he didn’t want to do that. He just was, he was just in a position where he had to do that.

[00:07:06] Howard Hartenbaum
So I think Larry, of course, had the capability to run his business the whole time. Larry Page. But he’s just too smart to do that because being a CEO is really no fun. So he put all this. Well, because the company’s kind of doing really well and they’ve got, you know, everything is really strong. There’s not a lot of turbulence. But it can’t be too much fun when there’s all sorts of issues when a company is young.

[00:07:27] David Hornik
Oh, I think it’s brutal. Well, it’s also just hard. It doesn’t matter. We, even now being CEO of Google has to be an unbelievable job. Right. Because first of all, everybody wants your time. Secondly, you’re making monumental decisions. Third, you have to travel all the time. Right. You know, my wife is annoyed at the traveling I’m doing in the venture business.

[00:07:48] Howard Hartenbaum
Yeah, but if you have a bed on your plane, travel is probably not that bad.

[00:07:51] David Hornik
It’s not helping my wife and kids.

[00:07:52] Howard Hartenbaum
You have a bed on your plane?

[00:07:54] David Hornik
No, I’m, I don’t. I don’t have a plane. Okay, but I’m saying, even if I had a bed on my plane.

[00:08:00] Howard Hartenbaum
Do you have a plane?

[00:08:01] David Hornik
My wife. Okay, even if I had a plane. What is this? Stop beating your wife. My, my wife and my kids would be annoyed at my traveling.

[00:08:11] Howard Hartenbaum
Right.

[00:08:12] David Hornik
It’s just, that’s just sort of how it is. So anyway, but so, so, so Larry’s taken over. They announced the earnings. 8.44 billion in revenue. I didn’t see what the profits were, but that’s a good quarter. It’s not exactly Apple. Apple announced a quarter that was 6 billion in profit.

[00:08:34] Howard Hartenbaum
Yeah. So we had a discussion briefly in the past. If you could take Google or Apple, which would you take? If you said Google and I said Apple, I think I still would. I mean, I would rather have a company kick out 6 billion in profit in a quarter.

[00:08:46] David Hornik
Yeah, I’m not a.

[00:08:46] Howard Hartenbaum
Than 8 billion in revenue.

[00:08:48] David Hornik
No, Apple. I mean, Apple’s been unbelievable. It’s been. So would I still take Google over Apple? Yep, I would. Because I think that there’s a much greater diversity. If Apple were willing to expand or be expand their view of software. Right. Then you know how that the software experience moved beyond the device. Then I think then I’d take Apple because I love. The design sense is beautiful and the devices are amazing. And you know, look, I have just sitting here at this table, what do we have? 1, 2, 3, 4. We have four Apple devices. 5, 6 Apple devices sitting in this office that you can see.

[00:09:31] Howard Hartenbaum
So I made.

[00:09:31] David Hornik
Oh, yeah, I forgot the one in my pocket. And you have one eight.

[00:09:35] Howard Hartenbaum
So I was traveling over the holidays with my family and I brought up to my wife and said, you know, which companies did we give the most money to last year? And we made a list. And number one was Toyota Motor Company. Right. And number two was Apple.

[00:09:53] David Hornik
Yeah.

[00:09:54] Howard Hartenbaum
Because I have a family of four. We all have iPads and MacBooks and iMacs and airports and ipods and everything. And number three was AT and T. Wow. Because we used. Which is because of Apple. But I have a fat AT&T bill every month. And if you multiply that by 12, it’s a big number. The next one was the surprising one. It was the clothing store, the North Face.

[00:10:20] David Hornik
So how did you figure this out? Did you go on your. Did you look at your.

[00:10:23] Howard Hartenbaum
No, we just talked. We just talked about it. Yeah. Which.

[00:10:25] David Hornik
So north. So your daughters are North Face people.

[00:10:28] Howard Hartenbaum
And like we go skiing and I have a North Face jacket, a North Face fleece, North Face pants, North Face boots. And my kids, they were all. We were skiing and I’m looking at them all saying I should buy North Face stock.

[00:10:39] David Hornik
So let’s see. In my house, we didn’t buy a car. So there’s no car. So you know, it’s probably. It’s Apple first. All the ridiculous devices and computers. Although you have to think about it, right? If you add up, because the next two are clearly Comcast and are potentially Comcast and att.

[00:11:00] Howard Hartenbaum
I don’t have tv, so no Comcast.

[00:11:02] David Hornik
All right, so you’re.

[00:11:03] Howard Hartenbaum
And I pay my Internet access to AT&T.

[00:11:06] David Hornik
Okay. I pay. So I have Comcast as Internet and TV and phone. So that’s 120, 10 bucks or something a month. So that’s 1200 bucks a year. And AT&T, I have five iPhones on a family plan. So what’s that? That’s like 250 bucks a month.

[00:11:27] Howard Hartenbaum
My bill on AT&T is 400amonth.

[00:11:30] David Hornik
What in the world are you paying for? Broadband? Phone.

[00:11:35] Howard Hartenbaum
Phone. I have a landline.

[00:11:37] David Hornik
Yeah. That’s a lot of money.

[00:11:40] Howard Hartenbaum
Yeah.

[00:11:42] David Hornik
Then it would be Nordstrom, Amazon, Zappos, probably in our house.

[00:11:48] Howard Hartenbaum
I was thinking of it more in terms of a specific brand. Yeah, more in terms of specific brands. So Amazon would rank like retailer would be number one for me because anyway, so buy stock in North Face.

[00:12:03] David Hornik
So you would take Apple. I would arguably take Google. Still. What if we added Facebook to the mix? Which would you rather have? Would you rather have Facebook, Apple, Facebook or Apple? Because you’ve already thrown.

[00:12:13] Howard Hartenbaum
So Facebook to Apple, I would take Apple. But Facebook to Google, I would take Facebook. And here’s why. Here’s why I think Facebook is the Internet because I’m seeing major companies. Like I saw an advertisement on TV and I don’t watch much TV for State Star.

[00:12:29] David Hornik
You don’t have tv.

[00:12:30] Howard Hartenbaum
I was traveling. I was in a hotel or whatever. And it’s an. And it’s for State Farm Insurance. And at the end of the ad it says http://www.facebook.com state farm. And I looked at that.

[00:12:44] David Hornik
Yeah. But by that same same thing. Then you should also want Twitter because it’s amazing how often you get the. Follow us on Facebook and Twitter. Follow us on Facebook and Twitter. It’s unbelievable.

[00:12:54] Howard Hartenbaum
I can’t decide on Twitter. I just.

[00:12:55] David Hornik
Here’s why.

[00:12:56] Howard Hartenbaum
Google or Facebook. I take Facebook.

[00:12:57] David Hornik
Here’s where I think Facebook is. Is super interesting. Here’s what I’m waiting. I think that Facebook has the capacity to build an international currency, a tradable currency that allows people to trade across borders without having to deal with, you know, exchange rates and whatever else. Although actually, I guess Facebook will ultimately be the one dealing with.

[00:13:17] Howard Hartenbaum
I wonder if the terrorists are going to use it.

[00:13:20] David Hornik
Well, once it becomes they’re going to.

[00:13:21] Howard Hartenbaum
Fund the world with Facebook credits.

[00:13:23] David Hornik
Right. You could. You could. If the currency gets big enough, then it could easily become a liquid currency. And then the question is, can you, you know, you could launder money through Facebook credits.

[00:13:33] Howard Hartenbaum
We’re not recommending this.

[00:13:35] David Hornik
So I hope that Facebook’s focused on this. So anyway, would I take Facebook? Google, Apple. Wow. I don’t know. I don’t know. I think they’re both. They’re all. Obviously they’re all great companies, but I take Apple. I would take. Wow. Facebook or Google. Facebook or Google. It’s a toss up. I call it a toss up.

[00:13:58] Howard Hartenbaum
Yeah, that’s weak. It’s like you’re voting. Do you like the deal or don’t you like the deal? And David says, I’m neutral.

[00:14:06] David Hornik
Do you like it or don’t you? Yes.

[00:14:08] Howard Hartenbaum
Maybe not helpful.

[00:14:10] David Hornik
It’s a good thing that we never vote. This is how we vote. The other day. The other day, we had a deal in, and we were talking, and they came and they pitched. And then there’s a conversation that starts happening around the. Around the partner table, and there are people talking about, you know, oh, I think this. I think this. Lots of, you know, discussions of criticism, whatever. And Howard leans over to me, and he said, I’d do it. I’d fund it. And I say, in a heartbeat. And the two of us laugh because we’re like, we’re ready. We’re done. We’ll put money in. And then the rest of the guys in the room look at us like, what are you laughing about? And we say, well, we. We said we’d do it. And then the conversation continued.

[00:14:50] Howard Hartenbaum
Because they don’t care.

[00:14:51] David Hornik
What we think, apparently, are. The fact that we are unanimous does not, in fact, finish the conversation. Don’t you think it should, though? I think if the two of us are in agreement, that sort of should.

[00:15:02] Howard Hartenbaum
Be that, then they should definitely not do what we’re.

[00:15:05] David Hornik
Run away. Run away.

[00:15:06] Howard Hartenbaum
Yeah, but the market is. I mean, the venture market’s a little bit crazy right now. And it’s. You see a company, and it’s interesting, and in many cases, you have to decide pretty quickly, even before you have a chance to get to know the founders well enough and they have a chance to get to know you well enough. I think, you know, the trend is, you know, on top of speed, but prices have gone up and terms have gotten more lenient and, you know, bridge notes and such. And we saw this very interesting company a couple weeks ago, and the most important thing to us was to get to know the founders. And so saw them one day, took them out to dinner the next day, saw them all again two days later. Dave took them out to lunch the next day. I mean, it was just like, we’re teaming them because we wanted them to get to know us, and we wanted to get to know them. I just don’t buy this. You meet them on the spot and say, yeah, I know I want to fund them, but you’d still better get to know them before you do it.

[00:15:59] David Hornik
Oh, my God, you totally have to. Well, you know, and it’s also a little bit crazy, right? You know, we spent time recently with an entrepreneur I’ve backed before. Right. So this is a guy who’s Great. I like him a lot. And the earliest we could get him on the calendar to pitch his business, you know, the business was a week later. And he said, I don’t know if I’m gonna be able to hold him off. You know, like, I’ve got people clamoring to give me a term sheet. And I said. I said to him, here, I got a dirty little secret for you, which is if people want to give you money, you can hold them off as long as you want because they want to give you money. Right. It’s one big. People don’t want to give you money that you got to do all sorts of things to try and figure out how to get them to act, to propose giving you money. Once they say, here’s money, that’s a different story. Right. And so just, I’ll see you next week and take it easy and whatever else. And I got an email the day before he was supposed to come in saying, I couldn’t hold him off. I took the deal.

[00:16:53] Howard Hartenbaum
Yeah.

[00:16:54] David Hornik
So that was a week.

[00:16:56] Howard Hartenbaum
So if you get a term sheet and it explodes, like it says, you need to give us your answer by 48 hours from now or by Friday at 3 or whatever it is, that’s kind of a ploy that many firms do, but I think many of the better firms don’t, because it’s sort of like, you know, they’re putting a gun to your head and saying, if you don’t make a decision to marry me immediately, then I’m not going to marry you. And frankly, I don’t think you want to marry somebody who’s put a gun to your head. Yeah, you’d be better off. I mean, sometimes I got to tell Pamela. So if they give you a term sheet, that’s it. If somebody gives you a term sheet that says you have to decide if you want to work with those guys, you just say, okay, I’m happy to consider this, but the first thing I want you to do is to remove that expiration date off the term sheet. And if they’re not willing. I have never heard of a VC saying, oh, okay, you don’t have to worry about that.

[00:17:47] David Hornik
No, never. No.

[00:17:49] Howard Hartenbaum
You’ve never heard of VC Said enforcing a termination?

[00:17:52] David Hornik
Yeah, I’ve never heard a VC say, when confronted with. By an entrepreneur saying, no, give me. You have to give me a decision by Friday or I’m not interested in funding your company. That’s just silly, because we spend all year trying to find deals we like. When you find one, you’re not going to. Oh, well, no. Now I’m out. I can’t believe.

[00:18:08] Howard Hartenbaum
Because you wouldn’t marry me in 48 hours, right?

[00:18:10] David Hornik
I told you to.

[00:18:11] Howard Hartenbaum
I don’t love you Friday.

[00:18:12] David Hornik
So it’s over. No, it’s. In fact, I mean, so we’re. We’re completely consistent about this. We always say, here’s a term sheet. We love to do the deal. Then entrepreneurs say, well, I’d like it, you know, might take me another week or whatever. We say, great. What can we do? What can we tell you between now and then? How can we be helpful to you? Whatever. And that’s that. So I think it is a little crazy. It’s a little nutty. It’s nutty. I had this interesting conversation. I was on vacation over the holidays, and I was talking to two Internet smart guys whose names will go on, will not. Will not be spoken. And again, this show, right? Names will not be spoken. Joe. And. And we were talking about the secondary market. And I said, I think it’s crazy. I think the SEC will not stand by it, and I think it’s gonna end. It has to stop. And one of the smart guys said, God, it’s gotta stop. I think it’s terrible. We really have this, you know, it’s crazy. The other one said, I like it. I don’t know what you’re talking about. And it’s never. The genie’s never going back in the bottle. And I said, but people are trading shares and things at billions of dollars in valuation without any knowledge, any actual knowledge of things like revenue and expense and whatever margin. And he said, no, no, it’s not going to be. That’s not an issue. Or whatever. And then the week later, the SEC started investigating. And he said. And he tweeted like, oh, and I will not. I will not. I will listen to Hornick from now on, which is good. He should have in the first place. But I just think, like, the SEC has to crack down on this stuff, that the. That there may be companies worth a fortune, right? I’m not questioning whether whether Facebook is worth tens of billions.

[00:19:55] Howard Hartenbaum
It may be worth even more than people think.

[00:19:57] David Hornik
We just need to, you know, like, how much does it cost to have a center to whatever. You know, how much does it cost to serve a customer in Facebook? How much does it cost? I don’t know. I don’t know any of this. I don’t know revenue. I don’t know. How could I make a reasonable decision whether it’s 20 billion for a company.

[00:20:14] Howard Hartenbaum
With billions of dollars in the bank. They could do an audit.

[00:20:17] David Hornik
Yeah, maybe they should get on with that.

[00:20:20] Howard Hartenbaum
Are they hiding something?

[00:20:22] David Hornik
We’re not suggesting business audits.

[00:20:24] Howard Hartenbaum
Not at all. So I went on Living Social yesterday because I read an article that they were selling Amazon gift cards and Amazon put lot of money Into Living Social. 100,000,175, I think at Living Social, if you haven’t heard of it, it is a Groupon type of company with a comparable scale.

[00:20:45] David Hornik
I mean it’s almost, it’s, it’s the number two.

[00:20:49] Howard Hartenbaum
Okay. It’s the number two. And they’re gonna make money.

[00:20:51] David Hornik
You’re gonna do great. Sorry, you’re an investor in the Living Social, you’ll probably do great. But it is quite a bit.

[00:20:56] Howard Hartenbaum
Well, yesterday they made more money than Groupon.

[00:20:58] David Hornik
That’s right.

[00:20:59] Howard Hartenbaum
Because that Amazon gift code sold 25 or $26 million in a day. So if they can just keep that up, that’s a nine billion dollar revenue run rate. So I think the news said that Groupon’s biggest day was the Gap coupons, which was 11 million, right?

[00:21:16] David Hornik
Yep.

[00:21:17] Howard Hartenbaum
So this was, you know, for Amazon, it was brilliant to do it. I mean, they use it as a marketing cost to get people to.

[00:21:22] David Hornik
So you think so so do you think that. How many. Here’s the question, right? So let’s say it cost them 10 bucks. It probably cost them 15 bucks, right? Because it’s 10 bucks off and then it’s 5 bucks to living social or something, 2 bucks, whatever. Yeah, let’s say it cost them 12 bucks, 12 bucks a piece. So it’s customer acquisition times. 12 bucks. But the question is how many Amazon people bought it? And we’re gonna buy anyway.

[00:21:48] Howard Hartenbaum
But maybe they bought something extra and spent even more there. I mean, I think they did the math and it worked out. And for the new customers they got and for the repeat visitors they got, I think it made sense.

[00:21:58] David Hornik
Are you an Amazon prime user?

[00:22:00] Howard Hartenbaum
I’m totally addicted.

[00:22:01] David Hornik
You have. So if you don’t know Prime, Amazon prime is. You pay, what is it, 80 bucks or something?

[00:22:06] Howard Hartenbaum
79.

[00:22:06] David Hornik
70 bucks. 79 bucks. Okay, 80 bucks, 79. And then you use that extra buck to go buy yourself a Diet Coke. 79 bucks. And then for the entire year you get free two day shipping. And Amazon prime is genius. I really. I want to know if anyone from Amazon is listening to this. I’m gonna go ask it on Quora. Who invented Amazon Prime? Who came up with this idea? Because what it does for me, and it probably does this for you. And I was recently talking with some other people about this is, let’s say I run out of something, dental floss, whatever. I go, okay, in order to know if it was gonna ship in a week, you’d go, well, I gotta go to the store to get it. But if it’s something where you’re gonna be like kinda busy and you don’t need it right away, you go to Amazon, it gets there in two days, it’s a no brainer, you’re not paying anything extra for it. So the.

[00:22:57] Howard Hartenbaum
You save time in gas, right?

[00:23:00] David Hornik
Exactly. And so the volume buying I do on Amazon as a result of Amazon Prime, I bet you is increased tenfold.

[00:23:09] Howard Hartenbaum
Yeah, for me I would say it’s probably four to five fold. But I mean I was thinking everything I buy and I don’t wanna go to the store and I’m sitting at my computer and my wife says, honey, do we have any more Ziploc bags? Can you look in the counter? And I go, no, there’s no more. And I don’t even get out of my chair and I just go on to Amazon and I order. But two days later she’s like, great, thank you.

[00:23:31] David Hornik
Thanks for picking those up.

[00:23:32] Howard Hartenbaum
Like I don’t even bother getting up and looking for them in the house. It’s so easy. And I’ve taken care of it. I’m the provider.

[00:23:39] David Hornik
It’s genius. You’re the provider.

[00:23:41] Howard Hartenbaum
Amazon prime makes you the provider because people like getting packages in the mail.

[00:23:44] David Hornik
You thought you were a hunter, but you’re not. You’re a hunter and pecker. That’s what you are.

[00:23:48] Howard Hartenbaum
I’m a pecker?

[00:23:50] David Hornik
No, you’re just a hunter and pecker. Yeah, so that group.

[00:23:56] Howard Hartenbaum
So LivingSocial in the Amazon deal was pretty neat. I’d only used LivingSocial once before and the service was pretty good. There was some press that maybe there was an error in how their system works and people who knew how to tweak their browsers could order more than 1000s perhaps. So if that’s true, then they made a big mistake. But probably very few people.

[00:24:14] David Hornik
You could always order. You just have to create multiple accounts and blah blah, blah.

[00:24:17] Howard Hartenbaum
But I got mine for free because I put it on my Facebook post and three people, at least three people bought it from that and then I got mine for free. So I’m like a marketer now.

[00:24:30] David Hornik
Yeah, right, you are, you are a virus.

[00:24:33] Howard Hartenbaum
I’m an infectious.

[00:24:35] David Hornik
Oh, we were in this, we had this great, this meeting the other day and we were Talking about something or other. And this professor, who is a brilliant scientist, made a comment, and I’m trying to remember because it was funny. He said, yeah. He said, oh, it’s not viral, but it’s definitely infectious. Which I thought was, like, such an awesome distinction. Only a scientist would say, like, well, there’s a distinction. Yeah, there’s infectious and then there’s viral. Someone else recently wrote on their. Wrote on a Facebook post, like, oh, I’m as viral as Ebola or whatever.

[00:25:07] Howard Hartenbaum
And no, that’s deadly as Ebola.

[00:25:09] David Hornik
That’s what I wrote. I wrote, no, Ebola kills you too fast to be viral. And then there was this whole back and forth about whether it was viral or whatever.

[00:25:16] Howard Hartenbaum
Nice. So how’s that blogging list going for you lately?

[00:25:20] David Hornik
What, do you hate me?

[00:25:23] Howard Hartenbaum
The problem is you don’t get credit for VentureCast.

[00:25:25] David Hornik
Yeah, right, exactly. Why don’t we?

[00:25:27] Howard Hartenbaum
Because we have like, 8,600,000 people listen to VentureCast when we do it, and you don’t get credit for that.

[00:25:34] David Hornik
So the thing to which Howard is referring to. And as if it weren’t bad enough that you’re now bringing it up on the radio or whatever we call this, my dad sent me an email like, david, you’re no longer in the top 20 VC bloggers. Don’t you get any credit for blah, blah, blah. And I was like, so I went to the list face. There’s a. There’s a VC who creates this list every year based on traffic.

[00:25:58] Howard Hartenbaum
But you didn’t bribe him this year.

[00:26:00] David Hornik
And it’s just traffic. Coward. It’s just a fact. Turns out that if you only write on occasion, then the traffic goes down. But this year, I was. I thought it was number 21, and yet I just looked today and I was number 22. So something happened.

[00:26:13] Howard Hartenbaum
Yeah. Why didn’t he do the top 25?

[00:26:15] David Hornik
Yeah, right.

[00:26:16] Howard Hartenbaum
What’s up with that?

[00:26:17] David Hornik
I got screwed, of course. Oh, and then my brother tweeted it too.

[00:26:20] Howard Hartenbaum
What, to me? David’s off the list?

[00:26:22] David Hornik
Yeah, that. You know, serves me right. Or something like, this is what my family is for. This is what. This is the kind of support I’ve gotten my whole life, Howard. It gives. No wonder I’m in therapy with you.

[00:26:35] Howard Hartenbaum
With me as you lie on the sofa. And so you know who the new.

[00:26:38] David Hornik
Number one blogger is? Venture capitalist blogger. And there’s some controversy.

[00:26:42] Howard Hartenbaum
Paul Graham.

[00:26:42] David Hornik
Paul Graham is the new number one blogger. He got Fred Wilson.

[00:26:46] Howard Hartenbaum
So what’s his traffic?

[00:26:48] David Hornik
Let me look. I’ll tell you.

[00:26:49] Howard Hartenbaum
It’s probably equal to the number of companies he’s funded.

[00:26:52] David Hornik
Yeah, 97, 227.

[00:26:58] Howard Hartenbaum
Pretty accurate.

[00:26:59] David Hornik
Yeah, right. That’s. How many companies. What, what is that? I don’t know what that is. Is that monthly? Is that daily? Is it Weekly? Uniques a month? 97, 000 uniques a month. To Paul to Y Combinator essays Fred Wilson AVC81,000 uniques. What’s interesting is Mark Schuster came out of nowhere. Came out of nowhere. He’s like the best known VC in LA now.

[00:27:25] Howard Hartenbaum
He must have wrote one really good blog.

[00:27:27] David Hornik
He’s written all sorts of stuff. He’s a good. He’s writing good stuff. Smart guy, interesting guy. But he came out of nowhere. He’s got 50,000 uniques or something. I have. I don’t know, I’m down to 6,000 or something.

[00:27:37] Howard Hartenbaum
We have to fix that. Let’s write something really controversial.

[00:27:40] David Hornik
Yeah, right, Exactly. That’s what it’ll take. So truthfully, what it’ll take is if I consistently wrote for the year, then people, I think people, oh well, Hornick’s writing again. They focus, blah, blah, blah. Maybe I think this is my eighth year blogging or something. On my tenth year. On the tenth year of blogging.

[00:27:59] Howard Hartenbaum
Number 22.

[00:28:02] David Hornik
Shut up, Howard. That would be at least number 21 by.

[00:28:05] Howard Hartenbaum
We’ll fix that. I’ll come up with a really good topic again. That’ll save you.

[00:28:09] David Hornik
Yeah, last time you came up with a good topic. David, I get up with this topic. Every time you come up with a topic, I say you can’t write about that.

[00:28:14] Howard Hartenbaum
Wait a second. I wrote it and then you took it and made it better and then said it was your great idea.

[00:28:18] David Hornik
Oh, all right. That one.

[00:28:20] Howard Hartenbaum
That didn’t get many page views. Now you’re down to 6,000.

[00:28:22] David Hornik
I will. Maybe you should write some better stuff. Or not. Let me edit you.

[00:28:28] Howard Hartenbaum
So let’s do a shout out to San Francisco because we now have an investment in a company called Relay Rides which allows you to share your car with your neighbors and make money from it.

[00:28:38] David Hornik
Well, let’s just say we should suck up. Who do we want to suck up to? I think there are two people. Either we’re going to suck up to Lisa Gansky or Shelby. Why don’t. We’ll do both. I’ll suck up to Lisa Gansky and then you can suck up to Shelby.

[00:28:49] Howard Hartenbaum
How come he only has one name? It’s Shelby Clark. Okay, suck up to Lisa and I’ll suck up to Shelby Clark.

[00:28:57] David Hornik
Lisa Gansky. Who has been a good friend of mine for many years, created the first.

[00:29:05] Howard Hartenbaum
Web portal, the Internet.

[00:29:07] David Hornik
She sort of created the Internet. She created the first web portal that got bought by O’Reilly Media and then AOL or maybe funded by O’Reilly. Anyway, and then I got to know her because she was one of the founders of Ofoto, and I worked with them on Ophoto. And she’s just a wonderful person, really smart person. And she has just written a book, the Mesh. The book is called the Mesh and the, and, and the idea of the Mesh is that there’s sets of three things that are shared resources. And you can create this mesh and take advantage of these shared resources. Things like Netflix or whatever, bag borrower, steal or whatever things where you can, you know, where it’s more expensive, Airbnb, where you let someone rent out your room, etc. And so it’s a great book. You should read it. The Mesh by Lisa Gansky. And she’s been a good friend and a very smart, smart, industrious, wonderful person. And so that’s my suck up to Lisa Gansky. Now you can make the connection with Shelby Clark.

[00:30:12] Howard Hartenbaum
So Shelby is the founder of Relay Rides, which is the market leader, the world’s first, the most amazing car sharing platform. So what you do is, if you have a car that you’re not using all the time, which is everyone, you could, if you so choose, put a piece of hardware in your car that allows approved drivers who have been screened to make sure that they have good driving records to then go online, much like Zipcar, and then borrow your car for an hour or two or a weekend, whatever you’ve made it available, and then pay you for it. So while your car is sitting on the street on the weekend and you’re not using it, you could imagine that one of your neighbors needs your car, your suv, to go pick up some stuff and takes it away and brings it back. And you made money from that.

[00:31:02] David Hornik
I always think of it, it’s like, yeah, so you have a car and you’re not using it Monday to Friday, and so let people use it to go get their groceries or go on a trip. But the other thing, from a consumer standpoint, right, there’s often a time when I might, I have stuff to move around. I wish I had an suv, but I have a Mini. And now you just go on relay rides and boom, you know, a block from you, someone has an SUV or a truck and you borrow it for.

[00:31:22] Howard Hartenbaum
Or a supercharged mini convertible, right?

[00:31:24] David Hornik
Or yeah, right. Or how awesome would that be?

[00:31:26] Howard Hartenbaum
Oh, you need to learn how to drive a stick shift. It’s the perfect car.

[00:31:29] David Hornik
No, don’t do that. But if you, if you were going to go over to Half Moon Bay for the afternoon and you wish you had a convertible, then borrow a convertible. Right?

[00:31:37] Howard Hartenbaum
Yeah. Eight bucks an hour.

[00:31:38] David Hornik
It’s. I mean, so go for a ride. So anyway, so and Shelby Clark is.

[00:31:42] Howard Hartenbaum
The founder and they’ve, they’re launched in Cambridge, Massachusetts and now San Francisco as well. So if you are interested in maybe providing your car into the service or renting somebody sharing somebody else’s car, should take a look at it. It’s awesome.

[00:31:57] David Hornik
We also happen to have funded it.

[00:31:59] Howard Hartenbaum
That too. The data says that people who participate in car sharing on average take it seriously and really participate. Removes 14 cars from the road.

[00:32:10] David Hornik
That’s huge.

[00:32:11] Howard Hartenbaum
The person who contributes a car into the system because other people start using it less, they use cars less. They use it only when they need it. They combine their errands into one thing. It’s just, it’s an awesome business. We just have to.

[00:32:25] David Hornik
So there you go. So there’s our shout out, our shout out to Lisa Ganski the Mesh and Shelby Clark of Relay Rides. And I see through my window that my next meeting has set up. So I guess it’s time to roll. So thank you for listening as always. This is. Here’s the thing, by the way, if you are listening to this and you have an opinion, Howard and I are talking about maybe doing a video instead of an audio podcast. So if you have have a point of view, like yeah, that’d be fun to have a video. Send us an email. I’m Hornick, augustcap.com H O R N I K@AugustCap.com and Howard, your Hrbaum or Howard Howard. Howardgustcap.com we always would love to hear from you mostly because then we can believe that someone is listening thing. And if you think we should do a video, let us know. So anyway, thank you. This is David Hornik of August Capital.

[00:33:18] Howard Hartenbaum
And this is Howard Hartbaum of August Capital.

[00:33:21] David Hornik
And we’ll catch you next time.