Generated Transcript

[00:00:15] David Hornik
Hello, this is David Hornik from August Capital.

[00:00:17] Howard Hartenbaum
And this is Howard Hartenbaum, also from August Capital, with our special guest today.

[00:00:22] Tripp Jones
Tripp Jones from August Capital as well.

[00:00:25] David Hornik
Oh, my goodness, what a coincidence.

[00:00:28] Howard Hartenbaum
Did we have another guest we were expecting today? We could. Invited.

[00:00:32] David Hornik
We just had. Yeah, we just had Trip fill in, like. Must have been Clavier.

[00:00:35] Tripp Jones
Clavier thought the traffic was too bad.

[00:00:37] David Hornik
Yeah, from. From downtown Palo Alto.

[00:00:39] Tripp Jones
It’s pretty bad, Trip.

[00:00:41] Howard Hartenbaum
How long have you been here?

[00:00:42] Tripp Jones
Now, I joined. I accepted an offer from August capital almost exactly five years ago. I think it was March 28, 2011.

[00:00:52] Howard Hartenbaum
Are you a millennial?

[00:00:54] Tripp Jones
Depending on what definition I am. I was born in the 80s, but early 80s.

[00:01:00] David Hornik
All right, are you. I refer to you as our young guy, but are you, in fact, young?

[00:01:07] Tripp Jones
Not anymore.

[00:01:08] David Hornik
Oh, that’s a bummer.

[00:01:09] Tripp Jones
I have gray facial hair, and our associate is more than 10 years younger than me.

[00:01:14] David Hornik
Yeah, but he’s, like, 12, so that can’t be the measure.

[00:01:17] Howard Hartenbaum
24.

[00:01:18] David Hornik
Amy’s 24 now.

[00:01:19] Tripp Jones
He’s just turned 25.

[00:01:21] David Hornik
All right, well, that’s. We need to get a new associate, if anyone’s listening, who’s, you know, like, 20 or 19.

[00:01:27] Tripp Jones
He needs to be 30 years younger than David Hornik.

[00:01:29] David Hornik
That’s. Yeah. Unfortunately, I’m gonna solve that over time. We’re looking for a young guy who’s 40.

[00:01:36] Howard Hartenbaum
I was chatting with AB the other day. I said, AB, we need to find another guy, you know, like, your age or 30. And he goes, why? And I said, because in 10 years, I’ll be 60. Eddie Webb. Okay, I get that.

[00:01:54] David Hornik
Yeah. Well, we all get older. That’s just how it goes.

[00:01:58] Howard Hartenbaum
Howard, Millennial thing is kind of interesting. You know, everybody says millennials think differently, they act differently. I don’t think it’s all that different. Like, when you hear what they say, it sounds like what it was when I was a millennial.

[00:02:13] David Hornik
Yeah, I don’t know what they called. They called it Whippersnapper back then.

[00:02:16] Tripp Jones
How are you guys? Are you guys Gen X or are you.

[00:02:19] Howard Hartenbaum
I’m Gen X.

[00:02:20] David Hornik
Are we? If you’re Gen X, I’m Gen X. Yeah.

[00:02:22] Howard Hartenbaum
Because we’re the same age.

[00:02:23] Tripp Jones
Do you remember back in, like, the mid-90s when they had a pretty similar kind of hoopla over the Gen Xers, and they’re so weird and they don’t, you know, behave normally? It’s pretty similar.

[00:02:34] Howard Hartenbaum
Yeah.

[00:02:35] Tripp Jones
I mean, of course, I was, like, in. I was, like, in sixth grade back then.

[00:02:38] Howard Hartenbaum
But wait a second, you were born in the 80s? But you’re a millennial. Like, how does that happen? Like, I would think a millennial would be, like, born near the millennium, coming.

[00:02:46] Tripp Jones
Of age at the millennium.

[00:02:49] David Hornik
You know, we. I actually have a. I have an idea for our new associate because my son, Julian’s roommate Raul, listens to venturecast, and he’ll say, like, hey, Julian, I was listening to your father. And Julian always says, why in the world? But if Raul’s listening, we might as well just hire him. So if you’re listening, shoot us your resume.

[00:03:10] Tripp Jones
Yeah.

[00:03:10] Howard Hartenbaum
Raul, if you’re listening, you have four hours to get here for your interview.

[00:03:13] David Hornik
Yeah. Right. We are waiting.

[00:03:15] Tripp Jones
Yeah. Or if you’re under 30 and listening, we’re handing out associate positions. I’m gonna. I’m gonna. I’m gonna almost say we’re pretty safe.

[00:03:24] David Hornik
Or if you’re listening. If you’re actually listening to Venture Cast, we will hire you, because this could backfire.

[00:03:33] Tripp Jones
I doubt it will.

[00:03:35] David Hornik
Oh, I can’t believe it. Howard. He’s a guest for two seconds, and it rips on our show.

[00:03:40] Tripp Jones
I am one of your six listeners.

[00:03:43] Howard Hartenbaum
Really? Do you listen to the show? Yes.

[00:03:44] Tripp Jones
Well, I listened to them all in a row at one time.

[00:03:47] Howard Hartenbaum
You binge. You binge.

[00:03:48] Tripp Jones
Listen. It was actually super interesting, and it was helpful. I did this, like, two years ago and hasn’t listened since. And it was fun to go actually start at the beginning and went backwards. And it was just. It was like a. Interesting continuum of listening where the Venture business was over the course of, I don’t know, 10 years, however long you’ve been doing it.

[00:04:09] David Hornik
I just talked to someone else who did that who was saying, like, it’s super interesting because you have an hour episode. You listen to it, and then you’re like, all right, listen to the next one. If you have something commute or a runner or whatever, you could get through a lot of history, right?

[00:04:21] Tripp Jones
And it’s funny because you’re debating things that at the time were just definitely not clear that we now look back on, and it’s just, like, so stupidly obvious.

[00:04:30] Howard Hartenbaum
You mean like smartphones?

[00:04:31] Tripp Jones
No, it’s like, yeah, it’s like this iPhone. This iPhone thing. Like, is this gonna be a big idea? Like, I don’t know. It seems pretty cool, but, like, are people really gonna walk around with these things?

[00:04:39] David Hornik
I think on Ven Cast, I talked about spotting one at a. At a softball game. Steve Jobs was with his daughter at a softball game, and they hadn’t announced it yet, and he was using it. And I sent my Little kid over to, like I said, go check it out. He’s using an iPhone. And he. And he wandered over and because he was a little kid, nobody worried about it. And that little kid’s in college now, and the iPhone is basically, you know, rules the world. So.

[00:05:05] Howard Hartenbaum
What do you mean? It’s still not clear?

[00:05:07] David Hornik
Yeah, it’s unclear if the smartphone thing’s gonna work.

[00:05:10] Howard Hartenbaum
What parts of VentureCast did you like, like, structurally, so that we can do more of those?

[00:05:16] Tripp Jones
Oh, I think anytime Clavier was here, that was. Those were the highlights.

[00:05:20] David Hornik
That’s it. We have to have Guess so twice.

[00:05:22] Howard Hartenbaum
No, no, no.

[00:05:22] Tripp Jones
I think it’s. I think it has a very. There’s a lot of anthropolithic value. Is that. Is that a word?

[00:05:32] David Hornik
Like anthropology?

[00:05:33] Tripp Jones
Yeah, value to it of being able to go back. And I love listening to them.

[00:05:38] David Hornik
Hindsight, it is kind of funny. So we talked about talking about. We talked about talking about before we started recording, so. Well, let’s discuss the fact that in Q1 of 2016, the venture business raised $17 billion.

[00:05:55] Howard Hartenbaum
Now, what that means is venture firms went to their investors, called limited partners, and got the commitment of $17 billion of new money to flow into their funds.

[00:06:07] David Hornik
That’s stuck. So as you say, like, from an anthropology standpoint, if we were to look back at VentureCast, because it’s been going on for about 10 years with me talking to various random people or talking to myself, we’ve gone through three different cycles. You know, we had the crash in 2008. We have had the up cycles. Well, this is a hell of an upcycle. Right?

[00:06:30] Tripp Jones
I mean, I. I think it might be kind of a lagging indicator almost in a certain way where just like consumers pull down as much credit when they’re about to go bankrupt, it makes sense to pull down as much venture dollars.

[00:06:46] Howard Hartenbaum
You mean right before we go bankrupt? Is that what you do before you go bankrupt?

[00:06:49] Tripp Jones
Before interesting things die off for a while, at least exits. And then you can. At least these big mega funds can sit on pretty interesting management fees for right outside.

[00:07:01] David Hornik
Well, and they’re like, funds have been getting sneaking up and whatever else. Like Andreessen’s first fund was a couple hundred million, 300 million. And then they started figuring out, oh, we want to put a lot of money to work. And so apparently they’re raising another fund of a billion and a half right now, which will add to their billions that they’re. But then there are other folks. Like Lightspeed Ventures has been around a long time. They’ve raised many, many funds in the hundreds of millions of dollars. And they just raised over a billion dollars.

[00:07:28] Howard Hartenbaum
I think they’ve done another big. Have they go up and down 1.2.

[00:07:32] Tripp Jones
And it was split between a 700 early stage kind of traditional venture fund and 500 of a opportunity fund.

[00:07:40] David Hornik
And then Peter Thiel raised a billion.

[00:07:43] Tripp Jones
1.3 billion, announced this morning.

[00:07:45] Howard Hartenbaum
That’s nothing for him, though.

[00:07:46] David Hornik
But no, he hasn’t liked his venture fund. He hasn’t raised a venture fund of that scale. Right. So it’s just lots of people are definitely, as you say, they’re bulking up. Like it’s. It’s sort of like getting fat for winter or something.

[00:08:02] Tripp Jones
You know, people have decided that winter has come.

[00:08:06] Howard Hartenbaum
Oh, well, I just pulled up Wikipedia on Lightspeed Venture partners, founded in 2000, and they just raised their 10th fund at a billion dollars. So they’ve raised 10 funds in 15 years.

[00:08:21] Tripp Jones
Every 1.6 years. Jeez.

[00:08:23] David Hornik
Wow, that’s a lot. I don’t even think there’s a Wikipedia page on August Capital.

[00:08:29] Tripp Jones
There is. It’s like from. It’s from basically when August Capital was founded in the 90s.

[00:08:33] David Hornik
Yeah.

[00:08:34] Tripp Jones
That was the last time it was updated.

[00:08:35] David Hornik
Shouldn’t we update it? Like someone. Someone should update it. Whoever’s listening while you’re at it, you might know. Yeah. Oh, wow. This is all they have. August Capital is venture capital firm created by Dave Marcourt and John Johnson in 1995. It focuses on information technology and is based in Menlo Park, California. Partner David Hornik was on the Midas list in 2012.

[00:08:57] Howard Hartenbaum
I wonder who put that in there.

[00:08:58] Tripp Jones
Yeah, yeah.

[00:08:59] Howard Hartenbaum
I wonder who put that in there.

[00:09:01] David Hornik
Are you suggesting.

[00:09:01] Tripp Jones
Yeah, David Hornik’s mother, who’s listening, also put that in there.

[00:09:05] David Hornik
Betsy Hornick asked Jerry Hornick, her husband, to add David Hornik, partner on the Midas list. My mother got all pissed off at me the other day because she was looking for something and I said, well, just have dad search such and such. She’s like, you don’t think I’m competent to search the web, you know, which was a fair call out. But on the other hand, my father, all he does is search the web. Like it was really just a nod to my father’s hobby, which is searching the web.

[00:09:30] Howard Hartenbaum
Let’s go back to the $17 billion in Q1. So if that gets raised every quarter. Right.

[00:09:37] David Hornik
Yes.

[00:09:38] Howard Hartenbaum
That’s 68 billion raised this year. And therefore for those venture firms, on average, as you say, to return just the money that they took in if their average holding is 10%, they have to have exits equaling $680 billion.

[00:09:56] David Hornik
So just to be clear, to break even. So basically that. So when we go out and invest in a company out of our fund, we have a $450 million fund. And when we go invest in new companies, we say, hey, you know, company X that we’re excited about, we would like to invest $10 million and we’ll buy 15% of your company. And then over time, it gets diluted by new option shares to the employees and new money sold to other companies, etc. And so we probably, you know, you could easily end up with 10% of the company when they went. If and when it gets liquid, get. Goes public or gets sold. So basically the message is, for those, for that $68 billion that just will come into the industry this year, there needs to be companies that are funded that are worth $680 billion. And just to put that in perspective, that’s the equivalent of how many Apple. A $20 billion outcome has essentially never happened. It’s happened on three occasions in the history of venture capital. Oh, now four with WhatsApp. It happened with Facebook, it happened with Google. It happened with. I don’t. With a WhatsApp. It happened with like.

[00:11:15] Howard Hartenbaum
That’s it.

[00:11:15] David Hornik
Anything else? Alibaba, if you count Alibaba.

[00:11:19] Howard Hartenbaum
Right, yeah.

[00:11:19] David Hornik
It basically never happens. And so we need you. We need to produce. Right, you need 30 of those. 30.

[00:11:30] Tripp Jones
Yeah.

[00:11:30] David Hornik
20 billion dollar outcomes. And by the way, that’s for that year, which means that we have to produce 30 of them a year because next year another $68 billion could be raised. That doesn’t let.

[00:11:43] Howard Hartenbaum
So either it’s broken or we don’t understand it.

[00:11:47] David Hornik
Right. Tripp, you’re better at math than we are.

[00:11:50] Tripp Jones
I think it’s broken. I’m actually been quiet trying to find how much money was raised in 1999 and 2000 to see if it was at all comparable.

[00:11:59] David Hornik
No, it was quite a bit less. It was still the most ever.

[00:12:02] Tripp Jones
So 105 billion was invested in the year 2000, which is.

[00:12:05] David Hornik
Oh really staggering.

[00:12:07] Tripp Jones
Staggering to me. Like just staggering to me. So we never. We didn’t get to quite the stupidity that we got last time.

[00:12:12] David Hornik
Yeah. That’s amazing. That’s insane.

[00:12:15] Tripp Jones
Insane.

[00:12:15] David Hornik
So again, 105 billion, which means that. So you had to get to a trillion dollars in outcomes. Right. Or to break even. Trillion ish dollars.

[00:12:26] Howard Hartenbaum
Keep in mind, the whole stock market’s only worth what, 14 trillion.

[00:12:30] David Hornik
So you had to get to 114 of the whole value of the stock market to make back the amount of money invested in 2000. Holy crap. That’s so stupid. I just have a sense.

[00:12:45] Tripp Jones
But my investments are really good.

[00:12:47] David Hornik
Well, this is the irony, right? This is the irony, which is at the end of the day, there are a small number of firms who actually will make a bunch of money.

[00:12:57] Tripp Jones
Like, you know, always have, always will.

[00:12:59] David Hornik
Yeah. And that’s why in the end, there are a bunch of investors who want to get into the whatever they think are the top 10 or top 20 firms. Because those firms will actually, despite the fact that the industry will likely lose money, they will make money. We at August Capital manage to convince our LPs, repeatedly, we have August 7th that we will make them money. And historically, that has been true. Let’s, you know, knock them.

[00:13:27] Tripp Jones
You mumbled there for a second. You kind of.

[00:13:31] Howard Hartenbaum
Because it’s a scary thought. Scary for them and scary for us because we got to produce and we know it’s a small number of hits that will drive it. So let’s talk about as it relates to this whole unicorn concept where I was on a panel a few months ago with three other venture capitalists and somebody asked a question like, does it make sense to invest in unicorns? And I started to say, hell no.

[00:13:57] David Hornik
On average, to invest in a company that is already a unicorn, already a billion dollars or higher. Val.

[00:14:04] Howard Hartenbaum
And another venture capitalist who is, you know, a smart guy, but said something that I thought was a bit ridiculous was his claim was if you took all 142 existing unicorn valued private companies and you put money into every single one of them as they crossed a billion dollars, then all you had to do was have one become worth 142 billion to then break even. To which I kept my mouth shut, thinking, you go ahead and do that.

[00:14:33] David Hornik
Yeah, go find that one. Because, by the way, that’s never happened in.

[00:14:36] Howard Hartenbaum
He was arguing. He was arguing he could invest in all of them and it made sense because one would be worth 142 billion.

[00:14:43] David Hornik
Yes, again, if you held your Facebook stock, if you invested in it early at a billion dollars and then you held it for some number of months after the IPO. I don’t know when it hit 142, when it went public at 100 billion, it then dropped to 60 billion, then had to climb back to 100 billion, then it had to. So you had to have the fortitude to go, I’m sticking to it. I’ve made 60x. I’m gonna stick to it.

[00:15:10] Tripp Jones
The Fortitude and the LP agreement.

[00:15:13] David Hornik
Yeah, I mean that’s the thing that.

[00:15:14] Tripp Jones
Folks probably don’t understand is that once, you know, companies are public and a lock off has come off, we’re, you know, it’s our, it’s our job to return that capital back to our LPs.

[00:15:23] David Hornik
That’s certainly the august position is if we have the ability to give you your money back, then we will. That’s in the form of stock. If we get stock, it’s in the form of tax.

[00:15:34] Tripp Jones
You mean profit.

[00:15:34] Howard Hartenbaum
Profits back, right?

[00:15:35] David Hornik
Yeah. Here we go. Have it all back. No, if we make, yeah, if we make you money, company gets public. So, you know, in stark contrast to that craziness was, you know, we could each, we could list a bunch of. We had. Was it in 14, 2014, we had two unicorn outcomes. Right. We had.

[00:15:55] Howard Hartenbaum
Wait, wait, that’s the key word is outcomes. Most people were just talking about unicorn valued companies as opposed to exits.

[00:16:03] David Hornik
Yeah, like unrealized gain is also known as not gain. I don’t know why it’s called. We should, it should be called something else like unrealized snain. Because it’s not gain. It’s got to have a better term.

[00:16:13] Tripp Jones
Unrealized value or you know.

[00:16:15] David Hornik
Yeah, exactly.

[00:16:15] Tripp Jones
Why is games sound like you can spend them? You can’t spend unrealized games.

[00:16:19] David Hornik
You cannot get a mortgage on unrealized gain. You can’t buy cars.

[00:16:25] Howard Hartenbaum
I bet some bank will lend you.

[00:16:28] David Hornik
Well, they did that again. They did that in the late 90s and that was a real problem. Right. They did that. In fact, people assumed that their unrealized gain was valuable. They ended up borrowing against it. They ended up having to pay taxes on it. And then they ended up getting screwed. I mean it’s just an unrealized gain is not gain. But we in two different funds had companies that were. One went public and one was sold both for a billion dollars or more and in that instance resulted in returning capital of over a quarter billion dollars to our investors. In one instance, quite a bit more than a quarter billion dollars. Right.

[00:17:07] Tripp Jones
Each.

[00:17:08] David Hornik
Each.

[00:17:09] Howard Hartenbaum
So those are, by the way, those are called Good deal.

[00:17:12] David Hornik
Yeah, that’s a good, that’s a good deal. Mind you, we’d invested, you know, tens of millions at most in those companies and made hundreds of millions. And in our funds, which are 300 million, 400 million dollar funds, they in essence returned all of the capital in those funds in a single deal as opposed to a billion. Had that been a billion three fund, we would three more of Those unicorn outcomes to even get to break even.

[00:17:41] Howard Hartenbaum
We got to find a word for unicorn outcome and attribute it to David. So if anybody. Good idea of that word.

[00:17:46] Tripp Jones
Maybe the Venture Cast audience.

[00:17:48] David Hornik
Yeah. Can crowdsource it.

[00:17:50] Howard Hartenbaum
If you make up the word, we will let you come on venturecast and.

[00:17:53] David Hornik
We will pretend that we made it up.

[00:17:58] Howard Hartenbaum
That’s called the way it works.

[00:18:00] David Hornik
What was the name of the Howard had. Howard’s coined a number of these things. I don’t know why you’re.

[00:18:05] Howard Hartenbaum
The Illiquidity Premium.

[00:18:07] David Hornik
That’s my favorite. The Illiquidity Premium, which is when a company is more valuable because it is not liquid, because it is unrealized gain than if you actually had to make it liquid.

[00:18:16] Howard Hartenbaum
And because investors, without having all the data, they have to put their money to work someplace. So they bid up the value of the company beyond what it really is because they’re willing to pay the extra money to get in.

[00:18:29] David Hornik
It’s so dumb. That’s so. So I. I’ve come to the conclusion, and I’m not exactly a math person. Like, you know, you guys are better at math than I am. Were you an econ major?

[00:18:38] Tripp Jones
Nope.

[00:18:39] David Hornik
Oh, I thought you were. All right, well, I just.

[00:18:41] Tripp Jones
I just look like an econ. Boring.

[00:18:46] David Hornik
Howard at least went to mit, so we don’t even have to question his math.

[00:18:49] Howard Hartenbaum
I was a mechanical engineer.

[00:18:50] David Hornik
All right, well, you. You had to use math and mechanical engineering. But. But I just feel like nobody is bothering to form the spreadsheet. And this is not even a hard spreadsheet. It’s like, take a number, multiply it by a percentage, you know, times X. How big must X be to return the initial number? Does anyone do this when they think of investing in these funds?

[00:19:12] Howard Hartenbaum
Well, this is the conversation we just had. We had met a company today with really, really interesting founders in the company. And they have an interesting product. They’ve been growing quickly and they’re even profitable at the moment. And they’re ra Series A financing. And we’re having the discussion that it is not clear, even if they are wildly successful, that they will ever be a big enough company to justify a venture bet. It is clearly a great investment, but that doesn’t make it a great venture scale investment. And my argument was the guys are so interesting, maybe they’ll figure it out. But I agree. Totally unclear that the market space is big enough here to justify it.

[00:19:56] David Hornik
That’s a. I mean, it’s hard. I don’t know. So, Trick, when you got here, right, you had been working In a, in private equity.

[00:20:03] Tripp Jones
Yeah, growth equity.

[00:20:04] David Hornik
Right, growth equity. So you need a giant market. Like you don’t even. You didn’t even.

[00:20:09] Tripp Jones
No, not really. Because the growth equity is a little bit different where you. We have much, you know, We. I had, you know.

[00:20:17] David Hornik
Oh my God, yes. Ptsd, I keep calling it we.

[00:20:20] Tripp Jones
We. You have. You don’t need the gigantic outcomes to move the needle. You know, you just need to not lose money. You need to make a little bit. You know, you need to double your money in every investment or 3x your money or, you know, you know, make four times your money in every investment. So you can, you know, if. As long as you invest in a company at a 80 million dollar valuation, the market could only be 500 million, but if you sell the company for 240 million, you did just fine.

[00:20:49] David Hornik
So then maybe it was still a shock to your system when you got here because. Right. Oh, then you came here. It was like, okay, that just, you know, is that really big? We just had this conversation. This was actually, I just told this story about when I came to August Capital, because I had been. Forget. You had been an investor, right, Howard, you’d been investor. When you guys got to August, at least you had invested money. When I got to August, I had been an attorney, I’d represented companies. I understood the mechanics of investment, but I hadn’t made the investment. And I was looking at this company that was team that, everybody liked technology, that was very smart. It was a very clever company. And our partner John said to me, so who buys this company? Or do you think this kit’s big enough that it goes public? And to your point again about, there are unicorns, they’re fake unicorns and they’re real unicorns. Unrealized gain is not relevant because the only thing we do is try and turn an invested amount of money into more money that we can distribute back to our LPs. And that is actual realized gain. So in this company, I looked down and said, I don’t know, I don’t think there is anyone who buys it or there is no big company. Right. You need, if you are going to make hundreds of millions of dollars, it means that someone has to be able to acquire the company for a billion dollars, which means that they need to be tens of billions of dollars. Which in this particular space, which was the nonprofit space, there was no such company that was worth billions of dollars. And so my partners were sort of like, our partners are like, so I don’t see it. Right. And it just was A wake up call, like, holy cow. That’s the measure is I have to figure out how I can invest in a company. And when it works, it gets liquid, it goes public or gets bought and we make a bunch of money.

[00:22:38] Howard Hartenbaum
A lot of investors will make a comment that I want to make five times my money or ten times my money. And I think of it very differently, which is I want to invest in a company and put in 3, 5, 10, $15 million over time and get back 250 million we all want. No, no, that’s the threshold I’m thinking about in the process. I’m not thinking, if I put in three, will we get back 10 times our money and make 30 million? Because that doesn’t matter.

[00:23:04] Tripp Jones
So you two definitely think like series A investors and only like series A investors, which I appreciate and I’ve learned.

[00:23:10] Howard Hartenbaum
A ton from, but you’d better start thinking that way.

[00:23:12] David Hornik
Yeah. Young man.

[00:23:12] Tripp Jones
Just not to. Before I’ll take a vote. Yeah, before I, you know, before a astute venturecast listener starts picking on our math skills. I think your math on, you know, one, I agree with you. $68 billion of annualized, you know, venture capital fundraising is silly. But if, you know, I think the math is a little over inflated because you’re not taking, you know, the same company with the B investors and the C investors and the D investors all in it. That’s, you know, by the time those companies exit, like, I don’t know, let’s, you know, what percentage of Uber is owned by their investors now.

[00:23:50] David Hornik
But you’re. No. So I get to win in math. This is super exciting.

[00:23:55] Howard Hartenbaum
I’ll be the judge of this.

[00:23:56] David Hornik
Yeah. Oh, good. Let Mr. Math judge it. This is why MIT has served you well. Where is your brass rat, by the way? Howard?

[00:24:03] Howard Hartenbaum
Would you like to see it?

[00:24:04] David Hornik
Do you have it?

[00:24:05] Howard Hartenbaum
I do have it.

[00:24:05] David Hornik
What, do you leave it in your office?

[00:24:07] Howard Hartenbaum
No, I’ve never, I never wear it, but I do have one and I know where it is. Would you like me to bring it in one day?

[00:24:11] David Hornik
I want you to wear it. How?

[00:24:12] Howard Hartenbaum
Because you don’t believe I actually went there.

[00:24:14] David Hornik
You went there. I think you like you’re one of these guys. It’s like in Goodwill hunting. I don’t know. You are sweeping the floor, writing on the blackboards. And you pretended that you went there.

[00:24:24] Tripp Jones
But he probably stayed. Paid tuition too. He’s that moral.

[00:24:28] David Hornik
But anyway, back to it. Back to it. Your point is that when Uber goes, goes public, it could well be that 40% of it is Owned by investors. And Therefore instead of 10% over Uber, it’s 40%.

[00:24:41] Tripp Jones
That’s my point.

[00:24:43] David Hornik
That is not relevant. And here’s why. Because I’m talking about per fund, right? So any given fund raised, let’s say there are 68 billion dollar funds. Yep. Right. And they each invest in a set of companies. And so four of those 68 billion dollar funds invest in Uber and they each own 10%.

[00:25:04] Tripp Jones
Yep.

[00:25:04] David Hornik
In aggregate, they, they own 40%. But the reality is that each one of them owns 10%. And therefore for each one of those funds, if it gets public at whatever number, they only get a 10% return. So it’s just about the aggregate number, which is in aggregate, there’s $68 billion. It has to turn into 680 billion.

[00:25:25] Tripp Jones
And I totally agree with that point. It was more. My more point. The point was we’re talking about the, you know, the, the market value that needs, you know, the market cap that needs to be created that gets, that.

[00:25:35] Howard Hartenbaum
Gets double, triple, quadruple, counter, dozens of trip. Because you’re missing the point that once it gets past the first 20 or 30% of the company, that then gets diluted. The rest of it is not venture firms investing. It’s a completely different class of investment.

[00:25:48] Tripp Jones
It’s getting lumped in on some of these fundraising.

[00:25:51] David Hornik
The bigger problem is that you’re not buying 10%. So to his credit, Rob Hayes bought a gigantic chunk of Uber in the first round.

[00:26:01] Howard Hartenbaum
Shout out to Rob Hayes. Rob Hayes.

[00:26:04] David Hornik
And to its credit, our pal upstairs, Bill Gurley, bought a big chunk of the company in the series.

[00:26:11] Tripp Jones
Bill Gurley did not live upstairs anymore.

[00:26:13] David Hornik
Oh, but he did. Yes, our pal, who formerly was upstairs and now lives in the Mission. And then again, to his credit, our pal Shervin Fishvar, while still at Menlo, he’s no longer there. Bought probably more than 10% of the company. Maybe 10%.

[00:26:29] Howard Hartenbaum
What happens when a VC is at a fundamental. Like Shervin was at Menlo, and he invests in the companies on the board and then he leaves that fund like Menlo.

[00:26:40] David Hornik
Well, in that instance, he stayed on the board because.

[00:26:43] Howard Hartenbaum
Representing Menlo.

[00:26:44] David Hornik
No, I don’t think so. I think he stayed on the board representing friend of Travis. Friend of Travis, friend of Garrett and Travis, who is a good guy who people like and wants to stay on the board. Right. Because if it was not Shcherban, then Menlo would have said, no, no, no, he doesn’t represent us. Or Uber would have said, no, no, no, you can’t represent Menlo. You’re not even at anymore. It’s a big risk, right? If you have people who leave these firms, then what happens? Where do they go?

[00:27:11] Howard Hartenbaum
It happens every once in a while and it’s kind of a weird situation. And sometimes if the company is succeeding wildly, it doesn’t really matter. But if the company is struggling, which happens to many companies along the way, and the person who was on your board from a VC firm leaves that VC firm, then he gets off the board. It’s sort of like the VC firm isn’t really close to you anymore.

[00:27:35] David Hornik
This is, this is a big problem.

[00:27:36] Howard Hartenbaum
We call it an orphan, sometimes an orphaned.

[00:27:39] David Hornik
Well, here’s the other thing, right? There are firms that invest, you know, that investing companies put lots of money on it in these companies. And they either don’t get a board seat or they put someone, you know, one of the partners doesn’t go on the board, but someone else goes on the board for them. And it’s always a bit challenging because then the firm is sort of one person removed from the company. And as long as it’s going well, then it’s all good. You get the updates like, oh yeah, keep up the good work. And if it’s going particularly well, then that venture firm, before it goes public or before it’s a big outcome, will put their person back on it to, you know, to make the final lap and wave the victory flag and claim credit. But if it’s not going well, it’s really hard to connect with the firm and say, hey, we’re doing a down round financing or we need a bridge and who’s involved and how are we going to make that choice?

[00:28:29] Tripp Jones
And yeah, I think the way the firms handle it tells you a lot about the firm. I’m kind of curious and I don’t know the answer. What happened when you joined August from Draper Associates, Howard, you know, to your company?

[00:28:41] Howard Hartenbaum
I was at Draper Richards. Sorry, minor detail. It doesn’t really matter.

[00:28:44] Tripp Jones
Some Draper, different entity, same Bill Draper.

[00:28:49] Howard Hartenbaum
I stayed on.

[00:28:50] David Hornik
Same Bill Draper, different back channel.

[00:28:53] Howard Hartenbaum
No Draper. Well, sort of. I stayed on a couple of boards for a few years until they did a couple rounds more funding and then got off.

[00:29:04] David Hornik
But you also were an early stage investor where that was the normal.

[00:29:07] Howard Hartenbaum
Easier to do.

[00:29:07] David Hornik
That was the normal course. Same thing with Vivek. When Vivek became a venture partner at August, before he became a partner, he was sitting on a couple or three boards, which in that instance, he didn’t get off of them. They just came. The deals came to fruition. The Companies got sold. Those deals did very well and then he rolled off of them. Then he decided he actually liked investing. Stuck around, became a GP in August and now we can’t get rid of him. Like we’ve been trying and he’s still here.

[00:29:33] Tripp Jones
It’s been like a decade, right?

[00:29:35] David Hornik
10, 14 years of Vivek.

[00:29:39] Howard Hartenbaum
He’s out this week. We can get rid of him.

[00:29:41] Tripp Jones
I think we have a vote right here.

[00:29:43] David Hornik
We just gotta get call in. Jeff.

[00:29:46] Howard Hartenbaum
We actually do have the votes.

[00:29:47] David Hornik
We gotta quorum. It’s all good.

[00:29:49] Tripp Jones
Yeah. You thought you were not going away on any more.

[00:29:52] David Hornik
I got an email from one of our. Our former partners, Andy Rapaport, who is coming to the office because he’s coming for the lunch to celebrate the retirement of Tripp’s now assistant, Diane, who has been at the firm for how long?

[00:30:10] Tripp Jones
33 years.

[00:30:11] David Hornik
33 years.

[00:30:12] Tripp Jones
I was one year old when she joined August Capital. One year.

[00:30:18] David Hornik
Who finds that more trouble?

[00:30:21] Howard Hartenbaum
You know. We need though, she is starting her little baby blanket business and she needs somebody to build a website for her. We would love to find somebody, somebody who wants to build at a website.

[00:30:31] David Hornik
Hey, Raul. What are you up to?

[00:30:34] Tripp Jones
Hornick will pay for it. It’s fine.

[00:30:35] David Hornik
Yeah, just kidding.

[00:30:36] Howard Hartenbaum
We will send you a nice handmade baby blanket.

[00:30:39] David Hornik
Yeah. Should you need that. Yeah, no, Diane’s. So think about that for a second. Diane’s been here 33 years now, mind you, August Capital has been around for 26 years.

[00:30:50] Tripp Jones
21.

[00:30:51] David Hornik
21, yeah. Oh, yeah, sorry. Excuse me. Since.

[00:30:54] Tripp Jones
Since I’m here for the math.

[00:30:55] David Hornik
Yeah, since 95. Since 95. Yeah. We will have Tripp in the future, only he will say nothing except to correct our math. So 21 years of August Capital. Which means she got here when the predecessor fund, TVI Technology Venture Investors, which was an amazing fund. And she’s so. She’s seen. She’s seen a lot of craziness. She. She saw them hire me and I’m sure she was like, what? That’s the end of August. Call it. Call it. Then she saw them hire a trip and she was like, well, that’s better. That makes more sense. Howard? I don’t know.

[00:31:31] Howard Hartenbaum
I don’t know either.

[00:31:32] David Hornik
33 years is amazing. I do think. I think we often talk to companies and firms or whatever and you do it matter like you measure an environment by what is the attrition. Right. I just had a board meeting and the company reported 28% turnover. Annual turnover in team. So what?

[00:31:53] Howard Hartenbaum
So they had three people.

[00:31:54] David Hornik
28% is pretty troubling.

[00:31:57] Tripp Jones
How many people maybe is a blanket statement. Yes.

[00:31:59] David Hornik
If they were, you’re good. You’re good.

[00:32:02] Tripp Jones
How much was customer support?

[00:32:05] David Hornik
So it turns out that a big chunk of it was customer support. We asked exactly the same thing. What is the number for engineering?

[00:32:11] Tripp Jones
Yeah, exactly.

[00:32:13] David Hornik
You can lose everybody else, but if you’re losing 20, 28% of your engineering team a year, that’s a whole lot of wasted. That doesn’t work to get people trained and whatever else. I think the. The attrition rate at August is like, you know, It’s. It’s like 0%. One person leaves August every seven years or something.

[00:32:38] Tripp Jones
Maybe. So I, you know, I’ve been here, as I stated.

[00:32:41] Howard Hartenbaum
Well, Andy retired.

[00:32:43] David Hornik
Yeah.

[00:32:43] Howard Hartenbaum
Recently. And before then as a gp, it just sort of.

[00:32:49] David Hornik
No one has a gp. Mike Maples was here as a.

[00:32:51] Howard Hartenbaum
He wasn’t a gp.

[00:32:52] David Hornik
As a. Something like an investor.

[00:32:56] Tripp Jones
Awesome person.

[00:32:57] Howard Hartenbaum
Andrew Anker, Was he a GP?

[00:32:58] David Hornik
He was awesome. Anchor was a GP. He left in 2000 and joined one.

[00:33:02] Howard Hartenbaum
Of our portfolio companies.

[00:33:03] David Hornik
He actually joined a company and then it became a portfolio company. He also then became the chairman of the board of Ebates and continued to work on that. And that was very helpful. Yeah. So we, you know, we’ve had a stunningly small number of people leave, which is. Either means that this is a great place to work or we’re really bad at getting rid of terrible people.

[00:33:26] Howard Hartenbaum
You know, it’s had a lot of turnover lately. Is YC just in terms of imaging. I need everyone a few years ago. Is anyone left or I. Paul isn’t there anymore.

[00:33:36] David Hornik
Is he the core team? Paul’s not. Paul’s not. Paul is actually retired.

[00:33:41] Howard Hartenbaum
Is Jessica there?

[00:33:42] David Hornik
Jessica is there. She is still involved. And then the two. There were four founders and so three of the four are gone. Although we just looked it up. When did we say that it started?

[00:33:53] Tripp Jones
In March of 2005.

[00:33:55] David Hornik
Yeah. So 2005. So, okay. It was started in a. With this kind of interesting set of people. Paul and Jessica were sort of the core team that drove it forward after 2010.

[00:34:07] Tripp Jones
And by the way, the goal for all of us should be retires. You know, retirement should be something we aspire to retire at some point.

[00:34:15] David Hornik
Holy crap.

[00:34:16] Tripp Jones
I don’t know.

[00:34:17] David Hornik
So basically, if. If we do particularly well, we can count on you leaving. I just want to understand.

[00:34:24] Tripp Jones
Yeah, but you’ll be like 75 by then.

[00:34:28] David Hornik
Wow. That is not a whole lot of confidence in our ability to do particularly well.

[00:34:32] Howard Hartenbaum
We’re going to revisit this after the discussion today. Let’s get back to.

[00:34:36] David Hornik
Yes, we’ll, we’ll.

[00:34:38] Howard Hartenbaum
No meaning. I see not just the core people, but they had a lot of people help them build the business over time. Come in and go out and there’s a bunch of folks like, you know.

[00:34:49] David Hornik
The people.

[00:34:51] Howard Hartenbaum
Was it Taj Hagar? What was it?

[00:34:53] David Hornik
Oh, there were some early good young.

[00:34:56] Howard Hartenbaum
Guys there working, but they didn’t matriculate. They just sort of came and go, you know.

[00:35:00] David Hornik
But it’s a new, I think it’s a new model. Truthfully, since Sam came on, he’s thinking of it differently. He’s trying to build a much bigger scale. He’s bringing on a lot of, lot of partners. He’s bringing on part time partners. He’s bringing on a buddy of mine named Tim Brady who was the number three guy at Yahoo. He was actually in business school when Jerry and Dave started Yahoo and they said, hey, come help us write a business plan. Wrote the business plan. That was an amazing run. He left there and started working in and around the education space. He started Magine 12K, or I’m sorry K12, which was great accelerator for education startups. He just joined as a partner and they basically pulled the two things together because Sam’s saying like, look, let’s, you’re a great guy, you’ve been associated with the YC world for a long time. Why shouldn’t we just have you as part of it? Right, but the byproduct of that is they just had a demo day and a half.

[00:35:56] Tripp Jones
It was 100, 123.

[00:35:59] Howard Hartenbaum
123 YC 123.

[00:36:03] David Hornik
How many startups do you think we’ve funded in the history of August Capital?

[00:36:08] Howard Hartenbaum
I would more than that.

[00:36:10] David Hornik
10 or 12 a year, let’s call it.

[00:36:12] Howard Hartenbaum
No, no, if you just think per fund basis. If it’s 20 ish, 25 per fund times 123,6 invested, I bet it’s close.

[00:36:21] Tripp Jones
I bet it’s like 140.

[00:36:22] David Hornik
See, I’m so glad we have you here to do the arithmetic. So in the lifetime of the firm, 21 years, we’ve done 140ish investments. YC presented 123 in a day, in two days.

[00:36:37] Howard Hartenbaum
They do that twice a year now.

[00:36:38] Tripp Jones
You can’t do it in a day. Right. Five minutes times you’d spend all day equal five minutes. It’d be 10 hours. 10 hours and 15 minutes.

[00:36:47] David Hornik
Whoa. My God. I didn’t think Princeton was that good in math.

[00:36:52] Tripp Jones
I might just be bullshitting I wouldn’t know.

[00:36:54] David Hornik
I went to Stanford. I was a computer music major. What do I know from math? But here’s the other thing that’s super interesting. So YC just had a big outcome, right?

[00:37:09] Howard Hartenbaum
Unicorn exit.

[00:37:10] Tripp Jones
Yes. A real one.

[00:37:11] David Hornik
The real McCoy. Yeah.

[00:37:13] Tripp Jones
An edible unicorn.

[00:37:14] Howard Hartenbaum
Is that their first one in ten years?

[00:37:16] David Hornik
First unicorn.

[00:37:17] Howard Hartenbaum
Good for them.

[00:37:18] David Hornik
Their first realized unicorn was what’s the company, Cruz. So they’ve been around since five. So that’s 11 years. And they had. And the biggest exit they’ve had prior to that, so far as I know, was Heroku, which was sold to Salesforce for something shy of a couple hundred million dollars. Great outcome. Remember that? These guys put in a smattering of dollars and they get 7% of your company. So almost anything is great. But a billion dollars means that if they still owned 7, let’s call it 6% of the company, it had raised one round of financing. They made $60 million on at least.

[00:37:59] Tripp Jones
No one really knows exactly.

[00:38:01] David Hornik
Something in the vicinity of $60 million. Right. Pretty good outcome.

[00:38:04] Howard Hartenbaum
Great outcome for investing, like, $15,000, which is what they invested.

[00:38:09] David Hornik
So I was. I was just saying, like, oh, my God, it’s been 10 years. And there have been two outcomes and, you know, some. Some other smaller ones. Tripp was sort of like, you know.

[00:38:19] Tripp Jones
Well, you know, I will prove you wrong with a compliment to you. And it. And, you know, your best outcome ever, Splunk, you know, was returned, you know, almost a billion billion dollars to, you know, or closer to, you know, half a billion to August Capital alone. And how long did that take you?

[00:38:41] Howard Hartenbaum
Eight years?

[00:38:42] David Hornik
Seven or eight years.

[00:38:43] Tripp Jones
No investment. Investment to full liquidity.

[00:38:46] David Hornik
Nine years. Nine years. Time like that, I mean, okay. And, well, and then Ebates, which was also a. Was also a realized unicorn. A.

[00:38:54] Tripp Jones
That was 14 years.

[00:38:55] David Hornik
Real unicorn. We’re gonna. We need some term. Yeah, 14 years.

[00:38:59] Tripp Jones
So on average investment, your best investments take 12 years to.

[00:39:03] David Hornik
Shut up, Trip.

[00:39:04] Tripp Jones
So YC could be coming into, like, a golden age of exits. Who knows?

[00:39:09] David Hornik
Totally true. And. And keep in mind, they have Airbnb, they have. They have WePay, which we’re an investor in and have been for going on, you know, almost 10 years. They have, you know, they have Dropbox, they have a set of these companies that are. That have the capacity optimizely. Also great business. Like, they’re just. I’m not being. I’m. Trust me, Paul. Jessica, I’m not.

[00:39:38] Tripp Jones
No, I think. I think. I think, you know, the lesson that we should take away is if that. Venture investing is very hard and it takes a long, long time. And whenever my wife asks me like, hey, did you make any good investments this year? I say, I don’t know. I hope so. I’ve invested in good people. But I’ll let you know in like five to seven years, then I’ll have an idea.

[00:39:56] David Hornik
Yeah, very easy. When our newborn daughter is in fifth grade, I’ll have an idea and. Which is totally fair. In fact, I was just catching up with an old friend at the lobby conference, this conference that we run. And. And my son Julian played at the conference. He played a song at the conference. He’s a singer, songwriter guy. And. And this friend was laughing because she was. She. She and I had worked together on a deal and Julian came to the office for that deal. He was four. And here he was, you know, a junior in college and, and nearly fully formed. Human. It was very like time passes and it. And. And Stefan, the stuff that works gets more valuable, which is amazing. But. But it takes a long time. It really is. It’s. It’s a. I acknowledge it’s hard.

[00:40:50] Howard Hartenbaum
You know what we’re gonna see next? We’re gonna see because Cruise was automotive related and GM bought it and Uber is so exciting and GM put a bunch of money in there. We’re gonna start seeing Automotive focus. Sorry, yeah. Automotive focused venture funds.

[00:41:07] David Hornik
Good lord.

[00:41:08] Howard Hartenbaum
Momentarily, we’re going to read about some venture fund focused purely on automotive technology.

[00:41:13] Tripp Jones
We have our friends at RPM Ventures.

[00:41:15] David Hornik
That’S coming out of which. For which company?

[00:41:18] Howard Hartenbaum
No, I mean rpm, Mark Wiser and Adam Boyden. And they do have a focus on. And Mark is from Detroit. But I’m just saying new funds are going to be formed now.

[00:41:31] David Hornik
Doesn’t one of the big auto manufacturers have a fund?

[00:41:35] Howard Hartenbaum
GM has money.

[00:41:36] Tripp Jones
I think everyone has a fund these days.

[00:41:38] David Hornik
Oh. So I was just giving this talk and I was talking about that one of the potential. Going back to yc, one of the potential signs of a bubble is that there are an increasingly large number of accelerator programs. So you have YC and it’s kind of a general purpose one. Right. And then you have others like it that are. That are general. Then you have these sort of more specific ones. You have the Disney accelerator that’s focused with Disney. Then. I don’t know if you know this, but the, The. The NFL has an incubator. So there’s an NFL incubator program which is kind of fun. And so you could go incubating and the Cubs have an incubator. So if you want to be more specific, I’ll be focused just on a particular baseball team. I would say like it’s just a.

[00:42:23] Tripp Jones
Matter of time until mandate there.

[00:42:25] David Hornik
Curry until, you know, Steph Curry incubator. Right.

[00:42:28] Tripp Jones
I’d rather invest in Steph Curry incubator than the Cubs Inc. Incubator. But that’s just me.

[00:42:33] David Hornik
I just see it coming. The Steph Curry incubator. His daughter will like come by and cheer up.

[00:42:38] Tripp Jones
It’s also something I invested, which is awesome. Riley Curry is the Beyonce of toddlers.

[00:42:44] Howard Hartenbaum
As a firm. That’s not real, by the way.

[00:42:46] David Hornik
Howard, I’d just like to point out, before you get to a real point.

[00:42:49] Howard Hartenbaum
That that’s my whole job here.

[00:42:54] David Hornik
I think everybody acknowledges that. But Tripp, who is a visitor, has just injected athletic sports information into the show and so he has never invited back.

[00:43:06] Howard Hartenbaum
And I was just going to raise the point that you invested in a sports related technology company. Is that public information yet or not?

[00:43:15] David Hornik
Yeah.

[00:43:15] Tripp Jones
Yeah, so I love that one.

[00:43:18] David Hornik
No, a company called Second Spectrum. And it is kind of ironic that in fact I was at dinner the other night and it was the night before the second Spectrum board meeting and the warriors game was on TV while we were eating dinner and I was looking up at it and my wife was like, are you serious? Like, you don’t watch sports. I can’t believe you’re watching this. And I said to her, I have to. It’s important because I have the Second Spectrum board meeting tomorrow. And she was like, you’re so full of shit.

[00:43:45] Tripp Jones
Second Spectrum, even though not that many people know about it, is the company I talk about the most about from August Capital over Avant or Fastly or Ebates or Zulily or Turo or whatever. Just because it’s. I think it’s so interesting.

[00:44:00] David Hornik
So you know all of the companies other than Second Spectrum that Tripp just mentioned either have or have in the past or currently have tens of millions of dollars in revenue. And then there’s Second Spectrum, which is taking, imagine taking the video feeds from athletic competitions. Right now the NBA is the principal focus turning, taking those, consuming them, turning them into moving dots, using machine learning and then determining everything that is happening on the court. So you can say, show me every time a particular player does something that is.

[00:44:37] Tripp Jones
I want to hear an example.

[00:44:38] David Hornik
What kind of move, something that’s statistically unlikely to happen, a pick and roll, for example.

[00:44:44] Tripp Jones
That is a real thing. Imagine you have one. Hornick.

[00:44:47] David Hornik
Imagine Steph Curry were shooting for a thing and it Was unlikely to occur.

[00:44:55] Tripp Jones
Shooting for a double or a hat trick.

[00:44:57] David Hornik
Triple. For a triple thing.

[00:44:58] Tripp Jones
Yeah.

[00:44:59] David Hornik
And from like half the field.

[00:45:01] Tripp Jones
Yeah.

[00:45:02] Howard Hartenbaum
A three point potty shot from the.

[00:45:05] David Hornik
No, but it could be anything. The thing. That’s amazing. Right. So in basketball or in any sport, there are a very specific set of statistics that we follow. Right. So. Yes. What is your free throw percentage? What is your, you know, what is your percentage, you know, driving to the hoop or shooting a three pointer, whatever.

[00:45:21] Tripp Jones
Assist to turnovers.

[00:45:23] David Hornik
Yeah, exactly. All these things. These are like the standard things. And sure, Second Spectrum tracks those. The machine can instantaneously report those statistics for you. Piece of cake. What. What are not tracked in the same way. That is amazing is what is the likelihood that someone scores under pressure in any one of these things, what is the likelihood someone scores while being guarded by a disproportionately good defender? In any of these cases, the machine knows when someone takes a shot from a particular point in the. On the court. What is the statistical likelihood that the rebound will land somewhere else in the court? And it can tell you who is the most likely to get to that spot in the court, even if they don’t make the rebound. So who is the person who has the best rebound sense? Not just the person who’s making the most rebounds. It’s just. So it’s. And that’s just the beginning. I’m just beginning. Tripp, how do you think that was? Pretty good, right?

[00:46:19] Tripp Jones
I think it’s pretty good. It’s like. It’s like you’ve created a machine learning version of Shane Battier.

[00:46:24] David Hornik
Exactly.

[00:46:26] Tripp Jones
Yeah. You don’t know what I’m talking about, but you should.

[00:46:28] David Hornik
Is that the baseball guy or.

[00:46:30] Tripp Jones
No, I think he’s actually an advisor to Second Spectrum, but he’s known for an incredibly smart basketball sense. You know, Shane Battier, Draymond Green from the Warriors. Just like both a combination of.

[00:46:45] Howard Hartenbaum
I’ve had enough sports.

[00:46:47] Tripp Jones
I’ve got it exactly where I want it.

[00:46:49] David Hornik
So you know, the next.

[00:46:51] Howard Hartenbaum
How about that? Bitcoin.

[00:46:54] David Hornik
Anyway, I’m glad that. I’m glad that. I’m glad. So here’s the other thing. And by the way, if you are listening and you fall in this category, we’re looking to hire at Second Spectrum. One of the incredible competitive advantages when you’re a Second Spectrum is that if someone actually likes sports or understands sports, is good at sports, and is also a great engineer or whatever, they really want to work at Second Spectrum.

[00:47:18] Tripp Jones
Don’t they have like the entire MIT basketball team?

[00:47:20] David Hornik
We have something like five or six former captains of the MIT basketball team, both men’s and women’s. And it turns out that these people are actually pretty good basketball players because, you know, they were playing real ball. Whatever. They’re better engineers. No offense, guys. I’m sure you’re astonishing at both. And actually, that’s what’s amazing. So what we haven’t done yet is getting it to get any of the Stanford basketball team, the UNC team. We’re just looking for amazing smart people who also love sports. And next up is. Is European football, right? And it’s going to be amazing. And we really need to find, like, the smart, smart people who are professional, you know, football players who. Soccer for you Americans. You.

[00:48:09] Tripp Jones
You know, we Americans, David.

[00:48:11] David Hornik
We crass Americans, you know, the same kind of thing. And so anyway, super interesting Howard’s board. What else do you have anymore? It’s like, over. You feel like we’ve destroyed venture capital.

[00:48:24] Howard Hartenbaum
We’ve destroyed it today with too much sports. Like, you name people I never heard of.

[00:48:29] David Hornik
You’ve ruined it for hours.

[00:48:31] Tripp Jones
It’s like you talking about old entrepreneurs.

[00:48:33] David Hornik
Yeah, exactly.

[00:48:34] Howard Hartenbaum
Yeah. But those guys. Steve Jobs. You’ve heard of him?

[00:48:37] Tripp Jones
Michael Jordan.

[00:48:41] Howard Hartenbaum
I didn’t talk about Steve Jobs. Advisor.

[00:48:43] David Hornik
How would I have to say? I think the trip’s been pretty good here.

[00:48:46] Howard Hartenbaum
I think that he can have my role moving closer.

[00:48:49] David Hornik
You know, we had that Carl Borg, our partner, Eric. Carl Borg on here, and he was all CFO on us. And so he should be psyched that trip is, like, ready to.

[00:48:58] Tripp Jones
We should get Amy in here. Get some actual real.

[00:49:01] David Hornik
Some real thinking. All right, next time.

[00:49:04] Howard Hartenbaum
Yeah, I don’t think we had any real lessons today. Not that we were.

[00:49:07] David Hornik
We did. Jam packed with real lessons.

[00:49:09] Tripp Jones
Yeah, there was.

[00:49:12] Howard Hartenbaum
Just do whatever David says.

[00:49:13] David Hornik
Oh, Howard, don’t, don’t. Don’t downplay the value of your adventure cast.

[00:49:18] Howard Hartenbaum
My job is to just get it back on track every now and then.

[00:49:21] David Hornik
Yeah, well, let’s do it.

[00:49:22] Howard Hartenbaum
You know what it is? It’s the caffeine.

[00:49:24] David Hornik
I did have caffeine today, which is a rarity. I save it when I need it as a drug. And last night I got too little sleep and I went. I went and visited a friend over at Facebook, and he gave me a cup of coffee. And then it’s been downhill ever since, so I apologize. All right, well, this has been Venture Cast. I just want to once again reiterate that. Raul, you have, what, four hours, did we say to get here for the interview? And we look forward to. Or actually anyone, anyone who wants to be hired. Asterisks.

[00:49:54] Tripp Jones
We’re gonna pay you in goldfish.

[00:49:57] David Hornik
Yeah, that’s all right. He could be paying goldfish.

[00:50:00] Howard Hartenbaum
And socks.

[00:50:00] Tripp Jones
And socks.

[00:50:02] David Hornik
Stan sucks. This has been Venturecast. I thank you for listening. I’m David Hornik from August Capital.

[00:50:09] Howard Hartenbaum
And this is Howard Hardenbaum, also from August Capital.

[00:50:12] Tripp Jones
And Tripp Jones, also from Arms Capital.

[00:50:16] David Hornik
Thanks for listening.