Generated Transcript

[00:00:14] David Hornik
Hello and welcome to Venture Cast. This is David Hornik of August Capital.

[00:00:18] Howard Hartenbaum
And this is Howard Hartenbaum, also of August Capital.

[00:00:23] David Hornik
And this is what may have been the shortest time frame between Venture casts in quite some time.

[00:00:29] Howard Hartenbaum
Well, I think we did the last one like a month or two ago, but you just posted it this morning. So it’s gonna feel, if we post this one right away, then it will feel like it was short.

[00:00:38] David Hornik
It’ll feel that way. But no, we. No, it wasn’t a month ago. I think it was like at most three weeks ago.

[00:00:44] Howard Hartenbaum
We should call this show Old News.

[00:00:48] David Hornik
Why don’t we tell you about something? Yeah, let’s talk about something that happened at the end of last year.

[00:00:52] Howard Hartenbaum
Just so you know, in the end of 2008, the Agada BE was collapsing. Did you know that?

[00:00:57] David Hornik
I did know that. I remember because we were raising our A fund.

[00:01:02] Howard Hartenbaum
That’s right.

[00:01:03] David Hornik
That was a terrible time.

[00:01:04] Howard Hartenbaum
And the new president was coming on, the stock market rallied and then when he was the president inaugurated, he said, oh, things really are as bad as we thought they were. And then the stock market went down even further, went down again to a much lower point, but it’s come back up.

[00:01:17] David Hornik
It’s like at an all time high.

[00:01:19] Howard Hartenbaum
That’s a whole different problem.

[00:01:20] David Hornik
It’s unbelievable. I heard the story on npr, I imagine, because that’s the only place I hear any stories, you know, someone talking about, you know, what people who are putting money in, in IRAs and that the fact, even though they’re gaining a teeny bit of money in their IRAs, that they’re losing money because the IRAs are making less money than inflation. And so the adjusted, you know, gain on these IRAs is negative. That’s brutal.

[00:01:50] Howard Hartenbaum
Well, that’s a whole fundamental flaw in like the taxation system. If you bought, you know, $100,000 house 20 years ago and you sold it today for $150,000, you’d have to pay tax on that $50,000 gain, whether it was stock or a house or whatever. But your money’s actually only worth like 70,000 today because there’s been inflation the whole time period. So. So non inflation adjusted taxation. That’s really a screw.

[00:02:20] David Hornik
Yeah, but can you imagine then like the tax code, can you imagine the tax code we did that you thought.

[00:02:25] Howard Hartenbaum
It was bad before and of course.

[00:02:26] David Hornik
This guy was saying like, oh, I have all sorts of alternatives for you. But the reality is that the reason it’s that way is because the Fed has lowered the interest rate so low that The. That the value of savings have approached zero. So you can buy a house, you know, but. But that’s about it. Someone was saying to me, I should take out a mortgage on my house at whatever the 2% or whatever you can get now, and then buy some stock that has a 5% dividend, and I’ll make 3% on the bank’s money, and I’ll pay, and it’ll be tax deductible.

[00:02:58] Howard Hartenbaum
And if the bank goes under, then they just get more money from the taxpayer to pay it off.

[00:03:02] David Hornik
Exactly. That hasn’t happened in a while.

[00:03:04] Howard Hartenbaum
This is not a political show.

[00:03:08] David Hornik
I’m just describing what I heard on npr.

[00:03:11] Howard Hartenbaum
I like npr. They were talking about. They had a show on the 16 motivations for people, which was quite entertaining. Talking about things like fixing social injustices or curiosity or revenge. I mean, it’s a whole list. And so I sat down at dinner with my family, and we all learned that we’re all driven by different motivations. Like, some things I care about, like other people don’t like. For you, David, curiosity is really high on the list. And for me, I believe fair is really important. And I couldn’t decide if fair was solving social injustice or being vengeful. But they are two different things. Right?

[00:04:02] David Hornik
Right. So is it eye for an eye or is it give everyone opportunity? Yeah, those are different. Right.

[00:04:08] Howard Hartenbaum
I’ve decided that. For me, it’s, it’s. I, I think that there should be social justice, that things should be fair and people should be treated reasonably, but when somebody does something very wrong, they should just be punished under the law and not beaten to a pulp.

[00:04:25] David Hornik
So you have. Have some appropriate punishment. You, you, you apply it fairly and quickly and move on with your life.

[00:04:31] Howard Hartenbaum
Yeah.

[00:04:31] David Hornik
When they’re done, they get to have a clean slate and come back out and behave until they breach whatever expectations there are again. And then you punish them again.

[00:04:40] Howard Hartenbaum
Right. And so I would think revenge, having that as a motivation is. Is more the type of person who holds a grudge. He may never actually, you know, get revenge, but will just be pissed forever that something happened and never forgive the person. Like, for me, you punish them and you say, okay, you’ve been punished. Now just don’t do it again.

[00:04:58] David Hornik
That’s it. That’s that. Move on. Well, we just had this conversation because we were in this pitch and we were hearing this story of this entrepreneur who now, you know, this is one of those moments. Howard and I, our job is to.

[00:05:12] Howard Hartenbaum
Wait for this guy.

[00:05:13] David Hornik
Is to wait for this guy. It’s to sit around and hear pitches all day. Now, don’t get us wrong. This is not a, like, terribly laborious job. We enjoy it. You get to hear all sorts of interesting stuff, but various people are varying degrees of interesting and good pictures and all these things. And so over the course of the year, what you and I probably see a hundred or listen to 100 or so stories a year, right? Don’t you think? What do you think?

[00:05:40] Howard Hartenbaum
You see a few hundred? I meet three or four a day.

[00:05:43] David Hornik
You meet three or four. Not every day, though.

[00:05:45] Howard Hartenbaum
Almost.

[00:05:46] David Hornik
Wow, you’re crazy.

[00:05:47] Howard Hartenbaum
I ate last Friday.

[00:05:48] David Hornik
That’s. What? That’s not even possible.

[00:05:50] Howard Hartenbaum
Yeah, it was a busy day.

[00:05:51] David Hornik
That’s ridiculous.

[00:05:52] Howard Hartenbaum
These are actual meetings. Sometimes are half an hour, Sometimes some were half an hour.

[00:05:58] David Hornik
All right, so let’s say that people aren’t as crazy as you are. Let’s just say we’ll call it five. Five a week.

[00:06:05] Howard Hartenbaum
Let’s all say ten.

[00:06:08] David Hornik
Fine, you do ten a week.

[00:06:09] Howard Hartenbaum
Mine’s bigger.

[00:06:09] David Hornik
And you’re gonna do what, 50 weeks, whatever. 48,000. 4800. Anyway, who cares? It doesn’t matter.

[00:06:17] Howard Hartenbaum
480.

[00:06:18] David Hornik
I’m sorry, 400. 480 what?

[00:06:22] Howard Hartenbaum
Anyway, to get to the point, I.

[00:06:24] David Hornik
Meant over 10 years.

[00:06:24] Howard Hartenbaum
So I’ve been doing this. We’ve both been doing this about 10 years, plus or minus a few years.

[00:06:29] David Hornik
So we have somewhere like 5,000 meetings, a piece that we’ve been through, and.

[00:06:33] Howard Hartenbaum
This was the 1 in 10,000.

[00:06:35] David Hornik
This literally was the best, the most.

[00:06:38] Howard Hartenbaum
Exciting conversation I’ve had ever before we heard the pitch. It was just learning about the guy was so compelling that we were like, would you like to come in and pitch the rest of our partners on Tuesday?

[00:06:51] David Hornik
Now, we’re still giddy about this now. You know, the funny thing is that doesn’t mean we’ll necessarily fund him. Right. Despite the fact that, honestly, you and I are in agreement that in our, you know, that you’re 10 plus years. Of my 10 plus years in the venture business, this was the most interesting person, person and conversation we’ve had over.

[00:07:13] Howard Hartenbaum
An hour and real entrepreneur ever. No, no argument.

[00:07:18] David Hornik
I mean, now you and I have the exact same reaction, which is we should fund him. Isn’t that your sense? Like, you get done with that meeting, you and you say, and. And I talked about this. Like I’ve talked about this before. At the end of the day, I always have the same measure, which is I go home and if I worry about other things and I go to bed and I don’t think about a pitch, and I wake up and I don’t think about a pitch. It’s pretty much done. Right. I am going to do exactly what you are going to do, which is I am going to go home and I am going to tell my family about this conversation.

[00:07:48] Howard Hartenbaum
We were just commenting. We should just interview him on the podcast.

[00:07:51] David Hornik
We will.

[00:07:52] Howard Hartenbaum
So the person. The person who introduced us to him in the email said, you should meet this guy. He’s a rock star. And I responded back to that person today. I said, he’s not a rock star. He’s the King of Pop.

[00:08:05] David Hornik
He is fucking Michael Jackson.

[00:08:07] Howard Hartenbaum
There is only one Michael Jackson. And in a partnership, you’re often a little bit cautious in how you introduce somebody to your partners because you don’t know how they’ll react, and you don’t want to ever oversell someone. And what did I put in the email to the partnership today? He’s.

[00:08:24] David Hornik
I don’t know. I have to look it up. Because I do keep talking. I’m looking it up.

[00:08:28] Howard Hartenbaum
So I write the email to the partnership to try and tell them, you know, oh, I’d like to invite this guy in for a meeting on Tuesday. But this isn’t like I’m going to invite him in. He’s already coming here.

[00:08:37] David Hornik
David and I met with a guy today. He was one of the most impressive entrepreneurs I’ve ever met. That’s like, by the way. But we’ve just set ourselves up for failure. These guys are going to hate him. It’s never going to happen. But at least we were both there. This is sort of like seeing, like, the greatest thing ever, and you’re the only person there.

[00:08:58] Howard Hartenbaum
Wait a second. No, this is worse. This is. These poor. Our poor listeners are thinking to themselves, this is like some. My mom said, there’s this beautiful woman around the corner I met for you. She’s really beautiful. I can’t describe how beautiful she is. You will marry her. She is so beautiful. And the other guy’s like, yeah, so what? So anyway, we’ll bring him on next time and interview him, and you will see what we.

[00:09:22] David Hornik
Yes, that’s true. And I think that’s totally fair. It’s a totally fair point that we’re.

[00:09:25] Howard Hartenbaum
Because we know what he looks like.

[00:09:26] David Hornik
We met this guy, and he’s so great. Okay, but let me just say this to you. This is an entrepreneur who grew up without electricity. He grew up with no electricity and built the first ISP in his country before he turned 20. That’s crazy.

[00:09:47] Howard Hartenbaum
Yeah.

[00:09:47] David Hornik
Howard what were you doing before 20?

[00:09:49] Howard Hartenbaum
I’m embarrassed to say I was doing.

[00:09:53] David Hornik
You and I were in college, hoping upon hope that any girl would not think we were dorks. That is all we were doing. At the age of 20, this guy had already built the biggest ISP in his country, having left his home to claim opportunity, while you and I grew up in upper middle class homes that had electricity with electricity, where we were expected to go to school. And we did.

[00:10:21] Howard Hartenbaum
This guy reminded me of a friend of mine who’s in China, who’s one of the senior professors at Tsinghua University. And he was so poor when he was young, he was telling me what life was like. He lived in a mud shack. And I said to him, no running water, no electricity. And I said, well, how did you bathe? And he said, in the summer we would wash in the river.

[00:10:45] David Hornik
Yeah, it’s just unbelievable, right?

[00:10:47] Howard Hartenbaum
It’s a different experience than we have before.

[00:10:49] David Hornik
Do you know any other entrepreneurs who kind of come from such humble beginnings? I mean that, you know, huh. Anyway, so, yeah, we apologize. We apologize for talking about a guy in ways that are of no value to you other than to say that if you get VCs ever talking about you like this, you’re gonna get funded. That’s just how it goes. Mark my words, you will get funded. Oh, we have someone at the door. It’s Dave Marquardt. You want to join us in our podcast, Dave? No, he does not.

[00:11:19] Howard Hartenbaum
The best entrepreneur I’ve ever seen.

[00:11:21] David Hornik
Yeah, Dave Marcourt just poked his head.

[00:11:24] Howard Hartenbaum
He just quoted the email we were talking about. Are you going to be here for a while? Yeah, we’ll come talk to you anyway. And let’s talk about something else.

[00:11:33] David Hornik
Let’s talk about.

[00:11:34] Howard Hartenbaum
Let’s talk about Tumblr. So Tumblr is an interesting phenomenon, to say the least. Starting up, it was a service that youth used and I did not. And my kids were not exactly the right age to tell me that I should be looking into this and I missed it and shame on me. But that being said, well, but let’s.

[00:12:04] David Hornik
Be clear about this, right? This is what’s so interesting. We funded Six Apart. Six Apart was the, at the moment, the market leader in blogging. Sometime after that, WordPress started getting large and interesting and it got funded. So now you have 6 apart, you have WordPress, you have Blogger 6 apart then goes and creates, spends two years building this incredibly beautiful, elegant platform called Vox. No one used Vox. Hundreds of thousands of people use Vox. It was nothing. Then emerged these Two things, Tumblr and Posterous and people funded them. I thought what in the world are you doing? We already have Blogger, we already have WordPress, we already have 6 apart Vox didn’t work. Why is this different? Why would people suddenly use this thing instead of these other things? And what’s more, essentially Tumblr imposterous were the same thing. And yet Tumblr crushed Poster Poster got sold to to Twitter. I think it was an aqua hire. I don’t know, I wasn’t involved.

[00:13:16] Howard Hartenbaum
But so you’ve heard the saying in our business, too early, too early, too early, too early, too early, too late. And Tumblr hit it exactly at the last too early and sold right before too late. And the other companies were just too early in the cycle. And so I just say timing is so important.

[00:13:40] David Hornik
So you know, I think the Tumblr people would say no, we nailed the product, right? This was about short form, easy sharing and, and that you could subscribe to a feed and all that stuff. Right?

[00:13:53] Howard Hartenbaum
You know, true, but I think that’s a timing issue because they had less features and they had social sharing which WordPress was just too early for. And had WordPress started later and hadn’t built out the product so much and was much, maybe it would have been it.

[00:14:08] David Hornik
Well, and I just had a back and forth over Facebook with a former six aparter about this because he basically said why didn’t Vox, why wasn’t Vox this? And actually during the time that Vox was rolled out, I remember having a conversation, may have even been with Reid Hoffman and some others about just make it about photo sharing. And in the early days of six part we tried to buy Flickr and Flickr decided to sell to Yahoo instead.

[00:14:35] Howard Hartenbaum
For only 27 or 30 million.

[00:14:37] David Hornik
Yeah, small amount of money, great outcome for the founders who were ready to let the company live in a bigger institution or whatever. But yeah, Flickr had gone on, it could have been quite big and all these things. So. And they are all timing, right? Like I don’t know. Look, neither you nor I are on the Tumblr board, so we don’t know. But we. But Sand Hill Road is a little bit of a gossip fest. And so the word on the street is.

[00:15:06] Howard Hartenbaum
But, but interestingly in this Sand Hill Road gossip festival, numbers don’t seem to change. Like people don’t increment the story each pass around it tends to be like that company’s burn rate is X and if you hear it like it goes through eight people and it gets back to you it’s still the same number.

[00:15:23] David Hornik
Yeah. It’s not like telephone, where things get more and more discombobulated over time. So the word on the street was that Tumblr was actually running out of money, that they had a very high burn, that they had not sorted out monetization, and that they were running out of money. And yet Yahoo paid over a billion dollars for the company cash. Now, we. This was the same thing was true of YouTube. Right. When YouTube sold to either to Google and Yahoo and Google were in this sort of bidding war, not only was YouTube out of money and needed to raise money, but they had a huge amount of debt, so they were in big and being sued by everyone. So on the one hand, it was like a hugely important company and growing quickly, and on the other hand, it was a giant smoking hole if no one had taken it on.

[00:16:12] Howard Hartenbaum
Hotmail was the same way. Its costs to run the service were so high, If Microsoft hadn’t bought them, they probably couldn’t have raised money and would have gone under.

[00:16:21] David Hornik
So you kind of look at these.

[00:16:22] Howard Hartenbaum
Businesses and you say, go for it or go home.

[00:16:26] David Hornik
Yeah. And look, if you’re Bijan Sabat and you from Spark and you put that early money in, good for you. It’s a fantastic outcome and I give you huge kudos for being, you know, thoughtful and early. But, you know, it’s a big. It is a game of chicken. These. We’re gonna go for growth and not worry about it. Right. If Twitter hadn’t raised as much money as it’s raised, it wouldn’t have had enough Runway to get to monetization. Now, my understanding is that they’re doing quite well now on the monetization front, but boy, big infrastructure costs. They’re growing quickly. I just had a conversation today about Pinterest where Pinterest raised a ton of money. And they feel that that has given them the opportunity to take time to build out the product they want to build instead of simply throwing a bunch of ads on the thing. But it’s just a very interesting thing that you. That you would sell a company for a billion dollars that may have been out of business six months later. Six months later, right. For sure. YouTube, if it hadn’t been able to raise money, would have been out of business. It would have been a catastrophe six months later. But it wasn’t. Same thing with Blogger, by the way. Blogger was done, but Google decided to buy it and Evan team went and built it in Google.

[00:17:43] Howard Hartenbaum
Can you think of any that were at that level and went under and didn’t get bought, but could have just as easily been bought.

[00:17:53] David Hornik
Well, I mean, I hate to pick on Digg, but Digg was certainly in that category of it had been growing quickly, not worried terribly about monetization because it was growing and big and interesting and then, you know, ended up getting. Ended up being acquired for much less than one might have thought.

[00:18:09] Howard Hartenbaum
Unfortunate.

[00:18:10] David Hornik
Yeah, yeah. Or, you know, I mean, we’re investors in Technorati and Technorati, again, was exciting and interesting and was growing quickly. And then it just. The world shifted in ways where it no longer made sense. So it’s just, I think that it reminds me, I was having lunch today talking with someone, Pinterest.

[00:18:31] Howard Hartenbaum
I wonder what happens there, because that’s sort of in the boat where they’re not monetizing a lot. They have a high valuation, they’ve got a burn. Somebody may buy them for a few.

[00:18:39] David Hornik
Billion dollars or not, you know, or fab. Growing super quickly and, you know, spending a lot of money to, to get to lots of customers. And, you know, I mean, just rapidly growing companies have big expense lines because they’re growing quickly. Right. The truth is that this is exactly what venture capital is for. It’s for giving leverage so that you can build a big business. And you get to make choices. You get to choose growth over, over, over monetization because you have the capital to do it. In fact, last night I wrote a post, I wrote a comment on a Facebook post because a friend of ours had written, you know, I’m so tired of these, these attacks on education and going to college. You know, it’s ridiculous, right? And then someone writes in, in the comments, it’s basically, it’s just a big VC conspiracy. The VCs are trying to take advantage of kids by forcing them to build businesses at huge risk to themselves because of the value that they could create or whatever. And I just think, and I comment, I said, you know what? That’s just tired. It’s just not true. Right. It’s not the case that we are any more interested in you, you know, blowing up your life than we’re interested in companies blowing up their, you know, their experience. At the end of the day, we’re just trying to provide optionality, which is you have the optionality to like build something big if you have capital and you have. And if you don’t, it’ll. It might be successful, but it’ll grow more slowly.

[00:20:13] Howard Hartenbaum
Well, the whole concept of risk at that stage I think is very blown out of proportion. I mean, I Met entrepreneurs who have mortgaged their houses, ran up their credit card bills, lost their spouses, and taken huge risk and succeeded, or not succeeded and dealt with the fallout afterwards. But if you’re coming out of college and you haven’t had a job before, and you go and you start a company and somebody gives you some money and you take a modest salary for a couple of years while you’re trying to get off the ground, I think risk can sort of be measured by if it doesn’t work, what were the ramifications of that? And many of the companies, the great majority of the companies that are started with kids right out of school, I think they actually take zero risk. I think that they’re doing something very interesting and they have huge upside potential. But I look at risk as if there’s a risk. If you lose that, something bad happens as opposed to if it doesn’t work. It was a decision. It was an opportunity cost.

[00:21:09] David Hornik
Well, that’s the thing, right this. I’ve had lots and lots of conversations where people say, like, should I go to business school? You know, it’s not that I care about paying all that money, but I think there’s a huge opportunity cost because now is the moment in time and whatever. And I always sort of have the same reaction, which is what the opportunity cost when you’re in your 20s is. Is incredibly small. Right? I mean, you know, think about that. It’s. With the possible exception from 1997 to 1999, when literally you had the capacity to turn air into gold in ways that haven’t existed since the actual gold rush, the opportunity cost of taking a few years to meet a bunch of people and do something interesting is incredibly low.

[00:21:52] Howard Hartenbaum
I had one entrepreneur about a year ago saying to me, I have this great idea, Howard. I don’t know what to do. Either I could take the job at McKinsey Consulting that they offered me, or I could take a lot of risk and start a company. And my reaction was taking the job at McKinsey is the risky choice. They’re like, what do you mean? And I said, you’ll be taking it in a job. You’ll miss the opportunity of starting this company that you have a great idea that has good timing. You’ll be in a job that pays. Pays you modestly to well. And four years later, unless you really want to be a consultant your entire life, you will be worse off. Sorry, mackenzie, I didn’t mean to debut.

[00:22:31] David Hornik
That may be a little more harsh than.

[00:22:34] Howard Hartenbaum
But they thought that it was risky to start the company. I was like, no, it’s risky to take the job you don’t want.

[00:22:39] David Hornik
Look, here’s the deal because I advise a lot of undergrads, I’m a freshman advisor. I saw this this summer where, where one of my kids was trying to decide between going to Microsoft or taking an internship with Pay near me, one of our companies. And I said, look, you totally should go to Pay near me, in part because I have a vested interest in it, but mostly because it’s a much more interesting environment for you. You’re going to be working with these incredibly smart people very closely. And the other program, while having a great name, is more like a summer king, right? I mean you’ll go, there’s an organized program, whatever. And. But in the end his parents basically said, look, his parents, this was a kid who I believe is a first generation college student. And his parents said, why would, I don’t understand how you could go work for something I’ve never heard of when you have the opportunity to go work at a Microsoft, you know, so people have different measures of risk and appropriateness. And I say this all the time to my, to my students, particularly ones leaving law school, where I say, like, there’s incredible opportunities, do interesting things unless you can’t afford it. You know, like it’s easy for us to say you should do this, but if you have a lot of loans or you actually have a family you’re supporting, or maybe you’re supporting your family, you know, not your, I mean your parents or whatever, like maybe you can’t afford to make, take these risks.

[00:24:05] Howard Hartenbaum
So, so I think related to that is a, a lot of people don’t really understand, 99% of people don’t understand what risk is until they suffer the consequences of something that doesn’t work out. Like everybody understood that the stock market was risky, but they really didn’t know what that meant until they had lost half of their life savings and they were depressed and selling at the bottom, which they knew they shouldn’t do. And that’s when you lose, is when risk is evident. But when people use the word risk to mean, oh, it’s risky, should I have whole milk and taste good or should I have non fat milk? And the risk of having whole milk is later I might get heart disease or something, there’s no risk there. You can’t experience the other side of it.

[00:24:51] David Hornik
Yeah, the human mind doesn’t have the capacity to until you have that heart attack. I quite appreciate how unsafe it was to be as fat as I am right now. This has been very helpful, Howard. Perhaps I’ll keep my diet. I doubt it.

[00:25:11] Howard Hartenbaum
Yeah.

[00:25:12] David Hornik
What else? What else should we talk about, Howard?

[00:25:15] Howard Hartenbaum
We had our CEO dinner, like two weeks ago.

[00:25:18] David Hornik
Oh, yeah, for sure.

[00:25:19] Howard Hartenbaum
And we had a wonderful speaker.

[00:25:21] David Hornik
Yeah. So it’s funny. It’s interesting that VCs sort of do this all the time, right. They say we are very supportive of our entrepreneurs and we’re community. We are a community of entrepreneurs. We have this kind of Koretsu, and we’re gonna pull people together. And yet in most instances, they don’t actually do that. And. But. But when you do, it’s incredibly valuable, right? You know, and this was just such an example where we basically had, you know, we had an opportunity to get our CEOs together. And. And mostly it’s just to get them talking, right? Because CEOs don’t really have. They don’t really have the opportunity to talk with someone else who has as.

[00:26:03] Howard Hartenbaum
Much risk as they do. Even if you’re the CEO at a company with your co founders, you’re still the CEO. And when everything is going great, you sort of give credit to everyone. And when everything is going badly, it’s all your fault. So for CEOs, it is quite valuable to have other CEOs doing. To talk with, not just your co founders. And we have a mix of experienced and inexperienced CEOs and getting them all together, where different discussions around topics were helpful on both sides for experience and inexperienced. But at the same point, we had some of our companies there who have products and services that other companies could use. I was sitting at the table with one of our entrepreneurs who runs adcommy, and the other side runs Eat Club. And Eat Club CEO says to add to me, hey, do you guys use a catering service? And he goes, yeah, it’s kind of. So. So. And we do about 100 meals a day. And Eat Club CEO goes, well, we can do better than that. He goes, great. And they shook hands and there was a customer.

[00:27:02] David Hornik
Yeah, I mean, it’s fun. I mean, but. But that’s the reality, right? I mean, it turns out that oftentimes you fund things that are of value to. To the other parts of your portfolio. And it. I’ve known people to be sheepish about it, but the reality is, hey, look, super valuable, mutually beneficial. We don’t fund companies that we don’t think provide value, right? So if, if we’re funding it, we think it’s fundamentally valuable and, and provides a service. So we should be telling our Our all of our portfolio companies that they should be using it if it’s relevant. And you know, Eat Club’s an easy example, but because, look, if you’re catering meals, you’d rather have Eat Club, where you get variety and choice at a lower price than catering. That’s awesome. So why not, you know, why not pimp it to the, to the rest of the portfolio? Plus, Howard, you’re so shameless that you know it was going to happen one way or the other. You. The thing that I love about Howard is that he loves his companies. He falls in love. Howard goes on a board and you get these updates with lovely notes about the. All of the excitement. And it’s like, well, I can’t tell.

[00:28:09] Howard Hartenbaum
How your companies are doing because you never tell me.

[00:28:12] David Hornik
They’re all doing great.

[00:28:13] Howard Hartenbaum
As long as you say, hey, we just made another billion, that I’m okay with it.

[00:28:17] David Hornik
Exactly. Pull another splunk. One splunk for you. No, but it’s a little bit like having a new baby, right? When you have a new baby, it’s like all excited. Look at the pictures. And then my baby’s.

[00:28:31] Howard Hartenbaum
I was talking with a guy who wants to get into the venture business and he was saying to me, what’s it like? And I said, well, it’s sort of like you have eight children and one of your children is graduating from Yale and going off to medical school and another of your children has just gotten accepted to Princeton and mit. And he’s trying to deserve.

[00:28:56] David Hornik
If your children is pregnant and you.

[00:29:00] Howard Hartenbaum
Get down there and you’ve got one that’s in drug rehab and you’ve got one that, you know, one month after being born, you realize is autistic, which is just going to be difficult for everyone and there’s no cure. So the reality being, you know, you want to be helpful and some you can help and some you can’t. And some are wonderful and some are a challenge and some are self inflicted and some are. You know, I have a company that’s being sued for patent infringement by a large public company. It’s not a lot. They’re fighting it as hard as they can, but it makes their life very, very difficult.

[00:29:36] David Hornik
So just for the record, this is one of those examples of insensitivity. No right. Of an analogy going terribly wrong. That’s just. I want to say Howard had a look on his face like, I’m going down this path and there’s no way for me to back up. But I want to give you that opportunity. The react. You Know, we really are. Are not in any way suggesting that parents of autistic children have anything but joy and pleasure from the children that they have. So please.

[00:30:07] Howard Hartenbaum
True. I have pleasure. All of the companies are great. I’m just saying it can be very difficult.

[00:30:12] David Hornik
That’s true.

[00:30:12] Howard Hartenbaum
That’s all I’m saying.

[00:30:13] David Hornik
Fair enough. That there are different. Every company comes with it, different challenges. And, you know, and frankly, look, you know, you’re a kid who goes off to Harvard, then marries some douche who.

[00:30:25] Howard Hartenbaum
Never gets a job. Yeah, I was trying to differentiate between. I was trying to differentiate between if you have a kid who ends up being a drug addict, you wonder, what part in that did you have as opposed to a child, you know, who has autism? And you had no part. There was no. Nothing you could do to control that or not control it. It just became apparent one day. And I don’t mean it negatively. It’s just. It’s a. It’s a challenging situation.

[00:30:54] David Hornik
Fair enough. All right. It still was an analogy that went terribly wrong.

[00:30:59] Howard Hartenbaum
Just for the record, back to that CEO dinner.

[00:31:01] David Hornik
Yes.

[00:31:01] Howard Hartenbaum
So we had a David Hornikt the CEO dinner.

[00:31:03] David Hornik
Yeah. So. Fair enough. Yeah. So one. So my partner, Vivek had. Had spent some time with. With Nancy Duarte and of Duarte Design. And, and she is. She’s just a stunningly good presentation coach. She. She and her company can make anything look great and compelling. And so she, she gave what I thought was. I mean, I guess you. You would hope that the presentation coach could give a compelling presentation, but I thought that her conversation about what the cadence of a talk and how. How, you know, the best presentations are about opportunity and then challenge and then opportunity and then challenge.

[00:31:45] Howard Hartenbaum
She showed how Martin Luther King and Steve Jobs give the same pitch.

[00:31:49] David Hornik
Yeah. That they have this same kind of, you know, and here’s an opportunity and here’s the hardship and here’s it’s overcome. And so I thought it was great. And it’s nice. One of the things that’s nice is that you have a bunch of CEOs who are pitching all day to sit through this conversation and, and then say afterwards, wow, that was, that was really helpful to think through it because, you know, it’s really. It’s hard to, to make a compelling pitch, you know, particularly if you’re doing something that’s. That’s, you know, that is more technical or less exciting or whatever. It’s. Well, you know, what’s the, what’s the pitch for enterprise architecture or whatever? But, but you have to know, you. You have to be able to create the same kind of energy and excitement, the same kind of, you know, cadence of opportunity and challenge and challenge overcome and triumph. And so I, you know, I think if you. If you really want some help, then you should check out Duarte, because they’re, They’re. They’re an amazing firm. And she did a great job. And actually, she’s working on a new book, and I’m going to catch up with her for lunch because, you know, I was sharing all sorts of thoughts about how I think about brand and T shirts and the opportunity to build a message in these little ways. And so it was an exciting conversation, but mostly because I’m a total sales geek. You went to mit, Howard. They don’t teach sales at mit.

[00:33:11] Howard Hartenbaum
You know what I find in pitching, which I liked what she had to say. I thought it was very interesting. And a few of the entrepreneurs, the CEOs, walked away saying, I need to look harder at what I’m doing. Because many have a technical background, and they think it’s more of a proof. Like, If A equals 3 and B equals 4, and you put those together, you have a compelling story, and it’s really not the case. And every company is different, and the CEO needs to be a promoter, but not in a negative sense. They need to be positive. And sometimes you hear a pitch and all you’re thinking, like, in, well, is this a business or not? And sometimes you hear them talking about the business, and you’re thinking, well, is this a product I care about or not? Some companies should talk about the people first. Like the guy we met today, definitely talk about the people first, as opposed. The product is a very interesting company and such, but the guy was so engaging and got to the next step. But sometimes you have a guy come in, he’s going through the product, and you’re just like, is this a business or isn’t this a business? And then he tells you what a great business is, and you’re thinking to yourself, or you even say, you should lead with that.

[00:34:14] David Hornik
Start there, please.

[00:34:15] Howard Hartenbaum
And then once we’re all like, wow, that’s a really great business, then we’ll be a lot more interested in the product and the market and all that. So, you know, leading with strengths and getting people excited, that’s the upswing. You know, I think it’s very valuable.

[00:34:29] David Hornik
I think it’s. Next week I’m doing. I’m doing a webinar with Professor Jennifer Acker, who’s over at the business school on storytelling, and she does a Bunch of research about storytelling. And so we’re going to talk about it in the context of. Lots of things. Talk about in the context of pitching your business. I used to be a litigator. You know, it turns out storytelling is incredibly important in litigation and in brief writing. We at the lobby conference this past year, one of the guys who was there is a former professional football player, and he talked about it in the context of the coach and the coach before the game and at the halftime, trying to create the narrative that inspires you to, you know, to outperform. Etc. So anyway, this stuff is. This stuff is. And, and as you’ve seen already, as you’ve heard already, when you get it right, it’s pretty intoxicating. I mean, Howard and I are still. Are still. If you only. If you only knew how incredible, beautiful she was. I think on that note, Howard, we should just go. We should just sit back and, and enjoy the glow of our. Of our presentation earlier.

[00:35:35] Howard Hartenbaum
Yeah, it’s sort of like you. You don’t know what you’re looking for until you see it. You know, sometimes, I mean, for people, sometimes they’re looking for some clothing to dress, to buy, and they go to the. She goes to the store and she looks around and she goes, I don’t know what. That’s what I want. And you know it when you see it. Or you go to the bookstore and you’re looking for a book to read, and you’re kind of flipping through books and then you. And you get engaged in one and you’re like, three pages and like, I’m gonna buy this book. And you don’t know what you’re looking for until you see it.

[00:36:06] David Hornik
Yeah, well, it’s the power of engagement and excitement and curiosity and hopefulness and fairness and all those things.

[00:36:16] Howard Hartenbaum
And revenge.

[00:36:19] David Hornik
All right, well, you know, this is gotten philosophical. Next thing you know, we’ll go back to the politics or. Or, you know, so, yeah, this has been David Hornik from August Capital, and.

[00:36:29] Howard Hartenbaum
This is Howard Hardenbomb, also from August Capital.

[00:36:32] David Hornik
And we really appreciate you spending time with us. Talk to you.