Generated Transcript

[00:00:15] David Hornik
Hello and welcome to VentureCast 2012. I’m David Hornik from August Capital and.

[00:00:20] Howard Hartenbaum
This is Howard Hartenbaum from August Capital.

[00:00:23] David Hornik
That’s it. That’s all we got. Happy New Year, Howard.

[00:00:26] Howard Hartenbaum
Happy New year.

[00:00:27] David Hornik
It’s the 20th, so it took us 20 days to have our first Venturecast of 2012.

[00:00:32] Howard Hartenbaum
We were scheduled like two weeks ago and something happened.

[00:00:36] David Hornik
That happens. We’re busy, busy people.

[00:00:38] Howard Hartenbaum
It was you.

[00:00:39] David Hornik
Alright, I’m busy. I’m a busy person. It’s hard. It’s hard to give up.

[00:00:43] Howard Hartenbaum
You’re so busy, people have trouble, like trying to get on your schedule. So why don’t you tell everybody how you had one entrepreneur try and get on your schedule recently?

[00:00:53] David Hornik
Well, it’s true. It is true. People try and get through. And have you noticed increasingly people are sending stuff through Facebook and LinkedIn and all this stuff. Oh, David, let’s get together. And this guy had tried me through Facebook. We’d had some back and forth and stuff. And so I received an envelope in the mail and I opened the envelope and it had the only thing in it was a check.

[00:01:16] Howard Hartenbaum
For how much?

[00:01:17] David Hornik
Check for a hundred dollars. And in the memo it said, call me today.

[00:01:20] Howard Hartenbaum
Did he put his phone number on the check?

[00:01:22] David Hornik
Well, no, he forgot to put his phone number. Maybe thought I had it.

[00:01:26] Howard Hartenbaum
Or maybe there was no phone number on the check.

[00:01:28] David Hornik
You didn’t know that?

[00:01:29] Howard Hartenbaum
No, I didn’t catch that.

[00:01:30] David Hornik
Literally there was no phone number. So I. Call me today. Now, I could have tracked him down or whatever, but hundred bucks. So he wanted me to cash his check and then give him a ring. What? Like what? I thought maybe I would.

[00:01:45] Howard Hartenbaum
It caught your attention though.

[00:01:46] David Hornik
It did. I’ve been laughing. I’ve been laughing for a while and then I.

[00:01:49] Howard Hartenbaum
Did you cash the check?

[00:01:50] David Hornik
So I talked to somebody. So maybe, maybe I’ll cash it and give the money away to charity. And then I said, or I was talking to Tripp in our office, I said, I tell you what, Tripp, I’ll sign it over to you and you can call him. And then one of our partners said I should just write after in the memo no. And mail it back. Like, no, I’m not gonna call it.

[00:02:14] Howard Hartenbaum
Did he put his return address?

[00:02:15] David Hornik
Yeah, I have the return. I have the return address. I can’t really call him.

[00:02:18] Howard Hartenbaum
You gotta give the guy credit for originality. But. And it did catch your attention. But if you’re gonna ask somebody to call you, at least put the phone.

[00:02:25] David Hornik
Number on the channel. That’s step one. And so what do you think, like, look, the truth is, no, you can’t buy a phone call from us, right? I mean, you know, like, the closest you could probably come is some charity auction where you get to have lunch. Right, but where I’ve seen that. I’ve seen people who’ve auctioned off a lunch with themselves.

[00:02:45] Howard Hartenbaum
I once won a charity auction for a lunch with another vc. So I actually beat out some entrepreneur who wanted to have lunch with that vc, and then it was me.

[00:02:56] David Hornik
Why was it an auction charity or were you just being a jerk?

[00:03:00] Howard Hartenbaum
It wasn’t an auction. It was like a lottery. So you pay money for a ticket. So it was a purely random basis.

[00:03:05] David Hornik
I thought you were like outbidding. I’m like, what kind of jerk are you?

[00:03:08] Howard Hartenbaum
Then they announce the winner. It’s like. And the lucky entrepreneur who gets to have lunch with the venture capitalist is Howard Hartenbau.

[00:03:15] David Hornik
And they were like, you’re a loser. What do you know?

[00:03:18] Howard Hartenbaum
I took my lunch.

[00:03:20] David Hornik
Did you, did you go out to lunch? Was it a good lunch?

[00:03:23] Howard Hartenbaum
It was. It was a good lunch.

[00:03:24] David Hornik
That’s good. I mean, at least because you could see them then going, forget it. There’s nothing in this for me. Howard, I’m taking you to McDonald’s. Yeah, I was at an auction. I was at the.

[00:03:33] Howard Hartenbaum
No, the auction. Whatever the lottery holders paid for the lunch. So some of the money for the lunch came out of that.

[00:03:37] David Hornik
Oh, that’s a. You know, alright. But anyway, 100 bucks. So I’m thinking. So I was talking to my wife about this and she said, you know, of course you’re not going to do that. But she said, what if he’d sent you a million? What if it was a check for a million dollars? Call me, here’s a million dollars.

[00:03:52] Howard Hartenbaum
Then you would have cashed it. Nobody would have known.

[00:03:55] David Hornik
Totally would have cashed it. Like, okay, it’s like the old joke, you know, what do you take me for? A prostitute? Well, we’ve already determined that you’re a prostitute. I’m just trying to figure out what your price is. Well, that’s sort of, you know, that’s.

[00:04:07] Howard Hartenbaum
Sort of where we are. What does the law say? I know it’s illegal to pass a bad. But is it illegal to try and cash a bad check?

[00:04:16] David Hornik
Assuming what’s a bad check and what that doesn’t clear.

[00:04:19] Howard Hartenbaum
If you’re the recipient of a check, is there. Maybe not illegal, but is there a financial penalty to the recipient? No, I don’t know.

[00:04:29] David Hornik
I don’t think so. Anyway, I didn’t cash it. I don’t think that’s the best plan to get in front of us.

[00:04:38] Howard Hartenbaum
I can say unequivocally, the best plan to get in front of David Hornik isn’t a recommendation by me. I mean, as somebody that David knows and likes, who says, david, you should meet this guy. I met him. I like him, I trust him, and then you’ll get your meeting. But cold calls and checks and stuff like that and emails just don’t work.

[00:05:02] David Hornik
Nope. But if Renee Lacert from Bill.com emails me and says, hey, David, I really like this person, they’re working on something interesting. Why don’t you take a look? I will meet them. Sorry, Renee, I didn’t mean to do that to you.

[00:05:18] Howard Hartenbaum
And I had a meeting today with a company just now, and it was from Michael Furtick, the CEO of Reputation emailed me a couple days ago and said, this guy’s interesting. You should meet him. And I took the meeting immediately.

[00:05:31] David Hornik
So I guess that’s the answer for me. Godfrey Sullivan from Splunk, rene Lasert from Bill.com, danny Shader from Paynear. You know, like any of these guys are great guys. Find them. Garrett over at StumbleUpon. You know, all these. If they say this is interesting, well, guess what? They know what interesting looks like, because they’ve got it. They know the kinds of things we’re looking at, and we’ll respond accordingly.

[00:06:00] Howard Hartenbaum
And for me, if the introduction comes from Natalie Portman, I’ll definitely meet you.

[00:06:03] David Hornik
Natalie Portman, the world’s most beautiful.

[00:06:07] Howard Hartenbaum
She is beautiful Jew.

[00:06:12] David Hornik
You know, I was looking at. There’s a video going around. Howard, if you’re not Jewish, you have not seen this link, but if you’re Jewish, you’ve almost assuredly got this link.

[00:06:20] Howard Hartenbaum
I got it. And the same time you got it.

[00:06:21] David Hornik
The young guy who’s kind of talking.

[00:06:23] Howard Hartenbaum
About the same email. We both were.

[00:06:25] David Hornik
Oh, yeah, right. We were on that same email. But I’ve gotten it twice since, and it’s this email and it’s this guy on YouTube sort of talking about the things that resonate with him from being a Jew and how you’re happy when you hear that a Jew has been. Is a Nobel laureate, and you’re sad when you hear that a Jew is Bernie Madoff or whatever. And so, you know, so you have to forgive us. Like, you know, that Natalie Portman, you know, is Jewish is very exciting for every Jewish boy.

[00:06:51] Howard Hartenbaum
I don’t care that she’s Jewish. I just think Natalie Portman is awesome.

[00:06:56] David Hornik
Fair enough. Fair enough. She was, he was Princess Amidala.

[00:07:00] Howard Hartenbaum
So if you want an introduction, if you want to get a meeting with me, definitely Natalie Portman will work. So if you know Natalie Portman and you want to meet me, please ask her to make the introduction because that way I might hopefully get to meet her. Her.

[00:07:10] David Hornik
And for me it’s Lady Gaga, because my son Julian would like to meet her. So if you could get on with that, that would be great. What else have we got?

[00:07:22] Howard Hartenbaum
Anyway, you know what they should do? They should make Siri’s voice. Natalie Portman. No, even better, Lady Gaga’s voice.

[00:07:28] David Hornik
Yeah, right. That’d be good. That would make my son happy. So I was, I was driving down the highway, I was actually have my kids in the car, and I, I decided to use Siri the way Siri is supposed to be used, right? Which is you’re driving, so you can’t use. So it’s hands free. So I say, siri, email Josh Hornick, my brother. No, I say, Siri? Yeah. I said, email Josh Hornick. And Siri said, which one? You have 25. Josh’s. Whatever. So I go through, I click my brother. Okay. Said, okay, great. It says, what? And then Siri asks, what is the type? What is the subject? Subject? I say, dinner tonight. Siri gets that one right. Said, what is the body of your, of your message? And I say, dinner tonight at. At Juban at 6:30. That’s the message. And Siri says, dinner tonight at coupon at 6:30. Would you like to send? So I say, yes, and I send it. And then I say email to Josh. Okay, what’s the title? I said the title is Siri is an idiot. Oh, okay, so it’s a. Siri is an idiot. So what’s the, what’s the, what is the content? I say, no, dinner is not at coupon. It is at J U B A N. So Siri came. Comes up, no, dinner is not at coupon. It is at J U B A N.

[00:09:00] Howard Hartenbaum
I thought you were gonna say it’s a Jew.

[00:09:03] David Hornik
Yeah, right, exactly. Jew Ban Said, oh my God. So, all right, so I say message to email to Josh. Okay, so, you know, what’s the title? I say, siri’s still an idiot. I say, okay, here’s the message. I said, apparently Siri’s well versed in typing, Siri’s an idiot. Dinner is at J U B A N. Now interestingly, Siri again got it perfectly right. It writes, apparently Siri’s well versed typing Siri Siri idiot. And then it says, dinner is at J, U, E and N. So I gave up.

[00:09:41] Howard Hartenbaum
So I know what you said next. You said, final one. Tonight dinner is at McDonald’s.

[00:09:49] David Hornik
No, I said to my kids, like, I’m sure by now Josh knows exactly where we’re having dinner. And sure enough, his email back to me was, okay, think. See youth hair.

[00:10:00] Howard Hartenbaum
See youth hair.

[00:10:04] David Hornik
That’s right. So then I said, I asked Siri something else. You know, Siri, you’re. I think I swore at Siri. But anyway, and then I. And I. And I press here. And I said, siri is a piece of garbage. Was my. My thing. And Siri came back with, there are two places with garbage within two miles. All right, I give up. So I. Siri is totally useless. I’ve given up entirely on Siri being a meaningful tool.

[00:10:35] Howard Hartenbaum
I bet the folks at Nuance are probably working really hard to try and get up to that level, figuring that it’s such an opportunity. But it is a really hard.

[00:10:43] David Hornik
Well, it is Nuance. The back end’s Nuance. So. In fact, Nuance is. A buddy of mine is working at Nuance. He said they’re incredibly busy powering all sorts of stuff because everybody’s trying to create a Siri like experience, which to me just means a shitty experience. No offense to Nuance. I’m sure they’re doing as well as they can do.

[00:11:01] Howard Hartenbaum
It is a hard problem.

[00:11:03] David Hornik
Maybe it’s my accent.

[00:11:05] Howard Hartenbaum
No. I was talking with a travel agent today and she was a live person and I had about the same interaction. I was so frustrated.

[00:11:19] David Hornik
That’s unbelievable. I called Virgin America a couple days ago and they had just switched over their system to a new reservation system. And so the voicemail, the message said, we’re experiencing longer than expected delays due to our. Turn it. Our switch over to our new reservation system. If you’d like to leave your phone number, we’ll give you a call back. Otherwise, please stay on the line. So I said, alright, I’ll just stay on the line. And it switches over. It says, thank you for calling. We’ll be with you in 2 hours and 38 minutes. Expected wait time is 2 hours and 38 minutes.

[00:11:52] Howard Hartenbaum
That they tell you that, though?

[00:11:53] David Hornik
Yeah, no, that was great.

[00:11:55] Howard Hartenbaum
There’s some who wouldn’t tell you that. And you’d be on for two hours and 37 minutes when you’d finally hang up.

[00:12:02] David Hornik
So I said, you know what? I don’t need to. I don’t need to talk to you that badly.

[00:12:06] Howard Hartenbaum
I think Siri is. It’s interesting. It’s just not there yet.

[00:12:10] David Hornik
I think if it had worked, it would have been great because I was driving and I was trying to be a good citizen.

[00:12:16] Howard Hartenbaum
But you don’t frustrate easily. Some people by the third message would actually crash their car, like smashing Siri against the steering wheel.

[00:12:23] David Hornik
I kind of enjoyed sending those messages to my brother because I knew that my brother would piece it together and know exactly where we were going while reading these messages and going, what? What are you talking about?

[00:12:33] Howard Hartenbaum
I think his response of see youth hair is even better than your emails.

[00:12:38] David Hornik
Because he’s funnier than Siri.

[00:12:40] Howard Hartenbaum
Yeah, he’s funnier.

[00:12:41] David Hornik
He’s a funny guy, by the way. Funny guys. Speaking of funny guys, I just saw in through Techmeme that Hunter Walk has a new job over at YouTube.

[00:12:53] Howard Hartenbaum
I did not see that he is.

[00:12:56] David Hornik
He is heading up YouTube’s efforts to work with nonprofits and education, create a better YouTuber experience for that sector.

[00:13:06] Howard Hartenbaum
Is that because they’re afraid of Khan Academy?

[00:13:10] David Hornik
I am guessing that it’s that they see an opportunity, not that they’re afraid because what Hunter’s saying publicly is this is not a dot org. This is, we believe that there’s a real opportunity to transform the way that education takes place, that nonprofits can communicate, et cetera. And we think it’s well within the purview of YouTube. And you know, when you look at it, I mean, YouTube is a mind blowing thing. It is every piece of video of everything ever, right? And so going forward, they want to continue to be that and they want people to think cleverly about how they can use video to, you know, to power their experience or whatever. And so anyway, I thought that was quite interesting that he’d gone from this kind of pure product role to a broader effort to try and, you know, figure out how to, how to work with these sorts of organizations. It’ll be fun to see what he comes up with.

[00:14:05] Howard Hartenbaum
I wonder what will happen. Will they try and do something with Khan or not? Because Khan Academy is. Well, maybe it’s because Gates foundation backed Khan Academy, so Google has to do something competitive. I don’t know.

[00:14:18] David Hornik
Khan Academy is amazing. It’s amazing, but it’s in part amazing because it’s just a great idea. It’s mostly amazing because Sal Khan is amazing.

[00:14:28] Howard Hartenbaum
He’s an awesome guy.

[00:14:29] David Hornik
Like it just turns out like every so often there’s something that’s headed up by someone who’s just so awesome that, you know, you go, well, he’s he’s brilliant, he’s charismatic, and he’s. And then I was watching this video. I don’t know if you saw this video. Speaking of YouTube, was this great video describing kind of how flowers are laid out. And then it talks about. And then it shows how pine cones are laid out and how it’s consistent with some mathematical formula. And it’s this woman, this young woman who’s a.

[00:15:00] Howard Hartenbaum
Mathematics proves the existence of God.

[00:15:03] David Hornik
I don’t think that was. No, I think hers was really. Was about mathematics are fun. And here’s an interesting way to think about it. Here’s how you can draw. Anyway, and so I watched a couple of these and those and then. And I went to her channel, and it turns out that she just joined Khan Academy and that she and Saul Khan have joined forces and he wants her to make more videos for him. He’s gonna help. She’s gonna work with him. And, you know, it was just. It was so obvious that she was the right fit, though. It’s. Even though her presentation is very different from his simple whiteboard. You know, it was, you know, doodles and. And cartoons and I mean, just amazing.

[00:15:44] Howard Hartenbaum
Well, now that you’ve mentioned it, I will watch it.

[00:15:47] David Hornik
Good. Check it out.

[00:15:48] Howard Hartenbaum
Thank you very much.

[00:15:49] David Hornik
Yeah, I think her name’s Vi. I’m sure their listeners going, you are so bad. It’s Vi Olette. I don’t know, but. But it’s good. It’s good stuff.

[00:16:00] Howard Hartenbaum
So I read. I read that the Splunk filed its ipo. You know something about Splunk? Splunk, for those of you who don’t know, one of David’s investments here at August Capital a few years ago, more than a few years ago, was 2004. The first money into this interesting company called Splunk, when it was just.

[00:16:19] David Hornik
You’ve already gone too far. We cannot say that it’s interesting. We can say that Splunk is a company and that they have filed to go public. There’s an S1 on file and you should read the S1.

[00:16:30] Howard Hartenbaum
I will read the S1.

[00:16:32] David Hornik
We had. Trust me. There was. There was a portion of the board meeting in anticipation of filing the S1 that I would have termed the David cannot talk about Splunk session. And I said, can I tweet? No, you can’t tweet. Can I put it in Facebook? No, you can’t put. Can I blog it? No, you can’t. So all I can do.

[00:16:54] Howard Hartenbaum
Can I podcast about it? You didn’t ask that question. So by Omission. I should have known.

[00:17:00] David Hornik
Nope. All I could say is check out the S1.

[00:17:02] Howard Hartenbaum
So splunk is a company that was funded by August Capital.

[00:17:06] David Hornik
That is true. It says so in the S1 in.

[00:17:08] Howard Hartenbaum
2004 is on the board. And David Hornik is an interesting person.

[00:17:15] David Hornik
Well, that’s in the eye of the. In the eye of the beholder or something. I don’t know, but it’s interesting. So. So, you know, Howard, that I have a very hard time not talking about anything about everything, and so it will kill me, literally. I like, you know, ordinarily I would be very excited if I got a call from, you know, from TechCrunch or from CNBC or whatever. Hey, come on. You know.

[00:17:42] Howard Hartenbaum
But wait, I have no vested interest in Splunk.

[00:17:45] David Hornik
Yeah, that’s true. You are not a member of the fund.

[00:17:49] Howard Hartenbaum
I’m not a member of the fund, so therefore I can say anything I want. Not that I would. How much will you pay me to be quiet?

[00:17:56] David Hornik
I have a hundred dollar check I can sign over to you.

[00:17:59] Howard Hartenbaum
Deal. Do I have to call that guy?

[00:18:02] David Hornik
Yeah, then you have to call the guy. Oh, you know, so actually, that reminds me, I just sent an email, or maybe I tweeted it actually, because Sarah Lacey has a new thing that she’s got going, a new site. So Sarah Lacey, who had written a couple great books and she was at Business Week, and anyway, she ended up at TechCrunch and became one of the kind of best writers that TechCrunch had, writing these great long form things and doing great video interviews. And I was either beneficiary or recipient or participant or whatever of a bunch of that stuff. She left TechCrunch as part of this whole hoo ha. And. And she just started a new thing called. Called Pando Daily. Pando. Do you know about this thing? The Pando tree?

[00:18:58] Howard Hartenbaum
No.

[00:18:58] David Hornik
Turns out that the pando. Everybody now is getting the lesson on the pando tree. But the pando tree is. It’s basically a set of trees that exist across a very large area where the entire root system is interconnected. So it’s basically one giant organism where you see these trees that pop up here and there. But the real organism is the massive root system that lives underground. And if a tree is felled or whatever, it has very little impact on this broader ecosystem of roots. And I believe that Sarah’s point is that that is this startup ecosystem, that trees come and go, startups are made, big trees are formed, whatever. But ultimately there’s this incredibly Broad network of interrelationships that she wants to Discuss and describe, etc. And so it’s got a new thing. So I tweeted that I looked forward to the next, you know, like, oh, I forget what the debate was. Remember that McClure debate I did with.

[00:20:00] Howard Hartenbaum
Her over McClure the whole time?

[00:20:03] David Hornik
Yeah, exactly that. That fucking debate over that was the title. Something gate, whatever, remember? I mean, think of how quickly we forgot Angel Gate. Angel Gate was like Angel Gate was.

[00:20:12] Howard Hartenbaum
Angel Gate, that fucking debate.

[00:20:14] David Hornik
Exactly, the Angel Gate, that fucking debate. I think we should write a limerick or something. Anyway, so I said I look forward to another debate on pando daily.

[00:20:23] Howard Hartenbaum
So TechCrunch was funded by some investors who made money when it sold to aol. How is Pando being funded?

[00:20:30] David Hornik
Well, Panda was funded by. They raised two and a half million bucks and it was funded by a set of individual, very well known and smart individuals as well as a handful of funds. So the individuals include I think Marc Andreessen and some other VCs and then funds. I think Greylock’s an investor. I think that either Excel or some Excel individual is an investor. So it’s a bunch of VCs and VC funds. The crunch fund. Mike Arrington is an investor. I think Mike maybe even going on the board. But it’s funny. So I, you know, so, so Sarah shot me an email, said hey, David would love to have you participate in the financing.

[00:21:13] Howard Hartenbaum
At least she asked. That was nice of her.

[00:21:14] David Hornik
That was nice, wasn’t it? It’s nice to be asked whether you think we can or can’t. It’s nice, it’s nice when someone asks, so. And she said, look, I understand that you guys, that I believe that you guys have a policy or whatever, but to the extent that you can, either as an individual or as a firm would love to have you participate, which again, if it were the thing we did, I’d be thrilled to back Sarah because I think she’s fantastic. But what I told her was, hey, look, as a firm we have a policy which I believe to make complete sense, which is that we will not invest in things as individuals that we might invest in as a firm. Right. It doesn’t make any sense. Our job is to invest people’s money and focus our attention and relationships and, and strategy and all that to make money for our investors.

[00:22:07] Howard Hartenbaum
And we’re being paid by our investors to do so.

[00:22:10] David Hornik
Yeah, we’re being paid well to, for that. That’s what we do. Like that’s our job. And Therefore, we won’t do it as individuals because either we’ll be bad investors as individuals because we won’t give you the value you deserve, or we’ll give you that value you deserve. Therefore diminishing the value that we’re giving to the things we’re doing as part of our professional lives. So, and then as a firm, it just doesn’t, you know, like I understand why you might back, why you might do these angel things, but it’s just not what we do. Like, you know, four or five or seven venture funds putting in a couple hundred thousand dollars.

[00:22:49] Howard Hartenbaum
So I think the reason for entrepreneurs to take money from venture funds is A, for the money, of course, and B, for the help, the relationships, the oversight, the fiduciary responsibility, all those types of things. And there’s just not enough hours in the day. For me personally, if I did 10 or 20 or 30 $100,000 investments, I wouldn’t be able to give any company that I invested in enough time to be helpful to them or even to track what they are doing. So our style is to just, you know, take a limited number of boards, put a significant amount of resources, money and time behind the companies to be helpful to them. And that’s just. But there are other firms who do it different ways, just not us.

[00:23:31] David Hornik
So that’s what I told her. But you never heard from her again. But I wish it was. Yeah, right. So I will never do an interview on Pando Daily, which is good because I can’t talk about Splunk. So what’s, you know, what’s the point?

[00:23:44] Howard Hartenbaum
Maybe I could get you and McClure.

[00:23:46] David Hornik
What’s the point? Maybe McClure would like to talk about Splunk. Oh, by the way, I forgot that.

[00:23:51] Howard Hartenbaum
Are you even allowed to say that word?

[00:23:53] David Hornik
They tried not. They tried to remove you. Move it. Like David, don’t even say it.

[00:23:58] Howard Hartenbaum
What about Splunk?

[00:23:59] David Hornik
Yeah. Can I go spelunking? No, you can’t even do that. It’s terrible. So one of the investors in Pando is our good friend Andrew Anker, who again is working with lots of great companies. He’s the chairman of Ebates. He’s done a fantastic job there. And so can you describe what Ebates.

[00:24:23] Howard Hartenbaum
Does for some of the people listening may have never heard of it. It is an interesting, awesome company that has yet to file.

[00:24:31] David Hornik
That’s right. Oh, so I can still talk about it?

[00:24:33] Howard Hartenbaum
You can talk about what a wonderful service it is.

[00:24:35] David Hornik
Well, Ebates is great. No, actually we just finished up the holiday season and man, oh man, what a year. It was an awesome year for e commerce and that translated into an awesome year for ebates. So ebates is basically an online shopping mall and loyalty program, right? You go to ebates and you shop through ebates to find the things that you’re looking for and you receive a rebate back of some percent of the, of the money you spend. And ultimately so like you do when.

[00:25:10] Howard Hartenbaum
You use your specific credit card when you go shopping, you get some percentage back. When you use ebates, go through their system, you get some percentage coming back.

[00:25:19] David Hornik
No, absolutely. And in fact, you can use your.

[00:25:22] Howard Hartenbaum
That same credit card too and get even more back.

[00:25:24] David Hornik
Yeah, exactly. Go use your 1% credit card and then go to Ebates and get 3% back and suddenly you’re getting 4% back on your, on your purchase. So ebates moved more than a billion dollars in commerce this year. So it is the largest affiliate in a huge number of e commerce companies. And the value of that is that they can help companies that need to acquire new customers. They can help them get new people to spend. They can drive a lot of revenue. Because if you are customer of ebates as say, I don’t know, proflowers or something and it’s time to, and it’s Valentine’s day, Instead of giving 3% back, you say, okay, I’ll give 6% back. And you drive hundreds of thousands of dollars in spend by giving essentially a.

[00:26:16] Howard Hartenbaum
3% sale, which would normally cost you a lot more to market in other channels.

[00:26:21] David Hornik
Mad like, you know, the idea that you would get that you would give a 3% sale and it would drive any commerce is sort of amazing. And yet on ebates, it drives huge behavior. So anyway, so that’s been fun. Huge.

[00:26:31] Howard Hartenbaum
More than a billion.

[00:26:33] David Hornik
More than a billion. And growing quickly, Howard. Yes, that’s what it’s all about.

[00:26:39] Howard Hartenbaum
Can you say growing? Could you say interesting?

[00:26:41] David Hornik
I can with respect to ebates. That’s what I can say. You’re not to trying. Trying to skirt the rules, are you?

[00:26:51] Howard Hartenbaum
I didn’t, I don’t know the rules.

[00:26:54] David Hornik
Don’t get me in trouble, Howard. Move on to a new topic. Move on.

[00:26:58] Howard Hartenbaum
You were saying, I didn’t read your article, but you were telling me you wrote something about nice guys don’t always finish last or something like that. What’s up with that?

[00:27:08] David Hornik
That’s it. First of all, would you characterize yourself as a nice guy? Do you think you’re a Do you think you’re one of the industry’s nice guys, or do you think so?

[00:27:16] Howard Hartenbaum
I would like to think that I am, but I’m sure there must be some people out there who don’t think that I am.

[00:27:22] David Hornik
You have a tricky thing. You got a tricky problem. Right. Because you are undoubtedly a nice guy, but you also tell people the truth.

[00:27:30] Howard Hartenbaum
Well, that I perceive.

[00:27:32] David Hornik
Yeah. You’re as you believe it. Right. But there are lots of people who. You come in and you pitch your business.

[00:27:38] Howard Hartenbaum
You can’t handle the truth.

[00:27:40] David Hornik
No, they’re. Lots of people say, like, I could tell you that yours is, this business isn’t going to work, but it’ll just bum you out. And so I’ll just gently say, I don’t like it. You know, it’s the. You don’t have enough revenue or you don’t, you know, there are all these.

[00:27:56] Howard Hartenbaum
Like, let me talk to my partners, oh, I liked you, but they didn’t.

[00:27:59] David Hornik
They hated it or whatever. Right. But you don’t do that. You say, listen, you know, I like you, but here’s what I think. I don’t think the market. Market’s big enough, or I think the way you’re approaching it is probably wrong or whatever. And every so often people think you’re being a dick. Right. Don’t. When you say that. Right. That happens.

[00:28:16] Howard Hartenbaum
Yeah. It’s accurate.

[00:28:17] David Hornik
And people are like, what are you like? And then they fight with you and then it just gets uglier. And you’re just saying, like, look, it’s up to you. You can run your business any way you want.

[00:28:26] Howard Hartenbaum
I’ve had enough times where people have gotten upset to my face that often before I give people direct feedback, I say, I would like to give you direct feedback. Exactly what I’m thinking. And I know it’s just one man’s view, and if you ask 10 people, you might get 10 different views. But if you want my direct feedback, just please promise me you’re not going to yell to my face about it. You can complain to other people, and it does. Ever since then, nobody has ever gotten angry. And some of them say, yeah, I don’t agree for this reason or that reason, but I haven’t had anybody yell at me because. But I did have a few people in the past yell at me.

[00:29:01] David Hornik
As an aside, I always find it amazing when people. It’s fine to have a conversation and debate whether one thing is true or another thing is true or whatever, but when a venture investor says, I’m not interested in your business, because of X, Y and Z. And you try and engage in a sort of debate about whether that’s true, like, no, you misunderstand my business or whatever, it’s not worth it. Like go find the investors who aren’t saying these things. I mean, if it’s just a factual thing and you can correct it and hey, here’s the reality, then great. But if it’s some just difference of opinion about I don’t think the market’s gonna grow that quickly or I don’t think that adoption is likely or whatever, you’re just not gonna change people’s points of view. You’re better off finding someone who’s excited about what you’re doing and thinks that though, and agrees with you about, about the direction of the marketplace or whatever. But have you ever, I mean, I have had people come back and demonstrate that they’ve made progress in things that I thought were non true and then in one instance even given them a term sheet. So it’s not that I don’t change my mind, but I just don’t understand the. No, no, you’re totally, you don’t understand my business kind of back and forth. It doesn’t move the ball forward.

[00:30:14] Howard Hartenbaum
So as an example, I can think of one case where I told the entrepreneur entrepreneur. What he said in the pitch was after I get funded, I’m going to take a non executive chairman role and only be part time in the company and hire a new CEO. And I said to him, your business sounds very interesting, but I do not invest in entrepreneurs and management teams whose goal is to post funding to remove themselves from full time from the company. So it’s not a good fit for me. And his reaction was, well, I could have lied to you. At least I was telling you the truth. I could have just said I’m going to be the CEO and continue and taking the money and then done that. And I’m like, that’s not an argument that holds with me very well. I said, thank you for being truthful because if you had been untruthful, we would have had a terrible relationship. Moving forward, it’s good that we understand that we have different expectations on the business.

[00:31:09] David Hornik
Yeah, it’s always interesting, but a lot.

[00:31:12] Howard Hartenbaum
Of time it’s language. You know, there’s the example. You don’t say to somebody, the food you cooked is disgusting. You say, oh, it’s very good, but.

[00:31:23] David Hornik
I’m not a fan of peanuts.

[00:31:25] Howard Hartenbaum
I’m not a fan of peanuts or whatever it may be. And language is very important. Your Baby is ugly or ooh, I much prefer babies that don’t weigh 700 pounds.

[00:31:35] David Hornik
I think that one’s already hard one to skirt.

[00:31:37] Howard Hartenbaum
Baby is a pretty hard one.

[00:31:40] David Hornik
But no, I agree with that. I mean, so this is why I think like if you talk to 100 people, 92 of them will say, oh, Howard’s a great guy. How is a nice guy, like, do you think Howard’s a mean guy or a nice guy? 92. 92 out of 100 would say Howard’s. Howard is a very nice guy. Absolutely. And eight would say Howard is a jerk.

[00:31:58] Howard Hartenbaum
And I don’t know if it’s 92 or 50. 50, whatever. But the reality is, you know, I know that everybody doesn’t love me and I’m okay with that as long as my wife loves me.

[00:32:08] David Hornik
But I will say this right. There is, there are, there is a point of view that in among some that you know, that the way to be a successful entrepreneur, the way to be a successful venture investor is to be, to be a jerk. It is that nice guys don’t finish first. And in fact there was, there was just this stuff done by Stanford B school and a couple of other business schools where they tested people and said, what is more valuable to you essentially are tough guys or nice guys, the more successful executives. And they came to the conclusion that nice guys finish last. I just think the thing is wrong. I just think that in business, in the venture business in particular, it’s a very long term business. It lasts for three, four decades if you’re lucky and you’re successful and these things come back around and you should be an optimizer for the long run, not for the short term. So anyway, I wrote a thing for. While I was in London, I met the editor of Wired’s UK office and he had me write a little thing about it. So if you go to Wired UK or something, you can check out my thing where I insist that nice guys do not finish last. And I’m standing by that, Howard. Well, maybe people don’t think I’m a nice guy, in which case it’s not helpful to me at all.

[00:33:35] Howard Hartenbaum
Yeah, I mean there is a. I buy it, but I think there is also a big spectrum that sometimes there’s things that some very successful businessmen will do, which maybe isn’t the most attractive thing, but they end up being very successful doing it. So I mean, I do know some very successful investors or entrepreneurs who will, in negotiating, will tell untruths in the negotiation process and they will end up winning the negotiation far beyond what their expectations are. And then later it comes out that what they were saying behind the negotiation simply was flat out not untrue. And everybody looks at them after and goes, wow, they weren’t telling the truth. And then they say, but because they weren’t, they made a lot more money from it. And then sometimes people justify it or don’t. And while I completely agree with you, David, I would say there are many cases of people who were not playing it completely nice who made more money as a result of doing it. But I personally couldn’t sleep well with myself having been that person.

[00:34:49] David Hornik
So here’s the question, like, what are you optimizing around? Right? That’s fine. But if you’re those entrepreneurs, I would hope, and this is what I want to say, like, ultimately, as an industry, for entrepreneurs, for venture investors, whatever, fine, if it happens once it happens. But the word should get around and people should behave accordingly. If someone is misbehaving, they should. It should be known and it should be spread around. Right? I mean, without naming names, let’s just say that Tony Hsieh is very clear about how he felt about his venture investor in Zappos in his book. You read the book and you can see. And one could say, oh, Tony, you’re kind of burning bridges there. And that’s kind of crazy thing. But I think Tony, whose whole thing is about happiness, his book is called Delivering Happiness, you know, appropriately felt that people should be rewarded for behaving in a way that deserves praise. And if you misbehave, it should be made clear to the rest of the world. And so I would like to think that over the long haul, that strategy will not work, that that strategy will hurt you. But even if that’s not true, I have no intention of changing how I behave because I can’t live the. I don’t want to live in a world where that behavior is rewarded.

[00:36:11] Howard Hartenbaum
Good for you.

[00:36:15] David Hornik
I wish you could see the look Howard just gave me, like, I’m such a loser.

[00:36:19] Howard Hartenbaum
Totally different note. On a totally different note, I had an interesting discussion with a guy who is a CFO for young technology companies, and he’s looking to find a new company to work at. And so I was meeting with him to see if he might be a fit for some of our companies, and we got into talking about ethics to try and get a sense for what kind of cfo. And in the past, he’s been a controller, and he started telling me stories which were quite interesting, of catching people, executives, salespeople managers, whatever, in companies in Silicon Valley who were cheating on things like their expense reports and stuff like that. And he was giving, you know, different examples of. Like in one case, he was looking at a guy’s expense report and it had shoeshine, $7. And he talked to the employee about it and said, why do you think it’s justified liable to get your shoes shined and have the company pay for it? In this case, it was unfortunately a salesperson. But he said, well, I was going to a potential customer meeting and I wanted to make sure that I looked my best. The CFO said, well, if it’s not calories that you’re taking into your calories or water that you’re intaking into your body, it’s not an acceptance, acceptable expense to be put into an expense report. The guy’s retort was, okay, well, next time I get my shoe shined, I’ll just put it down as a breakfast. They fired the guy. And the thought process was that if somebody is willing to steal $7 from a company at great risk to their professional livelihood, imagine how much more likely they were going to steal 10,000 or $100,000 from the company.

[00:38:23] David Hornik
Well, and in fact, the one that you’re afraid of is you’re not going to meet quota. You’re trying to get a deal done. And so you say, I’m going to get it done, but I’m not going to get it in time. And so you forge the signature. So the deal gets done or they.

[00:38:37] Howard Hartenbaum
Change the date or some.

[00:38:38] David Hornik
Right. It gets done in December instead of January. So you make your bonus or whatever, and that stuff happens. Happens all the time.

[00:38:45] Howard Hartenbaum
And you can go to jail for that.

[00:38:46] David Hornik
No, totally. There was. There was another instance where, which we, which we were privy to, where a CEO was expensing his horse and you know, better than his horse tens. Yeah, right. I guess you caught. Maybe that’s what. Maybe that’s what the horse was.

[00:39:02] Howard Hartenbaum
He misspelled it with an extra S10s.

[00:39:04] David Hornik
Of thousands of dollars. And there was. That wasn’t one you could say, like, I wanted to write to the meeting or whatever it was, I was just expensing my horse. Like, that’s just how it goes.

[00:39:15] Howard Hartenbaum
But for me, talking with this CFO was actually kind of depressing because his comment was that at most companies in the past, he’s uncovered some type of expense reporting fraud, and there’s always some guy who’s doing it. This kind of depresses me.

[00:39:30] David Hornik
No, I was just. I was actually just told this, that when a company gets to a scale, you know, 500 employees or more, that you can bank on finding stuff like this, it is coming. And so you just need policies and procedures in place to unearth it and deal with it. And it is. But that is sad. You know that one. And you can. There’s a certainty that 1 in 500 people employed in any given company is going to be trying to steal.

[00:40:00] Howard Hartenbaum
How many VCs are there there?

[00:40:03] David Hornik
There’s certainly 500 on Sand Hill. So. Are you looking at me?

[00:40:07] Howard Hartenbaum
No, I just. It was. You know, if we’re going to blame the business people, we might as well evaluate our own.

[00:40:11] David Hornik
I’m sure there are venture investors who are doing all sorts of.

[00:40:14] Howard Hartenbaum
Who are having $7 shoe signs.

[00:40:16] David Hornik
Exactly.

[00:40:17] Howard Hartenbaum
Then $10,000 horses.

[00:40:19] David Hornik
I think $7. I suspect that if you were to, you know, to expense a shoe shine in that same context in a venture firm, that no one would think twice. Twice about it. Be like, of course, of course you should show it signs shining your shoes. However, Howard, you can take great comfort in the fact that I wear sneakers.

[00:40:35] Howard Hartenbaum
So did you not actually sell a special chemical for cleaning the white.

[00:40:39] David Hornik
Oh, no.

[00:40:39] Howard Hartenbaum
If you go to like Converse shop or whatever down there’s at the. What’s the.

[00:40:45] David Hornik
At the Stanford Shopping Center.

[00:40:46] Howard Hartenbaum
No, no, right on University Ave. There’s the Vans Shoe Shop.

[00:40:49] David Hornik
Yeah.

[00:40:49] Howard Hartenbaum
If you’re walking by there on University Go. And they sell special stuff that you just rub on and it takes off all the dirt and makes the light all clean.

[00:40:55] David Hornik
Nice. See?

[00:40:56] Howard Hartenbaum
Very important.

[00:40:57] David Hornik
I will not expense that. I promise you. I promise you I will not expense that.

[00:41:05] Howard Hartenbaum
Well, I got nothing else.

[00:41:06] David Hornik
That’s it. That’s all we got.

[00:41:07] Howard Hartenbaum
You know, we stopped doing our shout outs.

[00:41:10] David Hornik
Oh, yeah.

[00:41:11] Howard Hartenbaum
We sort of shouted out to Natalie Portman and Lady Gaga today.

[00:41:13] David Hornik
That’s true. Do we have any industry folks we’d like to shout out to? You know, I have a shout out to Godfrey Sullivan, the CEO of Splunk. Actually, that’s all I got because he filed an S1.

[00:41:28] Howard Hartenbaum
Did we? And congratulations because you worked hard on that.

[00:41:31] David Hornik
No.

[00:41:32] Howard Hartenbaum
Can I say the word no? Because you worked on that. No adjectives. You know, one guy. I don’t know if we did this last time. Did we talk about raja dodala from 7 11? No, but I think that guy is awesome.

[00:41:46] David Hornik
Yeah, I agree completely.

[00:41:48] Howard Hartenbaum
He was at your conference and he’s like, responsible for mobile and technology at a business which is, you know, he said 7,000 stores in the US the majority of their money comes in Cash. Just an interesting, interesting company. And they’re looking at what are the different options for, you know, loyalty and for all sorts of, you know, advertising. Advertising and tracking. And. And he’s a very smart guy. So I think he’s gonna come up with some good stuff for 7 11. And ever since I met with him now, like, I am driving by a 7 11, and even though I didn’t go to 711 for years, like, I am pulling my car over and buying stuff at 7:11 because I like that guy.

[00:42:25] David Hornik
That’s good. All right, there’s our shout out. All right, we have any other predictions? Got any predictions for 2012 that we will try?

[00:42:34] Howard Hartenbaum
We will do one venture cast every month.

[00:42:36] David Hornik
That’s it. We should be able to do that. I’m, by the way, I’m blogging more. I don’t know if you’ve seen this, but as a. As a, you know, avid reader venture blog. But I was reading this great article.

[00:42:47] Howard Hartenbaum
I have to see you every day. Why would I read you?

[00:42:49] David Hornik
You should read it because it’s pithy and smart and something so. Yeah. So I was reading this article, an interview with Jeff Bezos. And it was so interesting and smart that I’m writing a series now called the Wisdom of Jeff Bezos. So I’ve written the Wisdom of Jeff Bezos. Jeff Bezos, part one. I just posted the Wisdom of Jeff Bezos Part two. I have part three and four ready to be written in my head. I just have to get them. So. So I agree. We should. I think our goal should be two a month, because that would be good. And my goal is to write at least once a week on Venture Blog. Get back to it.

[00:43:26] Howard Hartenbaum
And sometimes we do guest speakers. So if Jeff wants to come and be a guest speaker, he’s always welcome.

[00:43:31] David Hornik
Yeah, Clavier is welcome. And anyone else who’s listening. Oh, Bezos. I thought you met Clavier because he’s our only guest.

[00:43:39] Howard Hartenbaum
No, no, no.

[00:43:40] David Hornik
We had.

[00:43:40] Howard Hartenbaum
We had Hunter walk and we had Mark Zester.

[00:43:43] David Hornik
Oh, actually, that’s right. And Andrew Anker. Yeah, yeah. So I agree with you. If Jeff Bezos wants to come on, that would be.

[00:43:48] Howard Hartenbaum
We’ll fly up there and bring the microphone with us.

[00:43:50] David Hornik
We will happily come. Or maybe while we’re down at ted, the TED conference will do it. That would be fun. We would like to have more. More guests. Guests and otherwise. Looking forward to an exciting 2012.

[00:44:04] Howard Hartenbaum
Okay.

[00:44:05] David Hornik
There you go. This has been David Hornik from August.

[00:44:07] Howard Hartenbaum
Capital and Howard Harttenbaum, also from August Capital.

[00:44:10] David Hornik
We thank you, as always, for listening to venturecast.