Generated Transcript

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

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

[00:00:23] David Hornik
And it’s been a while. What is it? It’s the 4th of February 2013. 2013? Yeah. Did we do one this year? Seriously? We haven’t.

[00:00:33] Howard Hartenbaum
Not in 2013.

[00:00:34] David Hornik
That’s terrible. Shame on us. I’ve been, I’ve been listening to Books on Tape and I’m kind of addicted to books on tape. And the reason I, I. And so now I kind of get like why someone might listen to Venture Cast before it was completely mysterious to me. Howard. Why, why anyone would. But if you’re driving up and down 280 to work or worse yet, 101 and you’re stuck in your car, you might not, you know, you might not find us that annoying.

[00:01:02] Howard Hartenbaum
Our partner, Tripp Jones listens to Books on Tape. He’s listening to Game of Thrones and he said on 280 it reduces his speed by about eight miles an hour because he wants to drive a little slower and get in a little bit more of his book before he gets to work.

[00:01:16] David Hornik
That’s good. Be a little more focused and not so dangerous.

[00:01:19] Howard Hartenbaum
And less speeding tickets.

[00:01:20] David Hornik
That’s good. Saves him money. Although I find that I’m so that, you know, everything is a trade off. Right. So if I’m listening to a book then I can’t be listening to the radio. So I don’t know anything about the world and I can’t be on the phone making phone calls. You know, thankfully I can’t be checking my email. That’s good news.

[00:01:38] Howard Hartenbaum
Well, right now isn’t NPR doing their fundraiser? So you turn on the news and three minutes later you’re like, turn it off because you don’t want to.

[00:01:43] David Hornik
Exactly.

[00:01:44] Howard Hartenbaum
I gave my money already stopped.

[00:01:46] David Hornik
Would it be great if you could personalize radio so that once you contributed then it just became the normal show? Once you called in, you were done. It would be so good. That would be so good for them too. It would increase their revenue by a ton.

[00:01:59] Howard Hartenbaum
It’s like an application. Paying for Ad Free application.

[00:02:03] David Hornik
Yeah, exactly. Ad Free. Ad Free radio.

[00:02:05] Howard Hartenbaum
I’m sure we’ll see that pitch in the next week.

[00:02:07] David Hornik
I was talking with a good friend last week who is a. Is an expert in radio. She. She is among the many expert. One of the few experts in radio and she was. And we were sort of talking about the evolution of radio and what it would take to have a device in car that was better and that where you could choose your content and you could DVR it and you could manage it in interesting ways and all this stuff and it’s just sort of astonishing it hasn’t happened. Instead we have all these disparate applications and we have our iPhone that or Android phones that have little bits and pieces of stuff and it’s just a mess. Yeah, it’s got to get fixed.

[00:02:46] Howard Hartenbaum
Back to that books on tape thing, I’m just curious, do people listen to books on tape instead of reading at home? It never occurred to me. I always just read a book. But wouldn’t it be, I wonder if people daydream more when they’re listening to a book versus when they’re reading a book.

[00:03:02] David Hornik
Yeah, it’s much easier. So I listen to books on tape because I’m dyslexic and so reading is super slow and, you know, I just wouldn’t get through a book in the same way.

[00:03:11] Howard Hartenbaum
Do you listen at home?

[00:03:12] David Hornik
So sometimes if I’m. So I was just listening to Ready Player One, which is this great book about this kind of sci fi ish thing. But it’s a. But it, it has all these 80s music and, and video game references.

[00:03:26] Howard Hartenbaum
It’s like Glee for books.

[00:03:27] David Hornik
It’s. I don’t know if it’s Glee for books, but it’s. But it’s, you know, so I was completely addicted to it and I was listening to it and one night I started. I was almost done and so. So I literally, everybody was asleep. I started listening to it and I stayed up. I ended up getting two hours of sleep that night because I just kept on. I’ll just listen to one more chapter because I have to hear. Just the same way that people who are readers get stuck reading, you know, and they get through one more chapter. So yeah, those of us who prefer books on tape, for whatever reason do often sit there listening. But it is easier to, you know, to have your mind wander and it’s. And it, it’s impossible to multitask while reading, right? You can’t like read two things when you’re listening.

[00:04:09] Howard Hartenbaum
You pull out cell phone, you start doing stuff and then you realize, you stop paying attention.

[00:04:13] David Hornik
Then that’s why you have to figure out, can you pay attention to both or whatever. So anyway, you know, Books on tape. Books on tape, we love them. Just the wish there were a bit. Well, you know, so here’s the thing, right? I went to get Ready Player One on tape. I bought the book. I realized I’d be way better off getting on tape. So I went and searched for it on. And it’s. And it was available on Audible, which is you can only buy through Amazon. So I imagine Amazon must have bought Audible. Do we know that? And Audible is kind of the books on Tape repository. And you can get a subscription or you can buy them individually. And so I decided I didn’t want a subscription. I just buy this book. And it was 32 bucks or something. I assume it’s because Wil Wheaton, who read it, gets some of the money and whatever else. But if I had a subscription, that I could keep getting books. And it’s less than that. And just reminded me how what a machine Amazon is like. They are just slowly but surely capturing every dollar I spend on the planet.

[00:05:10] Howard Hartenbaum
I went into my 2012 account to see. I was curious if I was getting my money’s worth on Prime.

[00:05:20] David Hornik
Yeah.

[00:05:20] Howard Hartenbaum
And I had ordered 111, exactly 111 different orders from Amazon during 2012. So that’s roughly every three days I’m buying something on Amazon.

[00:05:32] David Hornik
That sounds about right. I was having a conversation with one of my kids. We had. We needed something or other. And I said, oh, oh, I’ll order it. And my set. And my kid said to me, oh, you know, it’s funny, you don’t talk about going to the store anymore. It’s not like, oh, I’ll go pick it up. It’s never I’ll go pick it up. It’s I’ll order it. There are very few things other than food. Then in our house, we don’t prioritize. Just go online and get it. Clothing is sort of 50 50.

[00:05:59] Howard Hartenbaum
I stopped at a 711 the other day hoping that they’d have some old Hostess in there because I had a hankering for some snowballs and cherry pie.

[00:06:07] David Hornik
Gross.

[00:06:08] Howard Hartenbaum
And I went into the 711 and I said, do you have any Hostess left? And the guy said to me, no, your only choice is ebay. So I went home.

[00:06:16] David Hornik
The guy at 7:11 said that the.

[00:06:18] Howard Hartenbaum
Guy at 7:11 made me think the only place to get Hostess is ebay. And I went to ebay and I got a cherry pie for $4. 95 free shipping. And I got a snowballs for $8.95.

[00:06:29] David Hornik
Holy cow.

[00:06:30] Howard Hartenbaum
$2.50 in shipping. And now I have them and they’re both expired. And I’m staring at them thinking I should eat them. They’re only like a month expired, but they were.

[00:06:40] David Hornik
I saw you open it and wasn’t it like. But aren’t they like a year old?

[00:06:44] Howard Hartenbaum
No, no, it expired a month or two ago.

[00:06:47] David Hornik
Oh, all right. So it expired in 2012, but those things last forever. So I was just reading something that basically these expiration dates, with the exception possibly of dairy products, are just complete baloney. Like, they’re just food safety hedges, but you can eat these things forever. I’ve had this repeated debate with Pamela, my wife, who I often say, like, it is fine, it’s like it’s canned, whatever, how bad could it be? And she still insists that we get rid of them when. When we discover that it’s crossed over the expiration date.

[00:07:20] Howard Hartenbaum
So here’s a case where you can’t buy something in the stores anymore and you can only buy them online, which was Hostess stuff. And I went shopping for my brother’s birthday and I found something that was really cool and I wanted to go into the store. I was looking at William Sonoma. He has something. He’s not going to listen to this in time, but some handmade wood handled knives, steak knives, which he loves. He likes to collect knives. They don’t sell them in the stores, they only sell them online. So here’s a case where the exact thing that I want, I can’t even go to the store to check it out because it says Internet only.

[00:07:58] David Hornik
I have several that. So over the weekend, it was my daughter’s bat mitzvah and we were setting up for the thing and we wanted these two just very simple lamps for a particular table. And so my son Beckett went online, he was looking for lamps, and he went to Target, he went to whatever. And we found exactly the things we were wanting that we wanted. And it was same thing. It was like online only now, when they can deliver it in three hours, that’s great. But when that’s not the case, then you actually have to go to a store, which was very troubling to have to go to store.

[00:08:31] Howard Hartenbaum
Pretty soon Amazon will deliver within three hours, so it will be okay.

[00:08:34] David Hornik
But here’s the thing, right? It used to be that you couldn’t. If you wanted music, you had to go to a record store, you had to buy it. It would get delivered eventually or whatever. And then, you know, itunes came around and they figured out how to push digital music to you. And so you had to make a choice. You had to choose, do you buy the CD and wait for it, or do you get the digital music and you download it, right? And now Amazon has crushed it. Amazon, when you go to. If you want to buy digital, if you want to buy music and you buy it Anywhere other than Amazon, you’re nuts. Because you can buy the CD in many cases for less than the digital download, but usually for the. At least for the same price along with it. Once you’ve bought it, it automatically gives you a link to download the MP3 files for it instantly. So now you have the MP3 files and then Amazon now has all of them stored in their cloud player. And so you don’t even have to download it. You just, I have a cloud player on their iPhone and I forget, they recently sent an email that said anything.

[00:09:36] Howard Hartenbaum
You had bought in the past.

[00:09:38] David Hornik
In the past, however, on Amazon was being loaded onto your. I, your. Your cloud player. And I went on there and suddenly there were 147 albums that appeared because I had bought them over however many years. Amazing, right? So now I have this incredible storehouse of digital music. And when I, when I talk to my kids and they say I’m gonna buy it, I say, why go to Amazon? Like why? Unless you have iTunes, dollars or whatever.

[00:10:05] Howard Hartenbaum
Amazon, Yeah, I think it’s awesome. Except I don’t see people buying CDs moving forward.

[00:10:13] David Hornik
That may be the case.

[00:10:14] Howard Hartenbaum
I mean, it’s a great thing, but I think that’s a dying breed where, you know, are cars even going to have CD players pretty soon or they’re just going to have USB jacks?

[00:10:22] David Hornik
Yeah, well, still, actually I was in my wife’s old Mercedes and there was a button, I pressed the button like, what is this thing? And it flopped open. And it was a cassette. You know, it’s like, how old is her car?

[00:10:34] Howard Hartenbaum
It’s not like, buy your wife a new car, you cheapo.

[00:10:37] David Hornik
This is her old, new car. Whatever. It’s like an old Mercedes and it was from 2000 and I don’t know.

[00:10:43] Howard Hartenbaum
When it was from another decade.

[00:10:45] David Hornik
Yeah, it may have been right, 2003 or something, but still I had to laugh like, oh my God, I couldn’t even find a cassette if I tried.

[00:10:51] Howard Hartenbaum
And in your other car there was an eight track.

[00:10:53] David Hornik
Yeah, exactly. In the, in my old truck. So maybe that’s true, but even then, let’s say it’s even true and you’ll never buy a cd. Still, the fact that they have this cloud player, so you download it. Right.

[00:11:05] Howard Hartenbaum
That’s the problem with itunes. You get your music and then you lose your phone and you lose your account.

[00:11:11] David Hornik
Yeah. And you forget which thing you authorize and you’re only renting the music and whatever and it disappears. And so again, I don’t care if you buy A CD you still should only buy from Amazon because the cloud player thing is awesome. And they all sit there and then you can upload your own stuff, you could pay and have your own stuff there, but everything you buy from them is automatically there. And that’s pretty awesome.

[00:11:32] Howard Hartenbaum
I think we’re both a bunch of Amazon fans.

[00:11:35] David Hornik
We are Amazonophiles.

[00:11:38] Howard Hartenbaum
Amazonians.

[00:11:40] David Hornik
I think that’s different. An Amazonian is a breastless woman.

[00:11:44] Howard Hartenbaum
That is a very nice.

[00:11:45] David Hornik
Technically speaking, that’s my assessment.

[00:11:50] Howard Hartenbaum
Yeah.

[00:11:52] David Hornik
So did you see my most recent controversial venture blog post, Howard?

[00:11:56] Howard Hartenbaum
Did you use any foul language?

[00:11:58] David Hornik
I don’t think so. I don’t think so. I think I just. I called people, I called someone a moron, but I don’t.

[00:12:05] Howard Hartenbaum
A moron is not a foul language unless you’re being called it.

[00:12:07] David Hornik
Yeah, right, exactly. Then it’s way worse than someone else being called a fucker. You’d still feel much more offended by being called a moron.

[00:12:18] Howard Hartenbaum
I did, I saw it and I tended to agree with your assessment. I just thought you might rile some people up in the process doing that.

[00:12:25] David Hornik
So here’s the thing. So for those of you who have not read Venture Blog, and it is, and shame on you if you are not a venture immediately rating Venture Blog when those posts come out. I read, I read a post from someone else talking about the fact that there were purchases of Twitter shares in the secondary market, apparently from earlier Twitter. Twitter employees at essentially a 10 billion dollar mark market cap cap. So 10 billion dollars.

[00:12:53] Howard Hartenbaum
Nice to be a seller.

[00:12:55] David Hornik
Good to be a seller if you’re one of those early guys and you can now get liquidity even though there’s no public market, there’s no market for these shares. But someone is willing to pay 10 at a 10 billion dollar market cap. Which by the way, just to Clarify, at a $10 billion market cap, if you own 1% of the company is worth a hundred million dollars, right, $100 million. So if you were one of those super early employees and let’s say you just owned a half a point in the company, $50 million at a $10 billion valuation, you can’t blame people for selling.

[00:13:27] Howard Hartenbaum
There must be something going on there though, because you would think that their valuation would have generally gotten a hit with the Zyngas and Groupons and other consumer things, but it seems to have bounced back. So maybe there’s some data in there that says that it’s going great.

[00:13:41] David Hornik
No, it’s not. This is exactly my point, Howard. You, Howard. Ignorance.

[00:13:46] Howard Hartenbaum
I’m Just taking the. You morons say it.

[00:13:49] David Hornik
Yeah. No. So here’s the thing, right? This is the thing. What happened with Facebook, it’s what happened with all these things, which is incredibly constrained. Supply leads to high prices, right?

[00:14:00] Howard Hartenbaum
It’s the government’s fault that interest rates are too low.

[00:14:03] David Hornik
You have nowhere else to put.

[00:14:04] Howard Hartenbaum
Investors have no place else to put their money except into Twitter at a $10 billion.

[00:14:09] David Hornik
I’m looking at it and going, oh, you know, I don’t know if it’s worth 10 billion, but that’s the only way I can get shares. And these are the only shares on the market that’s etc. Etc. Now, the thing that my. So what my blog post basically said is, look, the only way you can be buying shares in the secondary market right now is without full information, right? The. To the degree that the public market is valuable and that these securities laws make sense or whatever it is, because it requires information so that everybody is investing more or less on a level playing field. And so once a company goes public, they list their finances, you know how much they’re spending, you know how much they’re spending. A marketing, you know how much a customer is worth. You see how much revenue they have right now. Now, if you’re buying on the secondary market from someone other than Twitter, So in this instance, these previous employees, like early employees, they don’t know anything.

[00:15:02] Howard Hartenbaum
If they know they want to sell.

[00:15:04] David Hornik
They know they want to sell. If they had information about this, about revenue, they couldn’t mislead you. But if they don’t have the information, then they have no obligation to seek it out, and the company has absolutely no obligation to give it to you. And so. And even if they have it, they’re under an obligation not to share it. It’s confidential information. So these buyers are either trading on inappropriate information they’ve acquired or which may.

[00:15:32] Howard Hartenbaum
Not be factual, which may be wrong.

[00:15:34] David Hornik
They have no way to confirm it, can’t confirm or deny, or they’re buying shares at a $10 billion valuation or without any information. And I have it on good authority that they had no information from the company. So they’re. So one of the. So as I say in the post.

[00:15:50] Howard Hartenbaum
But it makes sense if they think it might go to 11 billion.

[00:15:54] David Hornik
Well, first of all, does it really, does it really make sense to take that kind of risk for the possibility of a 10% gain? In order for them to make 10%.

[00:16:03] Howard Hartenbaum
They’Re betting it’s going to go to 50 billion.

[00:16:05] David Hornik
Okay, 10% of their money. They have to get to 11 billion.

[00:16:08] Howard Hartenbaum
No, no, they’re just, it’s pure speculation. It’s the same thing as somebody digs a big hunk of. You read that thing. What happened in Australia, New Zealand, A guy found this $300,000 hunk of gold. Like the largest, most intricate piece of gold. It’s a beautiful picture. You can dig it up on the web. It’s, you know, about 7 inches high and it looks kind of like a little animal or something. And the guy dug this up. There’s people bidding on it for much more than the price of the gold because it’s, because I think it’s so unique. But the point being, like there’s people I’m sure buying land near where that guy found that hunk of gold. Now just speculating, there’s probably a hunk of gold in their land. They’re willing to pay a lot more. They have no data other than somewhere nearby there was a hunk of gold. And I think that’s kind of a similar thing that’s going on.

[00:16:56] David Hornik
Yes. But here’s the thing. Like it turns out we’ve seen this, right? If you look at history, the recent history of these stock prices, that recent.

[00:17:04] Howard Hartenbaum
Like the past 24 months, past 12.

[00:17:06] David Hornik
Seconds, that hunk of gold turns out to be pyrite. It’s not even frickin gold. It turns out that they bought what they thought was gold and it turned into poop.

[00:17:19] Howard Hartenbaum
So wait, I have a question for you about Twitter.

[00:17:22] David Hornik
Yeah.

[00:17:22] Howard Hartenbaum
So how active is mobile for them right now?

[00:17:27] David Hornik
Oh, it’s got to be everything. They might, I don’t know, I don’t know the specific number, but it’s got to be a huge piece.

[00:17:32] Howard Hartenbaum
When you think it must be. But when I think about Twitter, I still think about all the times I’m reading about it on the web and, and on my desk, on my laptop. I’m not, I’m not, I’m not a huge Twitter user.

[00:17:46] David Hornik
Yeah, I don’t, I mean, I don’t know what the numbers are. Someone listening hopefully does. They can send us an email, but. But I think that it’s a huge piece of. It has been these mobile clients. So you can post. I mean I use the Twitter mobile client all the time, both for consumption and production. So.

[00:18:01] Howard Hartenbaum
Remember when people used to send their tweets via sms? Yeah, it’s like before smartphones they did. Like everybody was. I don’t know if you can. But that was.

[00:18:10] David Hornik
Yeah, I used to do it was the whole point of the link 140 characters. Actually, their mobile client is better because the thing that annoys me about when I go to twitter.com is is when you go to retweet, it just retweets. It doesn’t give you an option between tweet, retweeting or quote tweeting. And I like to quote, tweet and comment. I know this is kind of inside baseball and all, but it’s still. I like the mobile client in that respect. I often. I’m sitting at my desk and have to go to the mobile client so that I can go. Good point. Quote tweet.

[00:18:38] Howard Hartenbaum
Like you think people care about your opinion. Good point.

[00:18:41] David Hornik
They do.

[00:18:42] Howard Hartenbaum
I was thinking about it from, like, the perspective. So think about at&t and T Mobile used to make money on SMS from Twitter when it was young, but now it’s just going over the data channel or maybe even over Wi Fi.

[00:18:57] David Hornik
Totally.

[00:18:57] Howard Hartenbaum
And I’m just trying to figure out, like, there’s been a lot of attacks on the telcos for a long time. And this is just, you know, mobile is just. You think mobile would make them more money? I think it’s making it harder and harder again.

[00:19:09] David Hornik
Well, look at these guys who, you know, they sell. They sell all you can eat plans where suddenly all of this data that’s moving is actually costing them money. And then like you say kik, which.

[00:19:20] Howard Hartenbaum
Or WhatsApp or Voxer, we spent time.

[00:19:22] David Hornik
With the Kik founder. He’s awesome. That guy is like a great entrepreneur. I wish that, you know, you look at these guys as. Came straight out of school. He interned at. At good mobile companies and BlackBerry. Yeah. So he was like. And then he saw an opportunity, made it, made a great app that people get real value out of.

[00:19:44] Howard Hartenbaum
And. And then. And then BlackBerry shut him off because they didn’t like it. And he. He recovered from that. He was for him and he made it work.

[00:19:52] David Hornik
Yeah.

[00:19:52] Howard Hartenbaum
Good for him.

[00:19:53] David Hornik
Yeah, I agree. We applaud you. Nicely done, Deb. And then I get. And then I get a kick from my son Beckett, who’s now 11. And that always cracks me up. It’s like, what? I didn’t even know he had kick on his ipod touch. And sure enough, he’s like, hey, Daddy, where are you?

[00:20:11] Howard Hartenbaum
I’m getting Snapchats from my college daughter. I asked her to stop sending them to me because I’m afraid she might send the wrong one to me.

[00:20:19] David Hornik
You’re paranoid. You should.

[00:20:21] Howard Hartenbaum
No, that’s not something you want to see.

[00:20:23] David Hornik
You should appreciate that your daughter’s communicating I just. So this is like the. My son is off in boarding school. I was looking on Twitter. I followed the head of his school who had said that he’d given the kids the day off. So I texted him, hey, you got the day off. I had this back and forth with him that reminded me that he had bought this thing for me on Fab and that it got crushed when it was shipped. So I had to go to Fab to get reordered. Like our entire life is online. Why am I even looking at you? Why do we even sit in the same room? We need to.

[00:20:55] Howard Hartenbaum
You’re not looking at me. You’re staring at your phone while you’re talking.

[00:20:57] David Hornik
At the same time, we should be. We should do this independently. We shouldn’t have to sit in the same room just so we don’t have to have any human contact.

[00:21:07] Howard Hartenbaum
Let’s talk about E commerce. Speaking of fab.

[00:21:11] David Hornik
What’s E commerce?

[00:21:12] Howard Hartenbaum
Speaking of fab? Think about all these companies that are coming out with like new models of E commerce. And everybody keeps trying to iterate it and try something a little bit different, and it’s not sure where it’s going yet. I mean, that’s the best part of our business, is there’s always somebody else comes in. The one that I saw most recently was Julie Wainwright presented the Real Real. And they are a online consignment shop for luxury women’s goods. Their business model is they send their workers to women’s houses who have bought way too much Louis Vuitton and Cartier and stuff like that that you and I can’t understand. And they will pick like 100, 200 items out of their closet, take it away. They look at it and make sure that it’s real. And then they sell it. So they keep sale.

[00:22:05] David Hornik
They don’t leave it in the house, they take it.

[00:22:07] Howard Hartenbaum
But there’s no inventory cost though, right? And they sell everything through it.

[00:22:11] David Hornik
Well, there’s a little inventory cost, right. Because they have a warehouse, but there’s.

[00:22:14] Howard Hartenbaum
No cost to the inventory.

[00:22:17] David Hornik
So they’re sitting on other people’s inventory.

[00:22:19] Howard Hartenbaum
And they can sell it all through within a few months and they put it on sale and they take 35, 40% cut from the deal.

[00:22:26] David Hornik
So does that count as collaborative consumption, this idea? Or do you have to have something.

[00:22:29] Howard Hartenbaum
That’S called collaborative disposal multiple people can use?

[00:22:33] David Hornik
Right. So this is just. This is just a new way to recirculate purchased items.

[00:22:39] Howard Hartenbaum
Yeah. Would you call ebay collaborative consumption? I don’t think so.

[00:22:42] David Hornik
I don’t think so.

[00:22:43] Howard Hartenbaum
The collaborative implies you’re all doing it at the time. Same. Same time.

[00:22:45] David Hornik
Yeah. I think that you have to research. It has to be something that you have use of. And then you allow others to use, but you regain, you maintain.

[00:22:53] Howard Hartenbaum
So bag, borrow or steal would be collaborative consumption.

[00:22:56] David Hornik
That was one of the first collaborative consumption pieces. I was a big fan.

[00:22:59] Howard Hartenbaum
Public library is the first collaborative consumption piece.

[00:23:02] David Hornik
Thank you, the library. I think you’ve had another example for me, Howard. What was your.

[00:23:07] Howard Hartenbaum
Prostitution?

[00:23:08] David Hornik
Yeah, that’s. I’m not sure that’s consumption. It is collaborative, but live.

[00:23:14] Howard Hartenbaum
So collaborative consumption is one of those terms that means a lot of different things to a lot of people. And everybody tries to stick their thing into that saying it’s it because it’s cool.

[00:23:25] David Hornik
Oh my God, Howard, you left that just hanging right out there.

[00:23:29] Howard Hartenbaum
It came out that way.

[00:23:31] David Hornik
Oh my God. I just.

[00:23:32] Howard Hartenbaum
Inappropriate.

[00:23:33] David Hornik
I’m gonna be a grown up and I’m just gonna move on. We’re just gonna move on.

[00:23:36] Howard Hartenbaum
So I’m thinking about TaskRabbit for example. So TaskRabbit, they call the sharing economy collaborative consumption. I think it’s just they have a bunch of workers and you hire the workers for some period of their day to deliver something for you or build your IKEA furniture for you or whatever. And I don’t feel like I’m collaboratively consuming a part time worker. When I think of collaborative consumption, it feels like a physical item to me. And the trend is towards not collaborative consumption like Zipcar, where the company owns the asset. That’s I would call asset heavy.

[00:24:12] David Hornik
Yeah, I don’t think that’s a consumption. It’s relay rides.

[00:24:15] Howard Hartenbaum
It’s relay rides where it’s asset light, where the item is owned by the individuals who are not completely using up their item. So Netflix might look like collaborative consumption, but the company rent my dvd. No, it wasn’t. Rent peer Flix. Yeah, Pure Flix was more of a, you know, peer shared collaborative consumption model. Unfortunately, it didn’t work. There was too much friction in this.

[00:24:39] David Hornik
But. But Airbnb is for sure collaborative.

[00:24:41] Howard Hartenbaum
Yeah.

[00:24:42] David Hornik
Lyft or whatever. Guys who you have something and I’m, you know, I know that there are people working on it for things like power tools. And that makes a huge amount of sense. Anything where you’d spend more money than you should reasonably spend for a thing you use very little. That’s, you know, if it has to.

[00:24:59] Howard Hartenbaum
Be something you use a lot or like power tools just doesn’t make sense.

[00:25:02] David Hornik
No, I mean that’s the thing. But like, why. How many of us have those heavy duty mixers, the. What are those things called for? For baking? No, you know what, those mixers.

[00:25:15] Howard Hartenbaum
I have one.

[00:25:16] David Hornik
I have one too.

[00:25:17] Howard Hartenbaum
And I use it like once a year.

[00:25:18] David Hornik
It’s like 250 bucks for this thing. And you make cookies once maybe. And then anyway, it’s another one that. Except it’s a pain to go get, but otherwise there’s no reason that anyone should ever own it.

[00:25:29] Howard Hartenbaum
So that’s Pure Flex was kind of interesting because you passed a DVD along because you never intended to use it again. And it’s sort of like renting and passing. So the mixing bowl, for example, you buy it. Once you try it, your options are to throw it away, to keep it, or to sell it on ebay. Those are your choices. If there was a way to just pass it to the next person and kind of share the process. So what I do is I buy stuff like I need a power saw. I buy it, I use it, and then I put it on ebay and I get back 80 cents in the dollar. And that’s my. Because there’s no way to rent it or share it that way. But I love ebay because I sell everything.

[00:26:07] David Hornik
You are. You’re like an ebay fanatic. Well, obviously you just bought frickin Hostess cakes.

[00:26:13] Howard Hartenbaum
Oh, and the guy. So the first guy I bought, I won the auction and he texted me, he messaged me and he said, I’m sorry, I can’t find it. I think my daughter ate it. And he said, would you take a lemon pie instead of a cherry pie? And I said, no, I want to eat the cherry pie. And he said that the other bidders wanted to keep it and enshrine it. And I said, I just want to eat it.

[00:26:41] David Hornik
Other people have far more respect. It was like when they changed the formula of Coke and suddenly everybody was searching around for cases and cases of Coke. Well, it wasn’t for history. It’s just like they preferred the flavor of the old Coke and it was terrible.

[00:26:54] Howard Hartenbaum
And what did Coke learn?

[00:26:56] David Hornik
Yeah, test, don’t be numbskulls and roll out a whole new Coke.

[00:27:01] Howard Hartenbaum
But anyway, the collaborative consumption piece, I think it’s one of those terms that means different things to different people. And it’s still. It seems to have not popping up as many times in venture pitches lately. But you know, six months ago, there was seven collaborative consumption pitches in a month.

[00:27:17] David Hornik
Totally. We saw. I saw a great company, really great entrepreneurs. I enjoyed, and they were working on Collaborative consumption around bicycles. And then I saw another really great company with really great entrepreneurs working on collaborative consumption around bicycles.

[00:27:33] Howard Hartenbaum
I’m mentoring a group at Stanford who’s doing collaborative consumption around bicycles really well.

[00:27:40] David Hornik
So there you go. It’s well, well worn.

[00:27:42] Howard Hartenbaum
So what I said to them is go to Google, get them to buy all the bikes and logo them and give them, and give them and put them all over the Stanford campus. And that’s the way Google can get their advertising all over the campus.

[00:27:54] David Hornik
That’s clever. So I heard some statistic that Google loses some number of thousands of dollars in bikes on their campuses a day. And I forget what the number was but thousands of dollars if stolen bikes a day.

[00:28:09] Howard Hartenbaum
Those are ugly bikes but you know.

[00:28:11] David Hornik
But the thing is, right they need, they need to be freely accessible so they’re just sort of out there. So people show up, they take them, they ride them off or whatever. But Google thinks that hey look, let’s say it’s 2,000 bucks a day. It’s still, that’s a lot of money over the course of a year, but still way better than trying to figure out how to manage getting people around and all of that.

[00:28:31] Howard Hartenbaum
So I’ve never seen a bicycle shaped like a Google bicycle that’s like been repainted or anything. Maybe they like ship them off to another country or something.

[00:28:39] David Hornik
Yeah, I don’t know. I don’t know. Like how often do you see, what do you know, like how often are you looking, seeing bikes that are for sale go to ebay and see if.

[00:28:50] Howard Hartenbaum
Their bikes look different. I know different.

[00:28:52] David Hornik
I know, but you know, you live in whatever, wherever you live, Los Altos or whatever. I mean it’s not like you’re people riding around with their stolen Google bikes. That’s not. Pretty sure that’s not the market for the stolen Google bikes. Probably. Maybe not. Maybe.

[00:29:06] Howard Hartenbaum
So is that collaborative consumption of Google bikes?

[00:29:09] David Hornik
Yeah, right, exactly. We’re collaborating with Google by stealing their bikes.

[00:29:14] Howard Hartenbaum
Nice.

[00:29:15] David Hornik
I just had a conversation with one of my companies that I thought was interesting. The founder of the company said you know what, we’re getting serious. We’ve decided this is.

[00:29:25] Howard Hartenbaum
We weren’t serious before.

[00:29:26] David Hornik
Right, exactly. Those tens of millions of dollars we spent up until now. We have a goal is to make this a hundred million dollar business hardened hundred million dollar revenue business in X number of years. We’re focused, we’re lean and mean and you know, on the scene or whatever. And I think if we are going to be serious about this and focus that we should maybe Start feeding our employees. I think maybe.

[00:29:50] Howard Hartenbaum
Where’s their office? We can introduce them to EAT Club.

[00:29:52] David Hornik
I told them all about EAT Club. I said then I did have to admit that, you know, that we had a vested interest. But you know, I just said it was just an interesting conversation. Right. Because the theory, because the theory is, okay, you know, you can. People will spend more time in the office and they’ll be more productive, whatever, or maybe they’ll just. You’ll be able to recruit more people or they’ll feel more loved or whatever. But how much is that worth? Right? How much is that time worth? How much is it worth? Because it’s not inexpensive to feed a company of 100 people or whatever every day. Right.

[00:30:29] Howard Hartenbaum
It’s a thousand bucks a day.

[00:30:31] David Hornik
What is it? So 10 bucks a person. So. But that’s not. That’s seven. That’s 5,000 bucks a week.

[00:30:37] Howard Hartenbaum
True, but people on average, eating at their desks, it only takes 20 minutes. And when people go out to eat, eat, on average, it’s a little over an hour.

[00:30:45] David Hornik
So you’re saving 40 minutes. Sorry, that’s. Yeah, 40 minutes a day per employee.

[00:30:50] Howard Hartenbaum
And what do you pay employees?

[00:30:52] David Hornik
I don’t know. More than 10 bucks.

[00:30:53] Howard Hartenbaum
It’s worth it.

[00:30:54] David Hornik
More than 20 bucks an hour, right?

[00:30:55] Howard Hartenbaum
It’s worth it. Yeah.

[00:30:57] David Hornik
All right.

[00:30:58] Howard Hartenbaum
It makes sense. And they have gluten free and they have vegan and they have.

[00:31:02] David Hornik
Right.

[00:31:03] Howard Hartenbaum
They have different.

[00:31:04] David Hornik
They have all sorts of things. That’s good. I like that.

[00:31:07] Howard Hartenbaum
We should talk Michael Mina into doing something with it.

[00:31:09] David Hornik
Michael mean, I’m off. So I, I turn 45 momentarily. In a few days, I feel ancient. And so in a, in a moment of complete shock to me, my wife said, well, why don’t we go to Las Vegas for the weekend?

[00:31:25] Howard Hartenbaum
And you agree?

[00:31:25] David Hornik
For your birthday. I thought she hated Las Vegas, but I discovered that actually it’s really just about the restaurants. It’s like we’re not gonna, we literally will not gamble. We will run through the casinos. But we’re gonna go to go to Michael Mina and have a. Which you know, of course there is one in San Francisco. So that does beg the question, why would you fly to Las Vegas for Michael Mina? But. But yes. So if he could do something, that’d be pretty awesome. I wonder what you could get for 10 years.

[00:31:53] Howard Hartenbaum
He’s an awesome entrepreneur.

[00:31:55] David Hornik
Really is. Totally.

[00:31:56] Howard Hartenbaum
He’s awesome. I said, for all those who don’t know, he came and cooked for David’s.

[00:32:01] David Hornik
All right. Who is he now? Michael Mina is one of the top chefs in the country. He just got a Michelin star for his flagship restaurant in San Francisco called Michael Mina. And you were saying? I’m sorry.

[00:32:15] Howard Hartenbaum
Yeah. So he cooked for David’s lobby conference. And I was fortunate enough on the plane to sit next to him on the way back and had a nice conversation. And I learned that he’s running 19 different restaurants in different locations. He’s serving thousands of meals per day and he’s an awesome entrepreneur. He’s not an IT entrepreneur. He’s building an empire of high quality restaurants.

[00:32:43] David Hornik
True. But you know what? You know how he does it? He has a website and every recipe. If you want to cook a new recipe at. Well, he’s doing that. He has a new thing that he’s launching. But in his own restaurants. Every new rest, every new recipe must be recorded, filmed. You have to list exactly the ingredients, whatever, so that once it’s on the system and it’s. And it’s successful, then other restaurants can replicate it. Here you have to show how it’s plated.

[00:33:16] Howard Hartenbaum
You have to show intranet.

[00:33:18] David Hornik
So he has. I don’t know if it’s. I assume it’s closed because otherwise people could use it. Right.

[00:33:22] Howard Hartenbaum
Don’t they call that an intranet?

[00:33:24] David Hornik
Yeah, they called it an intranet in like 1984 when you had to.

[00:33:29] Howard Hartenbaum
1999 intranet.

[00:33:31] David Hornik
When do we use Apple Talk to network together?

[00:33:34] Howard Hartenbaum
All three computers, the intranet and the extranet. Remember those words?

[00:33:39] David Hornik
Yes, I do. I’m telling you, this book, ready player one, it’s about the 80s. And so you have all these references to the early 80s computers. What was your first computer?

[00:33:49] Howard Hartenbaum
Mine was the. Probably the.

[00:33:53] David Hornik
Do you have a Trash 80 or a Trash 80? Yeah. So there were lots of references to the TRS 80. They have references to the Apple II. We had an Apple, I had Commodore 64. But we had. But the one I kept waiting for them to reference was the Colecovision. Do you remember Colecovision? Colecovision was like the Atari competitor that was slightly better. I thought it was slightly better most of the. Because we had a Colecovision. We used to. My brother and I used to play the Smurf game, which was completely awesome. Anyway, and then they made a little computer add on where you could connect up a. Your tape player to be the. To be the tape drive and all. So it’s super fun to read this book because it’s all these references to these ridiculous old games that, that I’m sure you played. It’s a lot of nerdery whole lot of like Dungeons and Dragons. Dragons references.

[00:34:40] Howard Hartenbaum
I didn’t play Dungeons and Dragons.

[00:34:41] David Hornik
You never played it?

[00:34:42] Howard Hartenbaum
Nope. I don’t like that game.

[00:34:44] David Hornik
Oh, you were in Malibu.

[00:34:45] Howard Hartenbaum
I used to like to go to the video arcade and put quarters in and play like, you know, the Star wars game or Tron or stuff like that.

[00:34:53] David Hornik
Well, they have a great reference to Robotron. Did you remember Robotron had the two joysticks?

[00:35:00] Howard Hartenbaum
My favorite one of all time was Star Castle.

[00:35:02] David Hornik
Was it? That was a good game. Mine iced it. Think Donkey Kong is sort of the classic. But anyway, lots of good references in this book. I enjoyed it.

[00:35:11] Howard Hartenbaum
I heard Warren Packard who runs a company called Thuuz a sports Internet game. A sports Internet site. He has some classic video game arcades in his house.

[00:35:24] David Hornik
Does he?

[00:35:25] Howard Hartenbaum
He lives in U.

[00:35:26] David Hornik
Z. I know exactly where he lives.

[00:35:28] Howard Hartenbaum
We should go down there and ring the doorbell one day. Yeah.

[00:35:30] David Hornik
What has he got in there?

[00:35:31] Howard Hartenbaum
I heard he’s got like all the classics.

[00:35:32] David Hornik
Oh, we should go play. I’m sure you wouldn’t mind, right, Warren? We’re coming over. He’s. He’s set up shop. I know.

[00:35:39] Howard Hartenbaum
Wait, wait. Let’s dig out his address and tell everybody.

[00:35:41] David Hornik
Yeah. All right. Here’s where you go.

[00:35:43] Howard Hartenbaum
I might have it right here in my smartphone.

[00:35:45] David Hornik
All right. I don’t want to. I don’t want to say specifically, but let’s just put it this way. He is very close to an elementary school. He lives near to a CEO of a very important Internet company. He. He lives two doors down from the head of business development for another interesting and important Internet company. Is that enough?

[00:36:08] Howard Hartenbaum
I’ll just give you the address. I’ve got it right here. No, sorry, Warren. We’ll just come over and ring the doorbell tonight. He has a beautiful house, by the way.

[00:36:16] David Hornik
Thu’s must have been, you know. So Thu’s is basically the like big moments you. You can track and it’ll show you when the big moments in any game happen.

[00:36:23] Howard Hartenbaum
You can watch an entire game like this Super bowl in 47 minutes or whatever you could.

[00:36:27] David Hornik
Oh, look, there’s the run back.

[00:36:29] Howard Hartenbaum
Only 11 seconds.

[00:36:31] David Hornik
11 seconds is all that took for to end the 49ers.

[00:36:35] Howard Hartenbaum
That was horrible.

[00:36:36] David Hornik
Oh, poor things. But anyway, so I bet you it was a good day. Probably good, good, good viewing for the. Thus the enthusiast. It’s good stuff. My buddy, the head of the UI and I guess he’s probably had a product or whatever was. Is a good friend of mine who used to do all the UI stuff. For Pandora. So he did awesome stuff for Pandora. Really transformed how people thought about Internet radio. And now he’s busy building, helping to build this Thuze app, which is cool. It’s good. We’ll be over, gentlemen, any second now. Listen, they’ll be barring the doors.

[00:37:14] Howard Hartenbaum
Yes. Because we do have a meeting coming in.

[00:37:16] David Hornik
Yeah, we have to meet. Actually, you know what we have to do right now is go meet with one of our LPs, our limited partners.

[00:37:22] Howard Hartenbaum
These are the investors, our customers.

[00:37:23] David Hornik
They are our customers. We have two sets of customers, we have entrepreneurs and we have limited partners. First, the limited partners, they give us enough money that we can then go invest in entrepreneurs.

[00:37:37] Howard Hartenbaum
What other businesses have such kind of. So different groups of customers and they’re kind of interconnected like that. Nothing pops to mind.

[00:37:48] David Hornik
Yeah, we’ll think about that. In between now and the next, venture.

[00:37:51] Howard Hartenbaum
Capital, like a big auto company, they have customers and suppliers.

[00:37:55] David Hornik
Yeah, we have suppliers. Aren’t there? But yeah, their suppliers aren’t their customers.

[00:37:59] Howard Hartenbaum
No, that’s like vendors and customers. We have customers and customers.

[00:38:02] David Hornik
Yeah, we have two buyers and that’s an interesting thing, right? Do you have two sides where one’s a seller, one’s a buyer, but two buyers? We are. In many ways it’s the same thing. We’re like Victo. It’s a two sided marketplace and we are. And we are in the middle of it.

[00:38:20] Howard Hartenbaum
We’ll have to think about that and maybe come up with something more intelligent next time.

[00:38:23] David Hornik
That’s tough to maintain. All right, well, hey, thanks for listening to venturecast. I have been and remain David Hornik of August Capital.

[00:38:32] Howard Hartenbaum
And this is Howard Hartenbaum of August Capital.

[00:38:34] David Hornik
And we wish you well as we eat our very strong year old Hostess cupcakes.