Generated Transcript

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

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

[00:00:23] David Hornik
And there you have it. You know, where we’re from, August Capital, people often.

[00:00:28] Howard Hartenbaum
People often say, yeah, that Venture Cash show. I said, oh, you. You mean the David Hornik show with sidekick Howard Arden.

[00:00:34] David Hornik
Bob, you can’t say that anymore because I think if we measured the airtime, I only have 60%.

[00:00:44] Howard Hartenbaum
I was going to say, if this was actually real time or we had enough listeners to make data bets on it, we would see that when you talk, people pay attention to. When I talk, they start typing emails.

[00:00:54] David Hornik
Yeah, but I’ve said this before, Howard, our partner Tripp, went back and listened to old ones and was like, oh, Howard really was insightful. And I was like, well, I was on those shows too. He’s like, yeah, well, like I said, Howard was insightful.

[00:01:08] Howard Hartenbaum
I think what he meant was, I will make some controversial comment that makes you think, well, that guy’s an ass. I mean, it makes you think.

[00:01:18] David Hornik
Oh, wow. So I just pulled up this list. I was looking there, the information, the future list someone went through. They worked with Social Plus Capital to pull together a list of the investment funds, and they ranked them on gender score, ethnicity score, and age score. So interestingly, they did a thing where they tracked kind of returns based on age cohort. And it’s kind of. I suppose it’s not that surprising, but it’s kind of a parabola, right, where the young, really young investors tend not to have the biggest returns and the really old investors tend not to have the biggest returns and the big returns, sort of. What do you think? Where do you. Where do you think the age peak is for, from a return standpoint?

[00:02:04] Howard Hartenbaum
38.

[00:02:05] David Hornik
Somewhere in there. It’s kind of mid-30s to mid-40s. So from 35 to 45, you’re kind of, you know, you’re in your prime. What’s your sexual prime? Do they.

[00:02:17] Howard Hartenbaum
I think if they say if you’re a man, it’s like 18, and if you’re a woman, it’s like 29.

[00:02:23] David Hornik
So either way, we’re screwed. All right, well, so it’s way better in that regard.

[00:02:27] Howard Hartenbaum
I think that hold the data is so hard. I mean, we were talking with one of our LPs before where they were commenting on how attribution is basically impossible. And who found Facebook and got Accel into that deal. Totally not. I mean, some people will say one thing, some people will say another. I’m not going to guess what it was, I mean, I know the various stories that I heard, but it’s, I mean that’s just one example. I think in many cases, you know, somebody brings in a great deal, a partnership does it and then somebody who didn’t find the deal or really even get it gets all the credit for it. So.

[00:03:08] David Hornik
Yeah, well, I think the whole, I mean, anyway, these rankings are always kind of interesting and, but like I say, they have a gender score, an ethnicity score and age score. And first best ranked venture firm includes super Angels. Who do you think? Age, gender, ethnicity?

[00:03:29] Howard Hartenbaum
Including only general partners or including everybody at the firm?

[00:03:35] David Hornik
I think it must include everybody because otherwise that’s my guess. Is any investment professional is my guess.

[00:03:43] Howard Hartenbaum
Probably a big firm. Google Ventures.

[00:03:46] David Hornik
No, Floodgate. So I guess Mike Maples is the only old white dude and everybody else is, you know, then it’s Ann and others. But yeah, floodgate, then Cowboy Ventures, then Felicis, then Social plus Capital fourth. It’s just an interesting, I mean, you know, look, in the end you kind of look at it and say, okay, do these things. Is there a direct correlation between diversity of age and gender and etc. And, and outcomes and you know, not necessarily. Although there’s some, you know, there’s some good, good measures. Google Ventures is 19th by the way. Not, but better than we are. We’re down in the 60s or something. That’s because what, we have five general partners. We have seven, eight investment professionals if you include AB.

[00:04:39] Howard Hartenbaum
AB should have brought our average down like 10 years.

[00:04:41] David Hornik
You helped us. In fact, I bet you he’s not in this data.

[00:04:43] Howard Hartenbaum
From an age perspective we should move to like 60.

[00:04:45] David Hornik
That could have bumped us to like 40 because AB is, you know, 12 or something. We have one non, you know, non Caucasian guy, Vivek. The rest of us are basically middle aged men. And you know, I mean Chamath and Shruti in Social plus Capital had posted this and I kind of. And it said, you know, bros investing in bros. And I commented on things and said, look, I am a bro, I am a man, but I think that I don’t act.

[00:05:14] Howard Hartenbaum
Are you asserting that?

[00:05:15] David Hornik
Yeah, let me just say for the record, I have a penis. If that is the measure. If there’s any other measure, I can’t speak for certain.

[00:05:22] Howard Hartenbaum
So that’s really interesting. What is the measure? Because sometimes there’s people who have had a gender change and they’re Olympic athletes or they have different chromosome mixes and people are arguing who is who.

[00:05:39] David Hornik
As a member of the GLAD board, I understand Yeah, I understand this.

[00:05:42] Howard Hartenbaum
I think it’s fascinating. I think it’s fascinating.

[00:05:44] David Hornik
On the other hand, it has no bearing on the venture business.

[00:05:48] Howard Hartenbaum
No, no, because you just said the definition was you had a penis.

[00:05:50] David Hornik
No, I’m saying, like, okay, in this context, if the definition of man in the venture business is having a penis, I am a man. On the other hand, I don’t think.

[00:06:00] Howard Hartenbaum
This is your legal background.

[00:06:01] David Hornik
I don’t think it’s like, terribly like, bro ish, you know, and that’s. And then you certainly aren’t like, you. You know, you’re not like, oh, high five. And people fist bumping. Maybe that’s the measure I think we should measure because I’m a hugger. And I feel like if you’re hugging, you know, hugging people when they come to meet with you, that that should exclude you. That should be a different part of the spectrum than the fist bump. Right? There’s the. There’s the handshake that’s kind of in the middle. There’s the hug, and there’s the fist bump on the other end. And I think that would be a more interesting measure.

[00:06:30] Howard Hartenbaum
I am most definitely not a hugger, but one of my companies, one of my companies, the CEO, is having a little bit of challenges and feels kind of beat up. And I gave him a hug, and he didn’t like it. I can say I didn’t like it.

[00:06:45] David Hornik
Either, but he thought it was the right thing to do.

[00:06:47] Howard Hartenbaum
I thought it was the right thing to do, you know? And no, it wasn’t.

[00:06:53] David Hornik
Well, Howard, I know you’re not a hungry. We had a meeting the other day. This was hilarious. So we had a meeting, and it was this female entrepreneur who I have met before who is very warm, and I. And I went to say hello to her and went to shake her hand, and she went to hug me. And I said, oh, great, I’m a hugger. That’s excellent. Right? And she had with her her co founder, who was a very large man who I had never met before. And so then when I went to meet Hit and she said, oh, this is my co founder, then I gave him a hug, because I said, I just gave you a hug. It’d be weird to shake your hand. But what was awesome is he, like, gave me a big bear hug, like, okay, I’m in. So. So then I come back around the table and Howard says, make some comment like, oh, yeah, Dave and I hug every day or something. And I said, oh, yeah, I’m sorry, Howard, I forgot our hug today. And I hugged him and he was like, oh, get off of me. He was like, that was a joke. Don’t touch me.

[00:07:50] Howard Hartenbaum
My mother told me that when I was a baby, I didn’t like to be held. So it’s something that’s been my entire life. Most babies cry and you pick them up. My mom said if I wasn’t crying, she picked me up, I would cry. So it’s nothing.

[00:08:04] David Hornik
That’s.

[00:08:04] Howard Hartenbaum
I got it backwards.

[00:08:05] David Hornik
I didn’t treat it as a. As an offense. I just thought it was funny because it was like, you know, that was a joke. David, step away. Yeah, but I. But, you know, I think it isn’t. The hug culture is interesting, right? I mean, you know, Bill Campbell, the coach, who is this incredible force in Silicon Valley, has been the coach, the, like, personal coach to many of the most important business people in Silicon Valley, is a hugger. He is like, he comes and he sees you and gives you a big hug. And I have to say, like, the first couple meetings, I share a board with him now, and the first couple of meetings that I went to with him where he shook my hand, like, hugged people and then shook my hand, I felt very sad. Like, in all fairness, he didn’t know who I was. He didn’t know me, but I was like, I don’t get a hug. I wanna.

[00:08:54] Howard Hartenbaum
Did you actually say that?

[00:08:55] David Hornik
I wanna not wanna.

[00:08:56] Howard Hartenbaum
So you should wear, like, a little pin next time. Hugging accepted or something.

[00:09:02] David Hornik
Good. Because then Bill and I got to know each other and then I got a hug, and I actually, after the board meeting where I got a hug from Bill Campbell, I called my wife, said I got a hug from Campbell, and she was like, oh, David.

[00:09:18] Howard Hartenbaum
So as you know, I lived in Luxembourg for a while, and Luxembourg is like, the population is like half French and half German, so you never know who to kiss and who not to kiss. And regularly, people would come up and I’m not a hugger, and they start kissing me and I’m o.

[00:09:32] David Hornik
Better like the kiss on the cheek than the hug, because actually, it’s less intrusive.

[00:09:38] Howard Hartenbaum
It’s just I don’t know when.

[00:09:41] David Hornik
So the answer is no, you don’t want to be a hug.

[00:09:43] Howard Hartenbaum
You know, some complete stranger. The guy introduces me to his wife and she’s trying to kiss me, and I’m like, whoa.

[00:09:49] David Hornik
It’s really kind of a cheek touch. It’s not like a big kiss or anything.

[00:09:52] Howard Hartenbaum
No.

[00:09:53] David Hornik
Anyway, actually, the other thing is. So I was talking to Moon Jal Shah at our. We had The August annual, which is our kind of party for friends of the firm or whatever. Right.

[00:10:02] Howard Hartenbaum
And he was dressed nicely, I’m sure.

[00:10:03] David Hornik
Much. I was always dressed nicely. Although usually he’s wearing a shirt, a tight enough shirt to know that he’s. So we can all know that he’s in way better shape than we are. Which, you know, if I. If I had his chest, maybe I’d wear his shirt. But if you. If I wore that shirt with my chest, we’d be like, oh, my God, could you please wear a loser shirt? But anyway, so Munchal, we were chatting about this, and I was going on about hugging because I. Because that’s something I do. And Mohanjao said that if you hug someone for 10 seconds. 10 seconds. The research shows that it creates this experience where you let out these endorphins.

[00:10:38] Howard Hartenbaum
I like endorphins.

[00:10:40] David Hornik
Right. So if you hug someone for 10 seconds, it will produce this endorphin rush. And that. That’s a good thing.

[00:10:44] Howard Hartenbaum
All right, let’s try it right now.

[00:10:45] David Hornik
I said. I said we were at the party as in munchal. But that 10 seconds, a long time. That I know. And then I started hugging her. Him. I said, well, let’s check that out. So I was trying to come. I said, one, two.

[00:10:56] Howard Hartenbaum
You didn’t make it, did you?

[00:10:57] David Hornik
I did. Totally did. But it was very awkward. He was like, you know, by seven. It’s a long time. That’s a long hug. And people are sitting there, like, going, what do we do when Joel and David are sitting here hugging for 10 seconds?

[00:11:10] Howard Hartenbaum
I’m gonna hug everybody I meet today for 10 seconds and see what happens.

[00:11:13] David Hornik
There’s zero chance you’re gonna do that. There’s zero chance. I mean, it would be amazing, but there’s zero chance you’re gonna do that.

[00:11:19] Howard Hartenbaum
Yeah, that’s true.

[00:11:21] David Hornik
But I. But I should hug someone today for 10 seconds.

[00:11:25] Howard Hartenbaum
I’m gonna try and hug my daughter for 10 seconds. I bet she can’t make it.

[00:11:28] David Hornik
She won’t make it. But do that.

[00:11:29] Howard Hartenbaum
She’ll be like, three seconds and I’m out of here. She, like, leans over. She’s shorter than me, but she leans over. So, like, she’s barely touching me when she hugs me.

[00:11:38] David Hornik
Now. Now the question is, do you tell her in advance? Oh, you’re just gonna, like, honey, how are you? It’s been a long day. How are you? Give her a big hug.

[00:11:47] Howard Hartenbaum
Even better. I will try and hug my wife for 10 seconds.

[00:11:49] David Hornik
Yes, even that. Like, and that would. You’d think, oh, that’s totally fair game. Like, you know, we’re. We’re in love and all that business.

[00:11:56] Howard Hartenbaum
That’s a long time, though.

[00:11:59] David Hornik
She’s gonna go, what are you doing? Why are you touching me? Yeah.

[00:12:06] Howard Hartenbaum
So I have a drop cam in my house.

[00:12:07] David Hornik
Oh. Oh, good. Drop cam. So I was gonna ask good transition out. I could talk for the rest of this.

[00:12:15] Howard Hartenbaum
About hugging? No, I was gonna say I was in my drop, looking at my drop cam. My wife was hugging somebody. I couldn’t quite see you. And it is neat, the uses you get for it that you didn’t really think about. Like, I have it, and I have it running, and my wife and I will go out to breakfast on Sunday, and we’ll be at the bakery, and my wife will be like, oh, should we bring something home for the kid? Well, let’s see if she’s up, and I’ll whip it out, and I’ll just look for motion going past me. No, she’s still asleep. So she hasn’t eaten breakfast. And then we’ll bring her something home. Or she’s walked by it and she’s gone to the kitchen. She’s already eaten already. And something as simple as that, well, you just look at the history, and if there’s any motion, it will have a frame from that. So you can say, okay, she’s up. And then, like, she’s eaten, and you don’t need to bring her. So something as simple as do you buy your breakfast and bring it home. You don’t want to call and wake her up, but you can get something. She walked by the camera, and it’s really nice thing to have.

[00:13:11] David Hornik
So this is. This is. So you raised this in part because I said to you, I need to have this question because I want to put in a webcam, and I’m kind of remodeling. And I have this conversation with the people who are doing the remodeling, and they’re, like, putting in wires. And I said, no, all I need is a plug. Like, just like a little shelf and a plug. No, no, you should get a camera that is integrated into the roof, and we can whatever to look sleeker or whatever. And that just seems like the wrong choice to me. Because if you just think what’s happened in the last five years in terms of webcams, don’t you think I’d just rather have a plug and wi fi, like, the capacity to plug the thing in and wi fi and the rest and how you do have it on a shelf or where you like. How do you.

[00:14:01] Howard Hartenbaum
I have. This is one you’re talking about outside your house?

[00:14:04] David Hornik
No, inside I just.

[00:14:05] Howard Hartenbaum
Inside, I just have it on a shelf and there’s a plug there and I just put it on there and it’s great. And sometimes I want to move it to a different place. I only have one. I thought about maybe getting another one. The only time I would argue you may want to hardwire something. You may want to. If you want to put one outside, like aiming, you know, at the front step, you may still want a wifi camera. You just may want to hardwire the power into the wall so somebody can’t unplug it and steal it so easily.

[00:14:31] David Hornik
Are they battery. Do they have battery operated as well?

[00:14:34] Howard Hartenbaum
There’s ones that are battery operated.

[00:14:36] David Hornik
Don’t worry about it.

[00:14:37] Howard Hartenbaum
Yep. I don’t like batteries because I forget about them. They go out.

[00:14:42] David Hornik
I would put it in a plug, but what I’m hearing is, oh, that’ll look ugly and blah.

[00:14:46] Howard Hartenbaum
So is Drop Cam.

[00:14:47] David Hornik
Drop Cam, Is that your recommendation?

[00:14:49] Howard Hartenbaum
I use Drop Cam and there’s a ton of others. I would just say that I have a nest and Drop Cam is integrated nicely with that. The app is a bit, little, little bit slow, I would say at a high level on wiring stuff. If you go back and watch a science fiction movie from six years ago and they had all this really cool stuff like self driving cars, it’s already doofy. So that’s when, you know, six or seven years. I would say everything is moving so fast right now I have hardwired Ethernet in my entire house. Like totally unnecessary. Like things are moving.

[00:15:21] David Hornik
That is my sense of.

[00:15:22] Howard Hartenbaum
Well, again, I like simplicity in design and wireless makes for a lot of simplicity. I think there’s no need to do all sorts of wiring. Yeah.

[00:15:31] David Hornik
All right. Drop Cam does it. Because I have a base that I could just like attach to the ceiling. So it’s just pointing out.

[00:15:37] Howard Hartenbaum
Maybe I could do.

[00:15:38] David Hornik
Maybe that’s what I do. It’s just like stick it up. I mean the point is just to have something so that if we’re out of town or whatever, then you get an alert and what do you pay? You pay like a subscription fee. And then it’s.

[00:15:49] Howard Hartenbaum
So there’s different ones. Drop Cam is like a hundred bucks a year to get the alerts and have it recorded and stuck in the cloud. There are other cameras that you can buy where you don’t have to pay anything per year. It’s just you don’t get much recording or you don’t get cloud based recording or you don’t get alerts or you do get alerts. In terms of ease of setup, if you’re willing to pay 100 bucks a year to drop Cam, it really. It’s really easy to set up. But 100 bucks a year adds up. I’ve already had it for a few years and it just. That’s 100. 100, 100. I pay like 90% tax rate, so that’s like a thousand a year.

[00:16:27] David Hornik
Yeah, that’s right. Somehow you’ve ended up in a tax bracket and no one else.

[00:16:32] Howard Hartenbaum
You know, there are people who pay more in taxes than they make based on like real estate business that they’re in. There are crazy tax laws.

[00:16:39] David Hornik
Yeah, you’d have to. You have to work hard at it. By the way, speaking of politics, do you know who. Do you know who. Speaking of politics, do you know who’s here with the president on Saturday at a fundraiser? Kanye West. That’s. That’s the double bill. Obama and Kanye.

[00:16:58] Howard Hartenbaum
I spent the whole ride this morning listening to John McCain yell and scream about Obama pulling the troops out of Iraq. Then they change the station.

[00:17:06] David Hornik
He’s a. What else do we have? Let’s listen to something else. You know what I’ve been listening to? I’ve been listening to politics a ton, but very specific politics. I’ve been listening to the soundtrack for Hamilton the Musical. It is unbelievable. I know this has nothing to do with venture cast in any way, but it is the greatest show that’s been written probably in our lifetime.

[00:17:28] Howard Hartenbaum
This is one you invested in?

[00:17:29] David Hornik
No, I wish.

[00:17:30] Howard Hartenbaum
I tried to actually just want to be. I just want to clarify here.

[00:17:33] David Hornik
No, I tried to. I tried to invest in it and they were like, we don’t need your money. You know what I did invest in? I put a small amount of money in the current Spring Awakening on Broadway. So they did a revival of Spring Awakening only what’s interesting about it is it’s with this group called Deaf West Theater. It’s literally a deaf theater. And so every character has a signing deaf actor and a singing hearing actor. And.

[00:18:03] Howard Hartenbaum
And they don’t bump into each other on stage.

[00:18:05] David Hornik
They can see. It’s not a sighted problem.

[00:18:10] Howard Hartenbaum
No, I’m just talking about the crowd on the stage.

[00:18:13] David Hornik
It turns out it’s super interesting. It creates this very compelling experience. But it’s kind of interesting, right, that because here’s music and dance, whatever, and half the cast can’t hear the music. They have to feel it and they have sick. You know, signals and. But it turns out, super compelling show. New York Times thankfully just gave it an awesome review. So it is very possible that I only lose some of my money instead of all of my money.

[00:18:37] Howard Hartenbaum
That’s a different type of investing paradigm.

[00:18:42] David Hornik
I’ve invested in a small number of shows on Broadway. My view, I treat it in the same way that I treat giving money to causes I think are important. Like this is a show that I think should be on Broadway. I’m excited to support it. If it ends up making money, that’s fantastic. If it doesn’t, I’m still excited. But go see it, that’ll be great.

[00:19:02] Howard Hartenbaum
Because you haven’t made all your money back yet.

[00:19:04] David Hornik
I have no idea. I don’t know if I’ve made any of my money back at this point. But it’s a great show.

[00:19:09] Howard Hartenbaum
So there’s the topic around here and all these very apparently very high priced funding rounds that happen here and there’s not a lot of data available on the companies. And very smart investors, or apparently very smart investors put money into companies at very high price. And the interesting part is, despite their intelligence, some of these companies then exit for much lower price than their most recent private financing. And we’ve joked about calling this an illiquidity premium, where you have a very small number of people with access to a company and they’re so excited about the company, but not just anybody can get in. You have to be one of these very small group of people and they bid the price up to an incredibly high price, which later has proven to be too high a price.

[00:20:04] David Hornik
So just, I mean, just to give context to why I think that Howard used this phrase the other day in our partner meeting and it’s been making me laugh ever since, this idea that there’s an illiquidity premium.

[00:20:15] Howard Hartenbaum
There used to be an illiquidity discount.

[00:20:17] David Hornik
That’s right. That’s what I’m saying. Like what people don’t understand is that, that what happens in, you know, in private deals and whatever is that if, if the currency that you’re getting in exchange for something is not liquid and therefore you have to figure out what happens over time, usually you get a discount to reflect that illiquidity.

[00:20:36] Howard Hartenbaum
So there’s a risk it may never become liquid.

[00:20:38] David Hornik
So it may not become liquid, whatever. And so the price is lower. And yet we have all these illiquid companies that are getting done at these crazy high prices that Howard now calls the illiquidity premium, which is completely accurate and so fucked up. That it’s hilarious.

[00:20:54] Howard Hartenbaum
And some of them prove out to be okay over time.

[00:20:57] David Hornik
Sure. Right. But some of them, yeah, not so much. Right. So Pure Storage went, went public today. Pure has had a lot of attention, a lot of excitement. My understanding is that its last private round got done at something like a 5 billion billion dollar valuation. The company went public today at a 3 billion dollar valuation and has, at least in early trading, traded down. And so if it trades down a little bit, it basically trades down to about half the price of the last round of financing. Now, the theory in these companies often is, well, I can put it in a very high price because I have preference and it protects me, me. And so even if I put money in at a high price, I’ll get my money back out because I get the first money out.

[00:21:44] Howard Hartenbaum
Until you’re converted to common, until you go public.

[00:21:47] David Hornik
When you go public, everyone takes their shares and converts to common. And it doesn’t matter when you bought your shares, you get one share of stock, is one share of stock. And so these folks who put money at a $5 billion value got one share of stock. Now, maybe they had some kind of ratchet or whatever that readjusted their price. I have no idea. But if not, then currently they’ve lost half the value of their investment. That’s a. And look, and this is gonna happen, right? I mean, not to be, to be mean spirited. When I started talking about things we could talk about with Howard before we started thinking, let’s talk about happy things, whatever. But we have. What the heck. What’s the one with the elephant? The note taking thing.

[00:22:33] Howard Hartenbaum
Evernote.

[00:22:33] David Hornik
Evernote. Evernote was looking like this astonishing juggernaut of a business. It was growing quickly, although it was a freemium model and got funded at very high prices. And now, of course, on the web is Conversations. The. The founder and CEO has stepped down. They’re bringing a new CEO. They closed some offices, they’re restructuring because it’s a heart. It turns out it’s hard. Similar scuttlebutt about other businesses. So look, this is just how it goes. Our business is about investing in things. It is risk capital. It should be risky. I think people have lost that sense. But why invest at these crazy high prices? And I guess it’s because every so often it is Uber, it is Facebook, and it turns out that your $20 billion valuation makes you 5x or the.

[00:23:22] Howard Hartenbaum
500 million funding valuation in Instagram four days before it got acquired by Facebook for a billion and turned out to be an incredible bargain. For Facebook in the process.

[00:23:35] David Hornik
Yeah, I mean that’s so tricky, right? It’s like, okay, someone invested in what looked like a high price. They instantly doubled their money, which probably was not what they had hoped for. And then, but I’ll take it. And then everybody’s like, oh my God, can believe you. Facebook paid a billion dollars. The company was only had 13 employees. It was only a handful of years old. Amazing. Like what an incredible outcome. And then the next deal they do is WhatsApp for 19 billion. And everybody’s like, oh man, what a rip off to those founders that Instagram only sold for a billion dollars, right? Like, oh my God, I can’t believe that. And by the way, so it was just the fifth anniversary of it Instagram. That looks like it’s going to be one of the greatest deals that any company has ever done. It is, it has. I forget how many tens of millions of users it has. It’s incredibly engaging. My understanding is that they’re monetizing it now. Like it’s a, it was a great, great acquisition. But the 13 people in that company who sold should not be sad. Like they, the founders made more money than they can ever spend. So yeah, they didn’t make 19 billion but like look, it’s okay.

[00:24:44] Howard Hartenbaum
But YouTube’s another example, amazing example.

[00:24:47] David Hornik
Like you know, we sold for a billion six. Everyone thought it was this incredible outcome. Now on the one hand at the time it was, it was quite early and they had, I forget, 100 million in debt and they were about to take on another some number of millions.

[00:25:04] Howard Hartenbaum
Sued and copyright issues.

[00:25:06] David Hornik
They were, they were like if they didn’t sell, I think they had to raise like $500 million just to stay alive. They sell it for a billion six.

[00:25:15] Howard Hartenbaum
I think and it’s got to be worth 50 billion now.

[00:25:18] David Hornik
Yeah, it’s, it is one of the best acquisitions that’s ever happened. It is truly dominant. It’s changed the nature of video, it’s changed the nature of media consumption. It has been extraordinarily well monetized. I don’t know how much money Google put into it to fix it, to pay off the lawsuits and all that. I mean I think it was hundreds of millions of dollars. But I think it is a very fair Bet that the YouTube acquisition was one of the greatest acquisitions that’s ever happened in tech.

[00:25:53] Howard Hartenbaum
So many acquisitions don’t work out. It is really neat when an acquisition does work really well.

[00:25:58] David Hornik
Well we to need it to happen right in venture because we want people to keep buying our companies.

[00:26:04] Howard Hartenbaum
Flurry’s acquisition at Yahoo seems like it’s quite a big success. I’ll leave the numbers out, but we’ll say many multiples of their revenue when they were acquired a year ago. And it’s growing really fast. And the three kind of remind me what Flurry does. Flurry was a mobile analytics company that then in a enabled app marketing which apps people should buy. People who bought this, bought this. But just trying to figure out what apps would be a good fit for you. It’s a great business, very high margin, doing great for Yahoo and the team that came in there too. If you look at who are the three folks running the different segments at the SVP level at Yahoo now there’s Simon Kalaf, who is the CEO of Flurry. He’s now running publishing and mobile. Prashant Floria, who was his number two at Flurry, is now running the ad business at Yahoo. And then the other one is, but not from Flurry is Jeff Bonforte running communications, including mail. I think that’s how it breaks out here. They had this modest acquisition of 300 ish million dollars and the business has gone skyrocketed with Yahoo’s participation. And the two guys from Flurry are now like two of the main guys running the important parts of Yahoo. It made me feel good because when I had done the Series A, it was actually a different business before it was enabling Flurry mail on feature phones, before iPhone was invented and it pivoted into something else under the great guidance of Simon and built a great company. But it got bought and then it was a really valued company later. I’ve had the experience of selling some companies that didn’t work out so good. And not to diss, we’ll pick Photobucket. That one sold to Fox Interactive Media. Photobucket was basically providing all of the pictures that were on MySpace and it got spun out soon after for pennies on the dollar. Which was kind of sad because yeah, that was.

[00:28:16] David Hornik
I mean, it’s true, but that was a very specific set of circumstances. They bought it because they needed to defend MySpace. Then MySpace had this big shift and. But you’re right, I mean, look, okay.

[00:28:26] Howard Hartenbaum
Bebo and aol, but there are lots of.

[00:28:28] David Hornik
Yeah, good lord. Right. But there are lots of instances. But I agree with you. So we, you know, we sold Pay Cycle, the online payroll company, to Intuit and similarly just has done great stuff for them. Hundreds of thousands of customers is producing a ton of revenue. They definitely paid less than the value that they got from it which, you know, totally look in the end, I think that’s great. I think it was a good acquisition. It was great for. Great for the company. Now we’re investors in Rene lasert’s new company, bill.com. and you know, I think that investor to it’ll have to pay more when they get around to it. When they wake up and go, boy, we really should own bill.com. it won’t be 200 million. That will not be the deal.

[00:29:15] Howard Hartenbaum
They gotta pay up because it’s worth so much.

[00:29:18] David Hornik
Exactly.

[00:29:19] Howard Hartenbaum
I love that company.

[00:29:21] David Hornik
It’s awesome. I actually, I was just talking to someone who is, you know, anyone who has a startup, frankly, that’s more than a handful of people. If you’re not using bill.com you’re out of your mind because it basically manages all the accounts payable, receivable and allows you to do electronic bill pay for your business in the same way you do for your. For your personal stuff. And it saves you so much time. It’s like, you know, I’m amazed that people are still writing checks. It is the stupidest thing who write like, can you imagine that the typical stupid small business is still writing by hand dozens of checks a month.

[00:29:55] Howard Hartenbaum
Bill.com go to bill.comb I L L dot com.

[00:30:01] David Hornik
That’s right. Pay your bills electronically. Oh, this. So my wife is actually quite pissed at me. Howard again, let’s do. Yeah. I get an email from Renee, runs Bill.com. their biggest. Their kind of big accountant conference is coming up, says David. They would like us to do a have a conversation at the accounting conference. Will you participate? Say yes. Of course. I’m happy to participate. So here’s why she’s annoyed. It’s in the Bahamas now. Or no, you go, oh, yay, get to the Bahamas.

[00:30:36] Howard Hartenbaum
I can do that for you.

[00:30:38] David Hornik
It’s terrible.

[00:30:40] Howard Hartenbaum
Dot com.

[00:30:42] David Hornik
No, the problem is, first of all, like, I’m going. I think it’s at Atlantis or something. It’s not like I’m not going to snorkel. I’m going to an accountant conference to talk about Bill.com.

[00:30:54] Howard Hartenbaum
This will be one of those conferences where there’s nobody in the in. Like you go to the conference room and there’s the people on the stage and there’s like 2% of the people show up in the room.

[00:31:03] David Hornik
If that is true, I’ll be so annoyed because.

[00:31:06] Howard Hartenbaum
No, you’ll go storkly.

[00:31:08] David Hornik
No, we have like, no, the problem is getting there. So in order to get there from.

[00:31:12] Howard Hartenbaum
The west coast is tough.

[00:31:13] David Hornik
I have to leave on, on Sunday this to, to do a thing on Tuesday. I have to leave on Sunday night. I get to Newark Sunday or leave Sunday afternoon. I get to Newark on Sunday evening. I sleep over. I wake up the next morning, I fly to the Bahamas. I get in whatever, whatever nighttime that is, and then the talks the next day. But then I can’t get like, I don’t know when I get back. It’s the exact same thing. I fly through Houston or something.

[00:31:38] Howard Hartenbaum
If you go all the way around the world, you get your day back.

[00:31:42] David Hornik
Oh, I should have thought of that.

[00:31:44] Howard Hartenbaum
Hey, I gotta, I got a different topic for you. I was having a meeting with a guy today. 42 year old, very successful guy, started a company, 13 years ran it as the founder, co founder, CEO, got it up, you know, had a couple of fundraisings, ended up getting bought out by Private Equity. 250 employees, few hundred million in revenue, profitable business. And he got pushed out because there’s big disagreement on the direction for the company moving. There’s a fundamental shift in technology going on and he thinks they should go one way. Yeah, a normal kind of thing. And he said, you know, it’s been eight months now since I’m out of there. And he said the best advice I ever got was from another entrepreneur who had gone through something like this. And what he said to me is, say goodbye and don’t look back. Don’t take a board seat, don’t try and be chairman, don’t try and have a consulting agreement like just move on with your life and do something new. And he said, you know, it was really painful for the first 90 days, but looking back now, it’s like, I own shares in a great company. There’s a disagreement about the future of the company, but somebody else can take care of that problem. He’s very happy that he did that because that is certainly not the instinct of the average co, founder, CEO of a company who is pushed out of the company. Usually they want to do their best to keep their teeth in and it may be the right thing, it may not be the right thing. But he said for him, psychologically, it was most definitely the right thing.

[00:33:26] David Hornik
Yeah, well, look at, you know, look at what’s happening at Twitter, right? They announces Jack’s going to be the full time CEO, whatever. And they announced that Dick Costello is stepping off the board. If I was Dick. If I was Dick. And if I was Jack, that’s the right answer. It’s like, look, I don’t need you. The former CEO sitting on the board. And I don’t need to be the former CEO on the board as someone else is making choices that I may or may not agree with. And in the end, it’s like, look, go run the company.

[00:33:50] Howard Hartenbaum
Yeah. If the new guy’s got a question, he can always call.

[00:33:53] David Hornik
Yeah, he knows where to find him at Dixie.

[00:33:57] Howard Hartenbaum
I’m sure Dick is still a huge shareholder. Probably. Or maybe not. He could certainly. If Jack wanted to call him, I’m sure Dick would answer the phone.

[00:34:06] David Hornik
No, what was very nice to see was that when Jack was made CEO of the company, Ev Williams had great things to to say. Dick Costa, great things to say. Saka had his, like, has been ranting about this forever. So he got to, you know, triumph. Are they gonna put sack on the board? So he just shuts up already. Like, maybe that’s the answer. All right, Saka, you can have a board seat if you just shut the up.

[00:34:32] Howard Hartenbaum
All in favor?

[00:34:33] David Hornik
Oh, yeah, Saka’s on the board. I mean, you know, it is interesting to think, like, you’re running a company that is so public, has such an impact that there are people who are so passionate, and the product itself gives them a platform to make a bunch of noise. Like, Zaka managed to get a million or however many million Twitter followers by virtue of being early and caring and being engaged. And then when he has a conflict with the company, he uses their tool.

[00:35:02] Howard Hartenbaum
Against them or for them or for his view.

[00:35:05] David Hornik
He’s very happy. No, exactly.

[00:35:07] Howard Hartenbaum
He’s a big shareholder there, I’m sure believer.

[00:35:09] David Hornik
He’s very happy with what they’ve done, glad that Jack is there. And, you know, they made Adam Bain the coo, and I think that’s the absolute right thing to do. Adam’s awesome and will help keep the company moving. And, you know, look, in the end, right, if Jack’s gonna run two big companies, you’ve got a square that is allegedly about to go public. You have Twitter that is public. The only way you can do that, you know, the way Steve Jobs did that ultimately, was he didn’t run Pixar. He basically oversaw it. Other people ran it. He was helpful strategically, but someone else dealt with it. He was more engaged in Apple. I think I have to assume the same thing will happen here. And the only question is, which one? Is Jack gonna focus his energy on Square and let Adam run Twitter, or is he going to focus his energy on Twitter and let someone else run Square?

[00:36:03] Howard Hartenbaum
Like, we had the discussion at our partner meeting on Monday that Jack is such A good multitasker. I’ve got a company. He could be. He could be CEO on every. Every second Monday. And he’s.

[00:36:14] David Hornik
You know, it’s a little company. Like, he can do it.

[00:36:17] Howard Hartenbaum
In fact, we’ll send the company up there to talk with him.

[00:36:19] David Hornik
We’ll just. Oh, like, he’s got extra space in one of those offices, so just put the company.

[00:36:23] Howard Hartenbaum
He can walk by and say, do this and do that.

[00:36:25] David Hornik
Yeah, right. Like, hey, I mean, I coo. Could say, we’ve done this and this. We’re thinking about that. And he’ll go, yeah, go left, and then he could go, move on. Right. I think that’s what we should do. But in all fairness, like, that’s all you and I do. Like, we don’t. We invest in a bunch of companies. We sit on the boards or we’re on the. We’re advisors or whatever, and we get to sit down, have a conversation, try and be helpful, give a perspective, and then we say, good luck. Go run your company. Right. I mean, that’s. That’s the reality.

[00:36:55] Howard Hartenbaum
We don’t want to run your company.

[00:36:56] David Hornik
No. If we want to run a company, we go start a company anyway.

[00:37:00] Howard Hartenbaum
I got this great idea for a new company.

[00:37:02] David Hornik
Oh, yeah, I’ll find you.

[00:37:07] Howard Hartenbaum
No, we have to be yin and yang. You need two very different personalities to do it.

[00:37:13] David Hornik
All right, Howard. Well, you know, I’m not sure what we talked about today. It was a rambling show. It was a rambling effort today. Adventure cast.

[00:37:21] Howard Hartenbaum
But.

[00:37:21] David Hornik
But I’m feeling good. Feeling good about it. How are you?

[00:37:24] Howard Hartenbaum
I think it’s great. And this is. Normally we wait, like, three months, and this is only, like, one month.

[00:37:28] David Hornik
That’s a good point. No, like a couple weeks or three. No. Maybe it was maybe.

[00:37:31] Howard Hartenbaum
Yeah.

[00:37:32] David Hornik
All right. We should do this more often. All right. This is David Hornik, and this has.

[00:37:35] Howard Hartenbaum
Been venture cast Howard Hardenbomb, also adventure cast. And thank you for joining us today.

[00:37:40] David Hornik
Thank you for joining us. We’ll see you in, I don’t know, maybe a month.