Generated Transcript

[00:00:14] David Hornik
Hello and welcome to VentureCast. I am David Hornik of August Capital.

[00:00:20] Howard Hartenbaum
And I’m Howard Hartenbaum, also of August Capital, venturecast.

[00:00:25] David Hornik
Been a while.

[00:00:27] Howard Hartenbaum
When was the last one? Two months ago.

[00:00:29] David Hornik
It was before the summer, wasn’t it? Did we do anything in the summer? We worked this summer. We did. We were busy raising a fund, Howard.

[00:00:38] Howard Hartenbaum
That’s right.

[00:00:39] David Hornik
It’s hard work.

[00:00:40] Howard Hartenbaum
We did fundraising cast. We just didn’t market it to the same people.

[00:00:44] David Hornik
That’s right, exactly. We were busy explaining the state of the venture universe to our customers.

[00:00:53] Howard Hartenbaum
That’s right.

[00:00:54] David Hornik
You know, I used to think of our, I guess I didn’t think of it this way, but it used to be like, oh gee, the customers in the venture business are the entrepreneurs. And so we got to figure out how to make sure that they view us in a positive light, etc. And I think that’s absolutely true. But it turns out it’s actually a three legged stool. And our real customers ultimately are the limited partners.

[00:01:20] Howard Hartenbaum
Yeah, and if you think about the limited partners is where we get our money. The limited partners, they get money from other places as well. Some of them are philanthropy, some of them are university endowments, some of them are funds of funds who have raised money from other people. Some are retirement retirement plans for some old school teacher somewhere. So as an entrepreneur, when you take money from a vc, some of that money in your company is from some little old lady in Chicago who’s hoping that you’ll make money so that she can eat.

[00:01:51] David Hornik
Man, that’s a lot of pressure.

[00:01:54] Howard Hartenbaum
But it’s important. A lot of times people think, oh, it’s the VC’s money or it’s some rich guy’s money, but actually some of that money comes from individuals and it’s really important to them and so should think about that.

[00:02:05] David Hornik
You know, a lot of it is right and even these foundations where it’s gee, we have a foundation, we’ve raised, someone has donated a bunch of money to try and support some important cause and then we’re gonna put it to work so that we can afford to pay for these programs. I mean, I actually think that that’s one of the best things about the venture business is that not only do we get to fund these amazing companies, really smart entrepreneurs, but then when we make a ton of money, then it goes to causes that are great, you know, like, you know, you’ve been, you went through this last year. But my oldest is applying to college, so I went, I’ve been going around to different schools right so you go to Yale and you hear the story and about, about financial aid and they say, and I think the numbers, if you make less than 60, if your parents make less than $65,000, then you will be guaranteed a full ride scholarship for all tuition, room and board, books, et cetera.

[00:02:59] Howard Hartenbaum
Well, that I think MIT is 75,000 but similar range.

[00:03:02] David Hornik
And they’re a them. I think Harvard and Stanford, a set of these. And so, you know, if you’re investing on behalf of Yale and you make money, it’s really supporting a bunch of kids who otherwise couldn’t go to get this great education. And so that’s awesome.

[00:03:19] Howard Hartenbaum
It’s not only great for them. So my daughter is going to Tufts and granted it’s not Yale or Harvard, but sourness. She is having a wonderful time and I am glad she’s going to a place that has an incredibly wide mix of students there, including those who are getting full support from the university. Because I don’t want my kids to grow up in a world where they’re only exposed to people who come from the same socioeconomic background that they do. And it is very important for everybody to mix up and realize that there’s different people in the world.

[00:03:54] David Hornik
And. But for these endowments that would not possibly happen. Right? You couldn’t, you know, no one’s going to take four. I forget what the, what is it, 47, $50,000 a year, whatever it is now times, you know, in loans, what would the job you’d get to have to be to. This is why Peter Thiel says, oh, it’s uneconomic to go to college, right? Oh, it’s uneconomic. You should just be.

[00:04:17] Howard Hartenbaum
It’s actually more than 60 a kid. Oh, is it for tuition, room and board with not no travel expenses, no books expenses, no pocket money, just like eating in the dorm and wearing the same pair of jeans the whole year. I mean it’s more than 60 grand for a private school.

[00:04:32] David Hornik
It’s just crazy. It’s crazy.

[00:04:34] Howard Hartenbaum
Quarter million dollars for four years.

[00:04:37] David Hornik
So we better do well for our LPs because they need to. That means for each person that is being supported by the venture gains of any given fund, it’s a quarter of a million dollars for four years per kid, right? So think about that. You know, we do a deal and it makes, you know, $500 million and let’s say some, you know, say 50 or 100 goes to one of these colleges, you know, that supports a lot of kids, but. But not that many in the grand scheme. Of things. You better have a lot of those hits. They better have a lot of good, you know, good gains.

[00:05:10] Howard Hartenbaum
Well, they don’t only invest in venture capital, though.

[00:05:13] David Hornik
They should not just August, though. They should. Yeah, no, it’s. I think it’s great, but I. But it, but it is clear when, when it is time for you to raise a new fund. It is unambiguous. Who are your customers? Your customers are the LPs, what we. They’re called limited partners, and limited partners are the investors in our funds. And we have to go out to them and explain to them why it is that we’re going to make them. Right. It’s a very simple thing, too. Like, it’s not. It’s an incredibly nuanced job. There are lots of things we do in any given day, meeting with entrepreneurs and talking with various people and helping companies get new financings and be sold and all these things. But in the end, at the end of the day, our job is to take a dollar and turn it into more. That’s it. But we have to go then tell our LPs why it is we think we’re actually going to be good at that.

[00:06:04] Howard Hartenbaum
And half of it is what we say we will do, and the other half is, did we do what we said we would do in the past?

[00:06:11] David Hornik
Yeah, it sort of reminds, it was a good reminder to me of why fundraising is important. Right. Why it is, you know, because, look, our companies have to go out fundraising far more frequently. They go out and, you know, you got to raise the next round of financing, etc. And, and it is incredibly useful to have to explain yourself, to have to say, look, here’s how we approach our business, here’s how we think about it, here are the ways in which it’s useful, here are the things that. And in the end, here are the reasons why we will be successful. And so I have to say, at the end of the process, we just closed our new fund. We’ve raised $550 million. We’ve got money now to invest in interesting companies. At the end of the process, I thought to myself, you know what, that was actually incredibly valuable. Like, it was very useful to have spent a handful of months chatting with people and explaining why it is we think that we’re the right people for them to give their money to. And by the way, I grew increasingly convinced that we were the right people for them to give their money to.

[00:07:17] Howard Hartenbaum
Yeah, because we also learn a lot in the process, too. Just like an entrepreneur does when they’re out raising money and talking with different VCs who are seeing different things and have different backgrounds. We heard what other firms are doing and how we are different or have some similarities and where they felt they were comfortable and where they thought risks were. So we learned from their experience a lot, too, because they deal with a lot of. Many of them deal with a lot of different venture firms. When an entrepreneur goes out pitching for money, too, it’s not like you pitch one firm, they say, yes, give you a term sheet, and it’s the end of it. You pitch a handful of firms or more, depending on how things are going. And you learn from that in the process.

[00:07:54] David Hornik
Nope. No question about it. And then you have to understand your, you know, understand your customer. What is it they’re looking for? What do they want? And they want money. Yeah.

[00:08:02] Howard Hartenbaum
And that’s what the entrepreneurs should be thinking, too, when they’re pitching a vc. What, in the end, what do they want? They want return so that they can pass it to their LPs.

[00:08:11] David Hornik
Yeah, no, it’s. It was. It was interesting, but I. I have to say, as fun and interesting as it was, Howard, I’m pleased to have it behind us.

[00:08:19] Howard Hartenbaum
Well, we’ll do it again in a few years.

[00:08:20] David Hornik
That’s true. And, you know, and like company fundraising, I think those firms that understand and appreciate that they will raise money again, etcetera, they’re better positioned, they’re in better position to go raise that money when the time comes around, as opposed to, oh, no, we’re out of money quick. Where do we go to get money that’s, you know, that doesn’t work so well.

[00:08:41] Howard Hartenbaum
Yeah, we have to time it just like entrepreneurs have to time it. Like, we go out and raise money when we’re about done with the money we have and it’s time to raise more money. It’s not. We don’t start much before, and we can’t wait till after. We won’t have money to do our job.

[00:08:53] David Hornik
Job. Yeah. No, we had this conversation because, you know, we were looking at an interesting company, and it was like, what do we fund? You know, we could fund it out of the current fund, but we’d be better off funding it out of the new fund. When’s the new fund closed? Right. So now the new funds closed. In fact, I was talking to an entrepreneur today, and they said, well, I don’t know where you are in your cycle, how, you know, fundraising cycle or whatever, if you have capital to, you know, to invest. And I said, we have capital as of Last Friday. So, yeah, we’re fine. We got plenty of capital, you know. Now the question is, are we the right fit for your company? Are you the right fit for us as investors? By the way, if you’re hearing this incredibly annoying noise, this kind of buzzing and whatever, it’s because they’re building a building right next door to our office, directly in my view. So I used to have this lovely view of trees and some. And sky and all that. And in a matter of weeks, they will start building. They’ve built the foundation. Now it’s basically ready to start taking over my view.

[00:09:58] Howard Hartenbaum
Maybe you’ll get lucky and they’ll put in those reflective windows so that when you look at the building, you will see yourself.

[00:10:05] David Hornik
And then I can see myself changing my pants.

[00:10:07] Howard Hartenbaum
My office is on the other side of the building and I still have my view. So I’m going to auction it up to the highest bidder.

[00:10:13] David Hornik
Man, oh man, I’ve looked at it. There’s an office available on the other side. But, you know, then I’d have to move and I’d have to like, make. Move my shelves and, you know, I mean, it would just. I’d have to move my puppet. Although that’s relatively, you know, lightweight.

[00:10:30] Howard Hartenbaum
This is audio, not video.

[00:10:32] David Hornik
Yeah, I’m just. Oh, let me describe it for you. Okay. If you look to the left, it’s a puppet.

[00:10:36] Howard Hartenbaum
And it looks just like Mr. Hornick, only it’s orange.

[00:10:40] David Hornik
So it looks like me after a spray tan. That’s what. That’s what the puppet of me looks like.

[00:10:45] Howard Hartenbaum
Nice.

[00:10:47] David Hornik
There you go.

[00:10:48] Howard Hartenbaum
There you go.

[00:10:49] David Hornik
I think we’re out of topics. That’s all we got.

[00:10:52] Howard Hartenbaum
I want to talk about a nice funding presentation that I got unsolicited via email the other day. You have to understand that we get lots of proposals. Many, most, the great majority are from people that we know who are introducing us or we know the entrepreneur ourselves before. But every now and then we get maybe one in 10 or so, we get some email from somebody that we don’t know, and we open it, call cautiously, hoping there’s no attachments, and it’s from an entrepreneur. And at the worst end of the spectrum, it says from so and so. And then in the CC line, there’s every VC in Silicon Valley and you can literally see a hundred people’s names in it. And then in the email it says dear investor and blah, blah, blah. Yeah, so just don’t do that.

[00:11:45] David Hornik
Howard’s gonna move on. But yeah, just to iterate, if you want to raise money from someone. It really is a personal process if you include two people. So here’s the thing. I actually think that I should answer everyone’s emails. I think that that’s appropriate. And so when you send me an email and you send me a business plan or an executive summary or whatever, I will read it and I will respond to it. But if you send me an email and it says Dear sir or Dear Investor and it’s to more than one person who isn’t from my office, I will actually not read it and I will just erase it.

[00:12:17] Howard Hartenbaum
So I’ve got even a better example. Yeah, so that was in the what not to do category. I’ve got in the what really not to do category.

[00:12:25] David Hornik
It’s like our new segment. We have a new segment of VentureCast what not to do when raising money.

[00:12:30] Howard Hartenbaum
So I got an email that was addressed to me, but I read through the email real quickly and it said, it didn’t really say what they do, it just said, we’re in the social commerce space and if you click on this link and register, you can see our presentation. And I thought, why do I have to click on a link and register? But what the hell? Guy went through the trouble to look me up and send me his thing. I might as well click on the link and see what he has to do and see if it’s a fit. So I went to the website, I looked at the website, I look at what I had to do, and then I went back and I sent him an email that just said, hey, thanks for sending your proposal. I’m sorry, not a fit for me, but I wish you the best, which.

[00:13:07] David Hornik
Is nice, very nice.

[00:13:08] Howard Hartenbaum
I responded. He knew that I had opened his email, so he sent me back an email. But like he’s. And he actually said to me, you know, I know you opened my email because you’re responding, but you, how can you say you don’t want to invest if you didn’t click the link, if you didn’t register and actually look at the pitch? And so I wrote him a nice email back that said I did go to your site and I found that having to register to get a pitch was just bizarre. You asked me for my date of birth, my passport number, my cell phone number, my address. And so that just sounded like an identity phishing scam, which I wouldn’t touch. And the URL, I noticed, I hit a link on his email and it redirected me to another URL, which actually read rock Hard in the URL and so what I said in the email was, and by the way, your URL being rock hard just sounded like a porn site. I’m a busy guy, but I’m interested to hear all ideas. But the way you did it actually scared me away. And so it’s actually pretty nice.

[00:14:14] David Hornik
I mean, it’s very straightforward, but it’s not impolite. You just said, like, here’s why. I mean, he asked me. You took the time to click on the link. You took the time to determine that you wouldn’t do it. You sent them an email back. He asked you why, and you responded.

[00:14:27] Howard Hartenbaum
I responded that I’m not giving you my passport number.

[00:14:30] David Hornik
That’s just crazy.

[00:14:31] Howard Hartenbaum
It was just crazy stuff. So he actually sent me another email apologizing with a login that I can use, which is the way he should have done it originally. But I’m still a little bit nervous.

[00:14:42] David Hornik
Only it was howardgheart.com or whatever. But this is a good reminder, by the way. There are oftentimes I find someone who I have a. You know, whether it’s a Twitter handle or a Gmail account, and it’s like, davey Done Good. Or, you know, super Soupy or what? You know, like something. And you go. And then you get a business plan. You get something official and professional, and it’s coming from Little Miss Daisy or what? And you go, really? You’re a little miss Daisy.7gmail.com. Is that really what you should email me from? So. So it’s perfectly fine when you’re first getting going to have whatever you want, but when it comes time to be a professional, you need to actually have an email that sounds professional. You need to have a URL that doesn’t sound crazy. Of course, as you know, we did invest in a company that changed its name to Tickle. We did invest in Splunk and Blippi. So maybe it’s not a steadfast rule.

[00:15:43] Howard Hartenbaum
But at least it wasn’t little girl 7 or underage child 7 lippy.com.

[00:15:48] David Hornik
That would be troubling.

[00:15:49] Howard Hartenbaum
We could do this whole thing as what not to do.

[00:15:52] David Hornik
Yeah, well, all right. Here’s another what not to do. So, yes, I’ve gotten an email from a guy. I get a lot of these emails, and it’s basically from someone they say, I unders. I know that you were an attorney and you made the switch over to venture capital, and I’d love to. You know, I’d love to talk with you. Having been in the legal field, I’d love to talk to you about that, right? And I say, fine. Like I often now people know what to say to get. I said, great, you know, look forward to catching up. And I connect them with my assistant. And so we had a meeting, he comes in, we just had a, you know, kind of cup of coffee in my office. And so he said to me, you know, yeah, I went, I went to a year at law school and then I realized maybe this isn’t what I want to do, etc. And I’ve sort of started the startup and you know, maybe I’ll talk to you about it. But anyway, he’s holding a folder and we chatted for about three more minutes before he then dove into a pitch, a full on pitch of like, here’s my, well, here’s what I’m doing and here’s why I think about it and whatever. And the pitch went on for many, many minutes and all I could think of, it was like, this is a total bait and switch. Like you said you wanted to talk to me about the process of how I’d been a lawyer or whatever and instead it’s like a pitch and if you had said, hey, I was a lawyer and I wanted a pitch or whatever, then I may have said, excuse me, I may have just said sure or whatever, but I felt like, I felt that it was, I had been violated. Now this morning, another lovely woman who had emailed me and said, I saw you at this thing, we chatted and, and I’m an attorney and I’d love to talk with you about your transition. And I said, okay, great. And so this morning I went and I met her and as I’m coming in, I’m thinking, what’s she pitching? Like, okay, great, what’s she pitching? And she wasn’t, she was just lovely. She was just like a very smart attorney who was curious what I thought, you know, what that process had been like. So I’m not going to hold it against all people who want to discuss this. I just have to say it didn’t help him get funded.

[00:17:49] Howard Hartenbaum
There’s an email that most venture capitalists who have email addresses on their sites have received in a similar vein, where it’s a bait and switch coming from a woman in Florida who sounds, she’s an entrepreneur and she says she’s planning a move to Silicon Valley and looking for some mentor, maybe a potential investor for her new company and that she had built a prior company called United Online or something like that, which is like a real company. And the email sounds very nice and professional. Until in the very last line it says, and below I’ve attached some casual photos of me and the photos. I assume you’ve gotten this and the photos of me. And the photos of me include a girl in a very slinky bikini. And that’s called bait and switch.

[00:18:38] David Hornik
In what direction?

[00:18:40] Howard Hartenbaum
All I know is like I was reading the email thinking I might get, you know, sounds like a very well written email professional. Maybe they’re, you know, there’s. They’re a good person and they’re an entrepreneur and then it’s like, oh, and here’s a slutty photo.

[00:18:52] David Hornik
Yeah.

[00:18:52] Howard Hartenbaum
And just totally inappropriate. And maybe that gets the type of response she was trying to evoke from a certain type of person that she was trying to evoke it from. Like maybe she put the photo in because she didn’t want people to take her seriously and she was just trying to get you to read to the bottom. I don’t know. But if you want to raise money, not the way to do it.

[00:19:10] David Hornik
So along those same lines, I was at a, let’s just call it an important conference, a conference that many important executive type people go to. And they had this networking platform that you could only get to if you were attending this conference. And in one year I received this email and it was, you know, hi, David, you know, I was looking at your profile, really excited and I have a sister who’s single and you know, it seems, you know, seems like you might be a great fit for her, etc. Etc. I thought, wow, that’s really weird, you know, flattering, but a little weird. And no, I’m not available. But it turned out actually she had done this for every. Was for herself. She had done this to everybody. Like anyone she thought was an eligible bachelor, potential eligible bachelor she’d reached out to and it decided to make this particular conference and like dating experience.

[00:20:10] Howard Hartenbaum
But did she put it on? The email copied everybody in the Dear potential bachelor.

[00:20:17] David Hornik
She was kicked out. She was not allowed to return to that conference because of her behavior.

[00:20:23] Howard Hartenbaum
I’m curious what the conference was anyway. What not to do.

[00:20:28] David Hornik
Yeah, there you go. What not to do. There’s our theme song.

[00:20:33] Howard Hartenbaum
Yeah, we used to have. What was it? Shout outs.

[00:20:35] David Hornik
Shout. Oh yeah, we used to have the shout out. Maybe we’ll come up with one by the end of the adventure cast. I don’t know, we could shout out to Steve Jobs since it’s the. It’s today, the first anniversary of his passing.

[00:20:49] Howard Hartenbaum
That seemed like a slow year. Yeah, it relatively. Maybe because we had to raise money.

[00:20:55] David Hornik
Exactly. Because one of the things about raising money is that you sit in a room with, you know, your potential investors, your existing investors, and you get to tell the story of your fund, etc. And that always, always includes, you know, who are you? When did you come for? So Howard and I have had to sit through and listen to descriptions of ourselves so many times.

[00:21:15] Howard Hartenbaum
I could do David, and David could do Howard with no problem. I could do Eric’s, our partner. Eric’s really? Well, yeah.

[00:21:22] David Hornik
10 years an operator. 10 years.

[00:21:24] Howard Hartenbaum
10 years a deal guy. He’s got. But anyway, just like, you know, many entrepreneurs do, you kind of get in the groove of doing it and you find out kind of what’s. What’s good. I can be a little bit impatient sometimes, and I wouldn’t have been surprised if we were meeting a potential LP and I said, I’m Howard. My bio is on the website.

[00:21:46] David Hornik
Yeah, that would have gone poorly.

[00:21:48] Howard Hartenbaum
You would have hit me.

[00:21:49] David Hornik
I would have killed you. And I would have said, that’s cute. Harrod, let me describe Howard for you. Grew up in Southern California, went to mit, studied mechanical engineering.

[00:21:58] Howard Hartenbaum
See, I don’t even have to do it. Excuse me while I go out and get a cup of coffee.

[00:22:03] David Hornik
Let me just do this for you. Maybe we could have done that as, like, mixed it up and described each other like, oh, I grew up. And we could just. We couldn’t even say who we were doing. Maybe we’d make it like a game. I grew up in Northern California, in Northern India. I went to school. That one would have been easy since there’s only one Vivek.

[00:22:24] Howard Hartenbaum
But wait, back to Steve Jobs for a minute. Being at the anniversary of Steve’s passing. So in the past year, other than some idiot breaking into his house and stealing his wallet and his iPhone and.

[00:22:39] David Hornik
His iPad and his computers, mistakenly not even to steal his computers, just compared to there was an opportunity to steal computers. What a moron.

[00:22:50] Howard Hartenbaum
Now the new iPhone5 is out.

[00:22:52] David Hornik
It is indeed.

[00:22:52] Howard Hartenbaum
It is indeed.

[00:22:53] David Hornik
Let me take mine out.

[00:22:54] Howard Hartenbaum
You have one? I have ordered one which I haven’t received yet. I ordered it a few weeks ago and I’m too lazy to go to the store and wait in line. But entrepreneur was demoing some software to me yesterday or day before yesterday, kind of side by side with the newest Samsung device. And I was quite wowed by the Samsung device. And I was thinking to myself, the difference between Samsung and iPhone was like the difference between HDTV and regular tv.

[00:23:24] David Hornik
Wow, that’s a bold Statement.

[00:23:27] Howard Hartenbaum
It was nice and I wanted.

[00:23:28] David Hornik
It was that much better than that much. So what was like, it was just. You liked the bigger screen because it has like a giant screen, right?

[00:23:35] Howard Hartenbaum
It has a bigger screen. The way that things moved around on the screen seemed more human and more gentle as you were doing stuff, maybe in how quick the swipes and the motion. It was nice.

[00:23:47] David Hornik
Android was better than iOS.

[00:23:49] Howard Hartenbaum
They had the way the device had at the base, next to the main home button, they had another touch button that would light up and go away when it was necessary as like a back function or whatever. And when you couldn’t use it or didn’t use it, it wasn’t there. So it was slick. And when you could and you needed extra functional appeared. And it was just, it was just nice.

[00:24:12] David Hornik
You’re smitten.

[00:24:13] Howard Hartenbaum
And what I’m thinking is, you know, Apple’s got some work to do.

[00:24:17] David Hornik
It’s funny because I just had this conversation with our partner about the new Windows Phone and he was saying he’d gotten a demo, really thought it was this great, was beautiful, and he was looking at replacing his iPhone with this new Windows Phone, which also like new generation of Windows phones that are, you know, that are gonna give again the iOS, iOS a run for the money. Now I now all that said, I have to say, Howard, when I ordered this iPhone5, I thought, well, it’s kind of incrementally better, like, oh, it’s, it’s a little bigger, it’s a little faster, whatever. But when I got it, I thought it was way better. Like it’s a great, it’s this super light skinny phone. It’s a nice big beautiful screen. Its camera is great. You know, with the exception of this controversy over the maps, which has been somewhat problematic, I have to say that I’ve been really happy. So you’re an idiot.

[00:25:16] Howard Hartenbaum
Thanks. Well, I haven’t gotten mine yet and maybe I will change my mind when I’m using it all the time. And I was just watching a demo of the guy comparing the two devices, but I was thinking it seemed like it got. Apple got leapfrogged a little bit, but maybe I’ll change my mind when I start using it. But, you know, competition is good. Good. The Maps issue, I didn’t realize how reliant I was on Google Maps on my iPhone until Apple swapped out the map program. So on a positive note towards the Apple Maps, I used it as a turn by turn navigation system with connectivity when I was driving. And it was better than my TomTom Navigator in my car. I mean, you need connectivity for it. But it was awesome in terms of where I was and what was coming and the perspective and everything. So compared to Google Maps version of Turn by Turn, Apple just kicked the crap out of it. And for the other stuff like where am I and how do I get there? Not from a turn by turn basis, but just like the detail in the maps and it’s horrible. I’m sure they’re working hard.

[00:26:21] David Hornik
Trust me. I had lunch with a guy who is involved, let’s just say is involved in the process. Process. And he is not sleeping very hard on this. They are very concerned. They, you know, they think that, look, people are, are hypercritical and I think that’s fair. But the problem with Maps is that it’s mission critical. Right? Like Maps isn’t something where you go, oh, that wasn’t the phone number. Let me look up the phone number again. It’s I’m driving. So I had this. Actually I was on my way up to, to the city because I was doing this Silicon Valley voyage voice which was what’s like an American Idol takeoff. It was supposed to be called SV Idol. And then they got sued or they got a demand letter from, from American Idol saying you can’t be SV Idol. So they became SV Voice. But anyway, I was on my way up there and I was already late and there was really bad traffic and then it took me to the wrong place and I was like. And that was just a very bad thing because I was late. I was already late. It was trouble.

[00:27:17] Howard Hartenbaum
The one feature that I found, found that was troublesome was if you put in a destination to search and it drops a pin and you hit the pin, sometimes it doesn’t give, you go to this direction, it’s just not available and other times it does, but then it doesn’t go to that direction. It just pulls up other things you’ve searched on and there’s some issues with it.

[00:27:35] David Hornik
That’s weird.

[00:27:35] Howard Hartenbaum
But unlike, you know, if you look at the history of an American car company when they came up with a product that’s just terrible and doesn’t work, they say we’ll fix it in four years when the new model comes out out. But I’m sure Apple will have this fixed very quick.

[00:27:47] David Hornik
Actually. They, the first download is coming momentarily and they intend to have it periodically, you know, on, you know, very short time frames, matter of days as they upgrade it and update it.

[00:27:59] Howard Hartenbaum
So smart guys there and they will fix it.

[00:28:01] David Hornik
They will fix, they will fix it. No question about it. Well, it’s interesting. I’ve been very, I’ve been very happy with my iPhone5 and then I upgraded other iPhone5s in my house which so.

[00:28:16] Howard Hartenbaum
I have, in my household we have all have four S’s and three of them work are kind of in the past six months. So I’m not gonna update those. Yeah, you’re waiting because I’m cheap. But you know, you can sell your, your old ones on ebay and get a lot of money for them.

[00:28:34] David Hornik
You know what else you can, so you can sell them on ebay if you’re an ebay specialists like Howard. And if you go to Amazon, Amazon has quite good prices for trade ins and they give you, they give you a particularly good price because they give you Amazon dollars. So they’ll give you a gift certificate or whatever for the $300 and Amazon dollars and which is good for them. It drives commerce onto their site. So it’s so, you know, very symbiotic and it makes you think like, oh man, if you’re Amazon, you actually, if you can pay for things with Amazon dollars, which people view as fungible with actual dollars but gives you more margin, what other things could you do like that, right. It gives them a lot of flexibility to start engage buying and selling. And things you think of like these. There are a bunch of companies that we’ve seen that are trying to figure out how to fix the, the gift card problem, right? That you get a gift card and you have six bucks left on it or you’re not gonna go to OSH hardware or whatever, you’re not gonna spend.

[00:29:28] Howard Hartenbaum
$8 in gas to go and spend your $6 at OSH.

[00:29:31] David Hornik
Yeah, exactly. It’s just not gonna happen. But imagine if you could, if you’re Amazon and you can swap them out for, you know, for Amazon cards because.

[00:29:40] Howard Hartenbaum
They could aggregate them too.

[00:29:40] David Hornik
You could absolutely aggregate them. And then someone wants to spend 100 bucks, they could sell it for 90. They could give you 90 bucks for the card, which is really only 80, which should be, you know, which would cost them 70.

[00:29:52] Howard Hartenbaum
Yeah, great.

[00:29:54] David Hornik
They should get on that. They should buy one of those companies. Except for the part we’re not investors in any of them.

[00:30:00] Howard Hartenbaum
So. So we’re talking about Amazon now. And the way this program goes, it just sort of meanders its way. And I was thinking about a discussion I had with an entrepreneur about like Dropbox versus Google Drive versus Amazon and product and switching costs and all that kind of stuff. And I’m a paying Dropbox customer and I think the product is quite good. Google sent me a note that they had kind of, you know, set up a Google Drive for me and I could start using it. And that didn’t catch my attention so much. But when I heard Amazon’s getting in that business and I’m a prime customer and I’ve been a customer, a very happy customer of Amazon’s for more than 10 years and I looked because I was curious. Last year I made 103 purchases in 2011. So that’s almost every third day. Pretty. That’s a lot, a lot of engagement. But big things like a TV and small things like Q tips. I mean I kind of exactly what Amazon wants.

[00:30:58] David Hornik
We do as well. We buy were prime members which means that there’s no. So in the last week I’ve gotten a couple books pre wrap that my daughter uses for soccer and what you know, like you just get whatever.

[00:31:10] Howard Hartenbaum
And I was thinking with them launching a kind of storage solution, I might be willing if they have a good, you know, wizard for moving everything over from one to the other or if they do something like every book you buy, physical book you buy automatically get an electronic book for an extra dollar. Or if they just put all of your electronic books into their storage mechanism and everything, they could steal Dropbox’s business, I think, or a significant percentage of their business. And whether that’s 10% or 30%, I think it’s possible.

[00:31:47] David Hornik
So by the way, you said if there’s an easy way to move stuff over. There is. It’s called Pixel Pipe. We funded it. So you can check out Pixel Pipe and make it easy to do selfless promotion. Yeah, right. Yeah. No, I’m just trying to help you, Howard. And actually it’s funny, I was trading emails with the founder of Pixel Pipe and I did not realize but if you have backup storage, so not easily accessible storage, just storage where it’s sort of put, you know, where you can’t do read writes. You just put stuff in cold storage on Amazon. How much that it is? A penny a gigabyte a month. A penny a gigabyte. Which means that for 12 cents a year you can have something stored. You know, a gigabyte of stuff stored. So 100 gigs costs you.

[00:32:43] Howard Hartenbaum
100 pennies.

[00:32:47] David Hornik
I was about to say a buck.

[00:32:48] Howard Hartenbaum
20 or a terabyte. And what is 72 terabytes cost?

[00:32:51] David Hornik
No, can’t do that. You’re the one who went to mit. I merely went to Stanford. I. We can’t do math. Yeah, that’s Amazing, right? But I agree with you, actually, I think that’s quite interesting. And you would try and I think you would trust.

[00:33:04] Howard Hartenbaum
I trust Amazon in some ways.

[00:33:05] David Hornik
You know, I’ve been having this ongoing conversation with our IT guy where say like I have all these videos and photos, family stuff and I want to put it somewhere, but where’s the place to put it that’s like, that’s particularly safe, that’s not overly expensive, etc. And so is it Dropbox? Is it Google Drive? Is it whatever. And truthfully, he hasn’t had a good answer for me. He sort of said, you know, Dropbox is great, but it’s a little expensive for that kind of.

[00:33:31] Howard Hartenbaum
I can tell you the answer. Yes, go buy a hundred and seventy five dollar two terabyte flash drive, put everything on there every few months and just leave it in your office.

[00:33:41] David Hornik
Well, I’ve thought about it and flash drive might be. Oh, might be the answer because it’s.

[00:33:47] Howard Hartenbaum
Small and light and easy to move.

[00:33:48] David Hornik
Right. I mean the interface is. My problem is I have a bunch of backup disks of hundreds of gigabytes of stuff. Old FireWire drives. Old, you know, like they’re old interfaces and I need to get that stuff moved before the interface is the problem.

[00:34:05] Howard Hartenbaum
But you know, 175 bucks 2 terabyte USB flash drive.

[00:34:11] David Hornik
Maybe that’s the thing to do.

[00:34:12] Howard Hartenbaum
To start, I use a DROBO at home, but that’s not fire safe because if my house burns down, the data’s on there.

[00:34:18] David Hornik
I’m not worried about. I guess this is why the cloud would be better if there was someone who had a redundant system, right? I mean if you have something in Kansas and something in Oregon, then the likelihood that it all goes at the same time is extraordinarily small.

[00:34:35] Howard Hartenbaum
Except if it’s. Could you imagine the country would grind to a halt if some state sponsored hacking took all of our baby photos away? They’ve taken down our storage. They’ve taken down our storage in both Seattle and wherever.

[00:34:54] David Hornik
Wherever Virginia would be most likely. Seattle and Virginia. It is true. You know, we haven’t really given a very nice tribute to Mr. Jobs, I don’t think. You know, we mentioned him and then.

[00:35:05] Howard Hartenbaum
We ripped on the iPhone and his house got stolen.

[00:35:09] David Hornik
It’s not fair.

[00:35:11] Howard Hartenbaum
Anyway, so what’s the next.

[00:35:12] David Hornik
Yeah, what else? What other topics do we have? I just, I was gonna say read, but it’s not really true because I don’t read long books because that takes me a very long time. But I was Given for a present. The Steve Jobs biography of on CDs. It was 20 CDs. Many, many hours. But it was quite interesting. Quite. I enjoyed it. Living in Silicon Valley. It’s a little weird because a lot of the people in the book are people we know. Right. So they talk about so and so or whatever, and you kind of go, huh, you know, and then the next.

[00:35:45] Howard Hartenbaum
Time you bump into that guy, you say, hey, I saw you in Job’s book. What did you think?

[00:35:49] David Hornik
Yeah, I’ve done that on a number of occasions.

[00:35:53] Howard Hartenbaum
Probably some of the same people.

[00:35:54] David Hornik
And they can. And you know, you get interesting. I think people are. Range from generous and the generous version is. I think there were a number of accounts for the particular episodes and the author chose the one that would sell the most books. That’s the generous version. And then I heard a very much less generous about the book version, which was very. A person who would have known a lot of this stuff, who was very angry and felt that it had been quite an unfair portrayal for the sake of selling books and whatever else. But a lot of the stuff we knew to, you know, you know, to be true. You’ve heard the stories, you know, the people. I was very much enjoyed. There’s a section in there talks about the early days of Apple and the Apple software team, the Mac team. And they talk about this guy Steve, Katie, and how Steve was part of the team and how he. They made a pirate flag and they hoisted the PI and Steve hoisted the pirate flag over the Mac team’s office and Triumph. Whatever. And which I thought was particularly fun since Steve is a. Is a senior guy at pay near me, one of our portfolio companies. So it’s really fun to. I was just saw on Facebook that he had taken apart his truck to take apart his Bosch dishwasher to recycle it. And the process of how many of the pieces in your dishwasher are actually recyclable since it claimed it was.

[00:37:23] Howard Hartenbaum
Can I get his email address? Because I just ripped a Bosch dishwasher out from under my cabinet and it’s sitting on the side of my house.

[00:37:29] David Hornik
Is it really?

[00:37:30] Howard Hartenbaum
And I would just like to.

[00:37:31] David Hornik
Yeah, no, his recipe.

[00:37:31] Howard Hartenbaum
Take it over and leave it on his. No, I’ll just take it over to his house and leave it there.

[00:37:35] David Hornik
You want to leave it for him to recycle?

[00:37:37] Howard Hartenbaum
Yeah. Can you imagine how his neighbors would feel suddenly, like 50 dishwashers showed up on his driveway.

[00:37:43] David Hornik
That’s right, Steve, this is your legacy. You get. Here’s another Bosch and I will say it took him a number of hours and a cut finger, so he may be less enthusiastic about your Bosch.

[00:37:54] Howard Hartenbaum
When I bought my house, it had two dishwashers in it, both identical and one we used all the time. We lived there seven or eight years. One we used all the time, and the other one. Don’t need it. Need two dishwashers. We’re not big party people. I decided to try it once to see if it would work a few years ago, and there was some problem with the drain pump, so it didn’t work. So ever since then, I started using it for parts. So the handle broke off the one I was using, and I swapped out the doors, and then the racks broke. One of the racks broke and rusted, so I swapped out the racks and then the drain thing was wobbly. So eventually it had, like, no working parts on it anymore, and I just took it out and put it on the side of my house. And I hired a cabinet guy to come, and he’s blocking it off. It’s $1,500 for a new dishwasher I’ll never use. And it’s $500 to have a custom cabinet put in there and have more shelf space.

[00:38:45] David Hornik
Nice. That’s Howard. You’ve just nailed it. That is totally. That is classic Howard Hartbound right there. Scavenge your existing dishwasher, then throw it out and block it up. That’s very nice. What else we got? Anything?

[00:39:05] Howard Hartenbaum
I don’t know. How long do we want these things to be?

[00:39:07] David Hornik
I think people have had enough. Oh. So I was talking to this guy, actually. This is interesting. And then we can. We can call it. I mean, people. It’s been a long time. Maybe they’re. They’re fatigued after having not had a Venture cast for so long.

[00:39:18] Howard Hartenbaum
We’d be happy to have ideas.

[00:39:20] David Hornik
Yeah.

[00:39:20] Howard Hartenbaum
If you guys have something, feel free to email us.

[00:39:22] David Hornik
I am Hornick. H O R n I k@augustcap.com.

[00:39:27] Howard Hartenbaum
Yeah, and feel free to email Hornick.

[00:39:32] David Hornik
Wait a second. That’s not quite the deal.

[00:39:35] Howard Hartenbaum
I think my email address is on the website as well.

[00:39:37] David Hornik
If you go to augustcap.com they’re not transcribing it. Howard, what is your name?

[00:39:41] Howard Hartenbaum
Howardgustcap.com. why do you use your last name for it? Oh, because we have two Daves here.

[00:39:47] David Hornik
No, there are a lot of Davids.

[00:39:49] Howard Hartenbaum
It’s easier to remember.

[00:39:49] David Hornik
I had a second grade class where.

[00:39:51] Howard Hartenbaum
There were six Davids, so there were no Howard’s.

[00:39:54] David Hornik
I’m Horn. Of course there weren’t any Howard’s who would be so mean as to name their. Oh, I’m sorry. So I was talking to these guys yesterday. They, they’re in from Italy and they have, and they have an incubator called H Farm that’s outside of, that’s outside of Venice. Really great guys. I totally enjoyed the conversation. And, and they’re, and they are increasing their engagement with a bunch of companies and how to encourage seed investment and all these things. And so I was chatting with him and one of them was saying that he’s a big podcast listener to that he. That he lives two hours from his. From the, from the main H Farm incubator. And so when he comes into town, he listens to. Listens to lots of talks, etc. And so I was saying, oh yeah, you have to check out venturecast. And I said, and you’re. And you’re in luck because we’re gonna record one tomorrow, even though it has been many years, so months. So shout out to you guys at H Farm and I hope you’re listening to this on your path. I think you actually don’t take a boat, but that would be even more awesome to listen to it on a boat on your way to the Venezia for the incubator. That’s the shout out.

[00:41:10] Howard Hartenbaum
Nice.

[00:41:11] David Hornik
All right, well, hey, thank you for listening. This has been been David Hornik from.

[00:41:14] Howard Hartenbaum
August Capital and Howard Hartenbach from August Capital. Thank you.

[00:41:18] David Hornik
We’ll catch you again soon. Maybe.