Generated Transcript

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

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

[00:00:23] David Hornik
Howard, I was up all night doing email. That’s almost true.

[00:00:29] Howard Hartenbaum
How many nights a week do you stay up late to do email? I mean, late for you is like 3:30 in the morning. Not late, it’s like 10:30 at night.

[00:00:38] David Hornik
No. So this is. I mean, I think the problem. Here’s the thing about email, right, Is that it is like a constant drumbeat. And so if you want to be truly responsive, right? You want to, within the, within the day, respond to the emails you receive. It basically requires you every night to stay up for some number of hours and respond to emails, which is a ridiculous. Like, is that a good use of our time? I don’t know.

[00:01:09] Howard Hartenbaum
So what about the problem that each. If you’re not careful how you respond to email, you generate more email.

[00:01:17] David Hornik
Totally true. If you’re wimpy about it and you don’t say, you know, okay, here’s an answer, right? Not let’s catch up this or blah, blah, but here’s an answer, then it will generate additional email. And then here’s the other thing. And I actually am very torn on this. I’m on it. You get these emails from CEO to the board, or I’m on a nonprofit, so there are 25 members of the nonprofit board or, or group. And there’s something interesting. And then you hit respond. All right? And respond all is basically like, congratulations or great job or thanks so much, or it’s super interesting. But if it’s generated times 27 times, then that’s a lot of like, oh, I’m glad you’re happy, but click, click, click, click, click.

[00:02:09] Howard Hartenbaum
We do that here, too. Vivek sends an email around, he’s selling a company, and it’s like, good job, congratulations, and I’ll send him a note directly. And I leave everybody else off.

[00:02:20] David Hornik
We just assume you hate Vivek.

[00:02:22] Howard Hartenbaum
No, no. I send him a note privately, and then everybody else, then I go, okay. And then I send another one and I copy everyone. So I’ve actually doubled it down. Like, we should just have a rule. Like, I have this with Kirsten, no emails that just say thanks just to simply, I know you’re gonna do it, or you know, I’m gonna do it. There is no reason to say thank you.

[00:02:44] David Hornik
I totally get that. And I absolutely. So we just had this conversation at the lobby.

[00:02:53] Howard Hartenbaum
You should tell what the lobby is in case we have any newbies.

[00:02:56] David Hornik
Yeah. Is there Anyone? So the lobby. So 10 years ago, this was the 10th anniversary. So 10 years ago I was going to a bunch of conferences and I thought, gee, I don’t get these conferences. Like, you stand, you sit around in the dark and there are people up on stage and they, you can’t really talk about the things they’re really thinking because they’re on stage and they’re being reported and whatever else. And then all you really want to do is talk to the other people who are attending the conference. And so you hang out in the lobby and you chat with whoever’s out there and you have a real conversation. But all the stuff that’s really the content of the, of the conference isn’t that interesting. That that was my theory. And so I created a lobby which was get a couple hundred people together unconference, hang out in someplace nice and have a. And have conversations about the things that are relevant to us. So one of those topics that we’ve discussed many times over the, over the 10 years is email. So I was saying to someone at the lobby that I had done exactly what you said and said to Mary, my assistant, hey, Mary, by the way, I type thanks or will you please, or whatever, you know, a thousand times a month. And it’s kind of wasteful. And can you, will you please assume that when I ask you to do things, I mean please and thank you and whatever else. And Mary’s like, of course, fine. And so then for about a half a day, I just sent emails without thanks or whatever and I couldn’t do it. I could, like, I just, I couldn’t do it. It just felt so rude to me that I ultimately still spend. Send a lot of thankses and whatever to Mary. Yeah, to Mary. It’s super inefficient. I acknowledge it is, but it somehow felt so wrong to me that I just couldn’t, I couldn’t bring myself to just.

[00:04:39] Howard Hartenbaum
You should just put in your signature.

[00:04:41] David Hornik
Thanks to everyone. Thanks for everything. Thanks for being there. Thanks for being a friend. The interesting thing about the lobby, so the lobby started out as a, you know, this is a digital media conference. 200 interesting folks like, you know, the CEOs of Zappos or Warby Parker or, or Birchbox or whatever, like just a bunch of founders and of LinkedIn and Twitter, etc. And when it started out that we really focused on business stuff and these days actually do. It’s kind of some business stuff, but it’s a lot of like, life stuff. Right. Have you noticed that people are Maybe it’s because we’re getting older and we’re closer to death.

[00:05:27] Howard Hartenbaum
Hey, I invited a death guy to the lobby.

[00:05:29] David Hornik
That’s true. How’d that go?

[00:05:33] Howard Hartenbaum
Did you hear about this death company AB Found?

[00:05:36] David Hornik
What is that?

[00:05:37] Howard Hartenbaum
I can’t remember the name, but it’s basically they buying up forests and then you. For you or your family, you buy a tree and a little name, your family name goes in the tree, and you can sprinkle your ashes around that tree.

[00:05:52] David Hornik
Well, it’s certainly a better.

[00:05:53] Howard Hartenbaum
And you can buy, like, a redwood for $10,000 or a.

[00:05:57] David Hornik
Do they promise it won’t get cut down?

[00:05:59] Howard Hartenbaum
They buy the forest. They’re like protected wood, you know, lands and whatever. And you pay based on the type of tree, like how long the tree is going to live or how big it is or what. And then you and your family can go and spread your ashes. Like, that is an awesome death company.

[00:06:11] David Hornik
Well, it’s certainly better than a plot of land. I have to. I don’t know if you’re a, like, burial guy, but that always strikes me as weird. Like, hey, that dead dude’s under here. Let’s go hang out.

[00:06:24] Howard Hartenbaum
That’s in Phillips Andover. That’s what they do, right?

[00:06:27] David Hornik
Yeah, they go. Well, they go hang out in the. In the. In the cemetery, right? No, I’m just not a cemetery.

[00:06:33] Howard Hartenbaum
Back to the lobby. Sorry, I just. I took.

[00:06:35] David Hornik
No, no, I don’t have anything about the lobby. No, I just know the email thing. This. This, you know, so we’ve talked lots about how do you fix. How do you fix the email question and how do you solve the email problem? And. And I don’t have a good answer. So the answer is that I probably, a couple nights a week, spend a lot of hours on email, and I. Because I fly a lot, that’s my best hope. Because if I fly cross country, I will clear my email. Right.

[00:07:01] Howard Hartenbaum
Do you get it down to zero?

[00:07:03] David Hornik
Never. Because I use my inbox as a to do list. So I’ll have 10 or fewer things that sort of sit until I can get rid of them. So you’ll go. I’ll go from, you know, 150 to 10. But you never. Yeah, I’ve never had the satisfaction of zero.

[00:07:19] Howard Hartenbaum
That, like, you know, in outlook, there’s a thing you can do like alt shift zero, and it only shows you the unread ones.

[00:07:27] David Hornik
I find that very confusing. I don’t want that. I don’t want that. What do you. I sense there’s a certain sense of malaise in this venture gas tower. I mean, I certainly understand it, but.

[00:07:42] Howard Hartenbaum
Well, that’s because the US elections were last week. That’s a whole different issue.

[00:07:45] David Hornik
I know. And we promised that we wouldn’t talk about the elections.

[00:07:49] Howard Hartenbaum
Yeah. So let’s talk about. Let’s talk about Silicon Valley. So from my perspective, and I think a lot of people here maybe were out of touch with what’s really going on in the rest of the country. And how does that impact the types of companies we back, or how does it impact who are the actual consumers and what do they look like and what are they thinking and are we actually doing good things? This discussion? Is Silicon Valley creating jobs or is it destroying jobs? I think it’s worth talking about here.

[00:08:26] David Hornik
I was just on this thing called Silicon Valley comes to the UK and so it’s a bunch of Silicon Valley types who go over to London and.

[00:08:34] Howard Hartenbaum
Cambridge, boondoggle and meet the queen, not a puppet.

[00:08:41] David Hornik
And talk with entrepreneurs over there about the stuff they’re working on, etc. So one of the folks who was there was a woman who’s over at X, formerly Google X, now X, and she’s done a number of things and one of the things that one of her lines, which I very much enjoyed, is that she said to a certain degree she’s watched Silicon Valley and it feels like the TV show. No, the environment, the place we live. And that these startups feel to her a little bit like young boys creating technologies to replace the things their mommies used to do, which I think is like, you know.

[00:09:20] Howard Hartenbaum
You mean like food delivery?

[00:09:21] David Hornik
Yeah. Pick up your sandwich, bring you your groceries, do your laundry. We were just discussing at our partner meeting, one of our partners was going on about how excited he was about his gasoline delivery. Right. And the fact that he just got a notification on his phone that while our, while we were having our partner meeting, someone came to his car and filled up his gas tank.

[00:09:44] Howard Hartenbaum
They drive this huge flammable truck under our building.

[00:09:48] David Hornik
Sweet.

[00:09:50] Howard Hartenbaum
Gas vapors everywhere. And they filled up his car.

[00:09:53] David Hornik
Right.

[00:09:53] Howard Hartenbaum
Subsidized by a venture capital.

[00:09:55] David Hornik
And then they drive it off somewhere. And Howard, you said that you’d, you looked at the math and see whatever. And that actually they’re losing a couple bucks. A couple bucks a fill up. But we’ll make it up in volume.

[00:10:09] Howard Hartenbaum
Yep. Well, this is one of those businesses like food delivery or like mowing your lawn or like house cleaning that you basically pay for the travel time and the service is free. So if you, if you have density and A lot of people like a big parking lot full of cars and the guy’s going from car to car to car to car to put gas in. It can be more efficient than a gas station and make a lot more sense. And the guy’s a pro and he moves faster. You don’t have to worry about moving the car as he’s just moving the truck. But that’s not the way it works. Because they drive here, there’s not enough density. They haven’t acquired enough customers. So they drive here, then they drive down the street and they drive up to Hillsborough. Then they drive over to Woodside and it makes no sense whatsoever.

[00:10:49] David Hornik
And there are two, there are two zealots here at August who are believers in this service.

[00:10:57] Howard Hartenbaum
And so I’m a believer in it. I just don’t think I do.

[00:11:00] David Hornik
Okay, so there are three.

[00:11:01] Howard Hartenbaum
But that’s only because it’s economically subsidized by venture capitalists.

[00:11:04] David Hornik
It’s good for you. But I’m just saying like there are three of us who use it consistently. I don’t think that our usage is subset is synchronized. I don’t think they’re like. So that means they have three trips to August capital, which is really stupid. Even if they had a single trip.

[00:11:20] Howard Hartenbaum
I do mine in the middle of the night.

[00:11:22] David Hornik
I’ll at your house.

[00:11:24] Howard Hartenbaum
And it’s great at night because there’s no traffic. They do it between 9pm and 4am.

[00:11:27] David Hornik
I was gonna say someone actually shows.

[00:11:28] Howard Hartenbaum
Up which is they have to drive up the hills a little bit too. It makes even less sense.

[00:11:32] David Hornik
Oh, I forgot you’re up in the hills. That was so confusing for me for a second. You used to be in the flats, Howard.

[00:11:37] Howard Hartenbaum
I know.

[00:11:37] David Hornik
Now you’re in the hills.

[00:11:38] Howard Hartenbaum
Don’t know what I was thinking.

[00:11:40] David Hornik
Have you discovered any? Howard’s doing Fixing some dry rot issues and some pipe issues and some issues.

[00:11:47] Howard Hartenbaum
96 year old remodel.

[00:11:48] David Hornik
Yeah.

[00:11:48] Howard Hartenbaum
So it’s 96 year old with 120 years of deferred maintenance.

[00:11:54] David Hornik
Wait, how’s that possible?

[00:11:55] Howard Hartenbaum
Yeah, that’s my question.

[00:11:58] David Hornik
Any technology is like any. Is there anything you’re bringing to bear or is it just old school?

[00:12:03] Howard Hartenbaum
So I think the answer is. And you’ve discovered this on your own, which is when you build stuff there’s lots of vendors who want to make your house the highest tech latest thing out there. I, I want less. I want simplicity. I’m taking systems out of the house. I’m making everything simpler because I think there’s more complexity. Means More problems in the future. And I just want simple.

[00:12:26] David Hornik
You and I talked about this, that I was doing a remodel and similarly did. I wanted just switches. I want you to turn on and off a light. I want a fan to go on and off. And it’s almost like that isn’t. Doesn’t exist. It’s like, oh. But the fan has to stay on for 30 minutes. It’s required by regulation.

[00:12:46] Howard Hartenbaum
The recirculation pump has to be motion sensor. I’m like, good, put it in. And then after the inspector comes.

[00:12:53] David Hornik
Like it is fine. It’s really hard. It’s very hard. But. So you’re trying to remove tech, but the one thing I will say is networking. You would think by now that we would have incredibly strong wi fi. And you put one device in a house and it sort of doesn’t matter what the house is made of and it should propagate or whatever.

[00:13:14] Howard Hartenbaum
There’s something called physics. So I installed eero, which I was very excited to use, but my house is old and it has Latham plaster walls and with three eero units no more than 20ft apart, each could not manage the bandwidth and would keep dropping. I paid a guy to come and run cat six to four rooms across the house. He only cost $300. I bought four.

[00:13:39] David Hornik
That’s pretty good.

[00:13:40] Howard Hartenbaum
Michael Viviani, the guy that William recommends, awesome. Ran a whole new thing in my house. I bought four Apple base stations, plugged them in in each place and peered them. Now I have super. Fantastic.

[00:13:52] David Hornik
Does that work?

[00:13:53] Howard Hartenbaum
Fantastic.

[00:13:53] David Hornik
So better than eero.

[00:13:55] Howard Hartenbaum
Way better. Sorry, Euro. I sold my eero. I sold my EERO on ebay and I got like 80 cents in the dollar because.

[00:14:01] David Hornik
Because I have eero and it’s. It. I think it’s a hard thing. It’s a hard process. Right, so you’re physics, so you need wire. Wire line to reasonable points in the house and then.

[00:14:15] Howard Hartenbaum
And then you pair them together.

[00:14:16] David Hornik
Standard Apple, the Apple, Apple, whatever.

[00:14:19] Howard Hartenbaum
They’re called extremes.

[00:14:21] David Hornik
They peer to each other.

[00:14:23] Howard Hartenbaum
Yeah. You just put the setting on and then you can move across the house. More reliable, higher bandwidth. Old school.

[00:14:32] David Hornik
That is old school, old school, new school. But it is amazing to me that we’re still having this conversation. How long have we been having this conversation? Like a decade. We funded a theros in 19, either 99 or 2000 when they. When these two brilliant professors came up with the idea that they could actually move data through the air and it took them another handful of years to get a working chip. And now WI Fi is in everything. And yet it’s not really like it’s work. I had this just yesterday where my daughter was like, ah, why isn’t this working? It’s not what, you know, whatever. I’m sitting outside, it should work outside. I was like, which network are you on? Oh, it’s on DMH, not DMH2. It’s like, oh, that’s not gonna work. You know, but it’s a little bit like, oh, my God. What was I just about to say?

[00:15:21] Howard Hartenbaum
We still talking about gas delivery?

[00:15:23] David Hornik
Yeah, we can, we can. No, about this idea that. Oh, a little bit like, what’s happening with VR? Like, you know, I assume by now we, we also looked at. Looked at Oculus. Oculus, which we. We really liked at the time. It was brand new and it was sort of made most people sick, but it was still clear that it was going to be really great platform.

[00:15:47] Howard Hartenbaum
And we were convinced by now everybody who had a gaming console would have a device like an Oculus. And still nobody has them.

[00:15:55] David Hornik
Yeah, they’re still expensive. They’re hard to distribute. They. They’re low on content. So I will say at the lobby, the Oculus team brought their latest version, which included this very cool motion sensing remotes. And I played this first person shooter robot game where I was a robot and I was being attacked by robots and motor. And it was super fun. I will say that, like, at some points I. You’d, like, get lost in it and you’d bump into something like, whoa, what is that? Because you’re like, you know, you. You’re in this world super engaging, but it’s a big rig and it, you know, it’s just. It’s hard to get content for it. And then there’s. And then there’s, you know, these studios that are trying to build virtual reality movies and content.

[00:16:44] Howard Hartenbaum
It’s a bit of a chicken and the egg problem. It’s like the 3D TV problem where 3D TVs were going to sell and then everybody’s going to make the content. And it neither got on either side. And it’s sort of come and gone already. And now it’s for VR goggles. And I don’t know anybody that owns them except for A.B. katz. And I just went in his office this morning. We couldn’t get it working.

[00:17:02] David Hornik
What? Oh, you tried to boot it and then, you know, and then.

[00:17:05] Howard Hartenbaum
But what sells Snapchat?

[00:17:08] David Hornik
Oh, the Snap glasses. What are they calling them? They’re calling them Snap. They’re calling him. I don’t know, I think they’re.

[00:17:14] Howard Hartenbaum
Instead of ultra high tech, we have ultra low tech.

[00:17:17] David Hornik
I think their marketing is kind of brilliant, though. They’re, you know, they go, okay, we’re gonna have these glasses, and they have a camera, and they’re kind of thick, and, you know, they weren’t trying by any stretch of the imagination to make them look like, you know, to hide the cameras. Like, look, there’s a big camera on my face. You know, and then.

[00:17:33] Howard Hartenbaum
Which, by the way, it’s like those hats with the beers in them with the. With the beers that you hang in, the little tubes that you suck the beer out of your hat. Those are like the Snapchat glasses.

[00:17:44] David Hornik
They’re the goggle equivalent of the beer beer hat. And yet they’re. And the only way they’re selling them, the only way you can get them, is if you get to the surprise location where the vending machine is put out. And then wherever the vending machine is put out, there’s a huge amount of tweeting and everybody knows where it is. And people rush and they empty the machine, and then that’s it. And they’re only. I forget how many they’re making.

[00:18:09] Howard Hartenbaum
Are they on ebay?

[00:18:11] David Hornik
Oh, I don’t know. I bet you.

[00:18:12] Howard Hartenbaum
Let’s find out.

[00:18:14] David Hornik
I’d be interested. Price. That’s a good idea because I bet because. Because when you have such a limited supply, there’s always someone who’s willing to pay a lot of money for. For the thing. Right? But it’s not clear.

[00:18:27] Howard Hartenbaum
Chat spectacle. Here we go, baby.

[00:18:31] David Hornik
Let’s see. Let’s buy one. What is it gonna cost?

[00:18:34] Howard Hartenbaum
This one is saying 2,500 bucks. That’s for a fixed price. They have a handful of them where there’s bids, 576, 650. Somebody asking 1500, 360, a thousand, or best offer, 425. Exactly as expected. Supply and demand.

[00:18:54] David Hornik
Amazing. Completely amazing.

[00:18:56] Howard Hartenbaum
Yeah.

[00:18:56] David Hornik
Speaking of supply and demand, I just had two interesting experiences with. With online booking of hotels. And do you even remember what. How did you get a hotel before online booking?

[00:19:12] Howard Hartenbaum
You have to, like, you called them on the phone and they sent you a fax confirmation and see, like, what.

[00:19:16] David Hornik
They had, and you had to just pick your hotel and whatever. So again, we’re not talking about the election, but if we.

[00:19:23] Howard Hartenbaum
The answer to your question is I’d ask Kirsten.

[00:19:25] David Hornik
Yeah, well, but a lot of times before you had Kirsten, before I had whatever is like, oh, my God, how do you. How do you do that?

[00:19:31] Howard Hartenbaum
Right?

[00:19:31] David Hornik
You’d go to aaa. Remember when aaa, like one of the big things about joining AAA is that they would help you get a hotel and they give this thing called the triptych, which was like a book of a map that showed you the route. I would get one of those when I was driving from, from Stanford to home in New Hampshire, I get a triptych, which was like this big long route. It was basically stay on i80.

[00:19:53] Howard Hartenbaum
So this is back to the comment that Silicon Valley is destroying jobs because triptychs aren’t necessary anymore.

[00:19:58] David Hornik
Yeah, not at all. And in fact, there’s no need. There is not really the same kind of need for, for travel agents. Right? Like why travel agent? Oh my God, why would I do that? I just saw that I need to go on a scouting trip for, for the lobby and it’s X day to Y day and I’ll just go on, you know, go on united.com I’ll book it in three seconds. I don’t need.

[00:20:22] Howard Hartenbaum
You go to Trip Advisor. It will tell you the three best hotels to stay in. You’ll tell you where to go.

[00:20:25] David Hornik
So, so the inauguration, the Trump inauguration is January 20th. And on Facebook through a, just an offhanded comment, some, as I understand it, some moments in Texas maybe said, we need to have a march. We’re gonna have a Million Mom March the day after inauguration, January 21st. And then there was some dispute about whether you should call the million Mom March. Anyway, now it’s the mom march or something on the 21st. So my wife said we should go, I want to take our daughter. Let’s go to Mom March. Okay, great. So I go online, this is now a few days ago, and I went online and first I went to Rocketmiles, which was our portfolio company, to see what, what was available. There was one hotel that had a room and the room was 1700 bucks a night. But you did get a thousand frequent flyer miles. So I said, okay, that’s not good. So then I went to Expedia and I looked and I found that the Marriott, Marriott Marquis had like a room. It was a mere 700 bucks a night or whatever. And I, and it was everything by the way, now non refundable. So the market has figured out that there’s huge demand, therefore we don’t need to make anything refundable. And so it’s non refundable, 700 bucks a night. So I say, all right, well.

[00:21:41] Howard Hartenbaum
And they’re still gonna overbook.

[00:21:43] David Hornik
Yeah, probably. So I booked it, you know, kind of thing. Then I Went to. Then I went online to look at plane tickets. By the time they looked at plane tickets, the Sunday out after this march was basically sold out. And this is to San Francisco. Like, nothing. It was like I had to use frequent flyer miles, like, to go direct. Then my wife Pamela puts on Facebook, Hey, I’m going to this Million mom march. Who’s with me? Bunch of her friends. I’m in it. I’m in. I’m in. I’m in. Where are you staying? Where are you staying? Oh, join us at the. At the Mark. The Marriott Marquis. Gone. By the time between the time that I booked Merritt Marquis and her. Her friends started looking, there was nowhere to stay in all of Washington, D.C. proper. Right. First of all, that’s amazing.

[00:22:34] Howard Hartenbaum
So you’re, like, including Northern Virginia as well.

[00:22:36] David Hornik
So. No. So now you have to go out to Silver Springs, and. Right. You know, it’s concentric circles. So now they’re gonna have to move out further, which is fine. But. And you can figure it out because you have the technology to figure out. So that was one. Oh, and then the second one was this morning, I got an invite to. To a party from Pandora for the ces. I thought, oh, I haven’t been to CES in a while. Maybe I’ll go to ces. And so I went online to try and figure out getting back to Rocket Miles to figure out. And there are rooms, and there are still rooms in Las Vegas, because it turns out there are gazillion rooms in Las Vegas. But by the time I finished looking at rooms, Tripp had convinced me that I shouldn’t bother going to. Cesar, when was the last time you went to CES?

[00:23:21] Howard Hartenbaum
Oh, like 10 years ago. I’ll never go again.

[00:23:23] David Hornik
It’s brutal. It’s too crowded, and it’s not. That’s like, read about in the blogs. Another one that’s. Why do I go. Gotta go for the parties.

[00:23:31] Howard Hartenbaum
So that’s tough. If you think about longevity of conferences, one of the challenges is that the same group of people go every year, and that cohort gets older and older and less interesting. And it’s the death of the conference.

[00:23:46] David Hornik
Huh, Howard?

[00:23:46] Howard Hartenbaum
I mean, so being a man who runs a conference, how do you make sure you just had the 10th anniversary? I’ll call it Ode to David Hornik. How do you make sure that you are running the Leading Edge conference and you don’t let that happen to it? Because people love it, and it will happen to it if you don’t do something about it?

[00:24:06] David Hornik
Well, yeah. And the Problem is that people who’ve done amazing stuff and have come for 10 years or whatever want to come the 11th. And we got very lucky in year one and invited up and coming people.

[00:24:18] Howard Hartenbaum
Who ended up building amazing things, just funded them all.

[00:24:21] David Hornik
Oh, my God. Do you know how. We certainly wouldn’t be working anymore if we’d funded everybody who went to that first.

[00:24:26] Howard Hartenbaum
Ev Williams.

[00:24:27] David Hornik
Well, Jack Dorsey, Reid Hoffman. Reid Hoffman, the founders of Uber, met each other at that. At the lobby. So Travis and Garrett, you know, just. It just that that was a point.

[00:24:40] Howard Hartenbaum
Enough to give you a stomachache.

[00:24:41] David Hornik
Bunch of. The bunch of there, you know, Dan Rose from Facebook was there. It was just a bunch of folks. But so. So 10 years ago, we got lucky, found a bunch of amazing people. They came and they’ve been coming for a long time. They’re doing amazing stuff. But the reality is that the venture business is sort of a. You know, it’s like cohorts. And we’re in our 40s, moving rapidly towards 50s, whatever. And the folks and their whole new generation of folks in their 20s and 30s are doing cool stuff. And so the only way that the lobby will stay relevant and interesting and all that stuff is if we get the next generation.

[00:25:16] Howard Hartenbaum
You’ve done a good job each year. I just think you got to do it even better. Got to do even better.

[00:25:20] David Hornik
So I guess this is fair warning. My apologies to the many folks who’ve come for lots of years. It’s going to be hard to get you all back because we need to bring new young.

[00:25:29] Howard Hartenbaum
What we have to do. You have some lottery mechanism right now in terms of.

[00:25:34] David Hornik
No, in fact, the lottery I always do is sort of leave open 50 slots and the theory is put in 50 new people and it ends up being fewer than 50. And then.

[00:25:42] Howard Hartenbaum
But what about doing it with money? And just each year you go, your price doubles.

[00:25:50] David Hornik
That’d be pretty amazing. You start at 3,000. So after what’s 3,000, that’s a big number times 10 years.

[00:25:57] Howard Hartenbaum
So 3, 6, 12, 24, 48, 96, 183, 67, 20 million and a half bucks.

[00:26:09] David Hornik
All of you people who got your special sneakers for having come to all 10 lobbies, you owe me a million and a half dollars.

[00:26:16] Howard Hartenbaum
Yeah.

[00:26:17] David Hornik
They would not come. You wouldn’t come in year three, Right? Three, six.

[00:26:21] Howard Hartenbaum
Some would. This is like doubling down in Vegas.

[00:26:24] David Hornik
You might come to the third 25.

[00:26:26] Howard Hartenbaum
I think it’s the opposite.

[00:26:27] David Hornik
I think you come to the 24th.

[00:26:29] Howard Hartenbaum
You’D get some people who keep doing it out of pride. It would. Well, I’ve been here nine times and you’d be like, whoa.

[00:26:39] David Hornik
And imagine the bands we could bring with that kind of money. Be like. And this time we have you two. Courtesy of Josh Koppelman.

[00:26:49] Howard Hartenbaum
The warm up Bad. You too. Followed by yeah, exactly.

[00:26:53] David Hornik
Bruce Springsteen.

[00:26:53] Howard Hartenbaum
Oh, that’s great. You were saying? I didn’t see it, but there was the new Microsoft computers. Somebody brought them to the lobby.

[00:27:01] David Hornik
Yeah, no, One of the fun things is I called it the science fair. But along with the oculus rigs, also Joe Belfiore, who’s back at Microsoft after a break, brought with him both the new laptop but also the new desktop computer by Microsoft and Apple had just announced their new laptop. And I have to tell you that that I. That was a. Both of that of the computers they brought were beautiful. But that desktop is so first of all, the screen is just screen. There’s like no bezel. It is a hundred percent touch screen. It is. I don’t know if it’s twice the resolution of the imac, but it is a significant step up in resolution from the imac.

[00:27:48] Howard Hartenbaum
How do they self smudges from your fingers when people are touch screening?

[00:27:51] David Hornik
Yeah, I don’t know. Yeah, I hate that part. I know. Well, you’re gonna have to get a little cloth, wipe it down. Be my daughter’s worst nightmare. She, in fact she just got a new computer and I grabbed it by the edge and she went, no, my bad. No, but it was beautiful. And the whole thing, the whole screen can tilt down so it’s flat, so it acts like a tablet and it works beautifully with a pen. And it has this new device that’s sort of like a knob that you place on the scre and it then points it in the screen and then in the context of whatever you’re working on, it changes that knob. So it can change colors or it could change.

[00:28:30] Howard Hartenbaum
I wonder if this was the case of they just hired one person who is brilliant and I wonder who that person is because this is not it. This is not like, oh, a big team came up with a better thing. This has got to be somebody driving it Jobsian kind of role.

[00:28:47] David Hornik
I do wonder if, you know the guy who invented multi touch, he had a company called bought by Microsoft. And I wonder what degree he’s involved. He’s a brilliant character, but it is beautiful. I mean literally, I sit here, I’m looking at my imac, feeling like it’s kind of dated and maybe it’s time to get a piece of it.

[00:29:07] Howard Hartenbaum
Yeah, but then you have to use Microsoft software.

[00:29:09] David Hornik
I know that is a little bit of an issue but I use a lot of Microsoft software but I use Mac Mail. I’m not sure that it’s terribly better.

[00:29:16] Howard Hartenbaum
Than using native Outlook and use that more than anything. 140 a day.

[00:29:21] David Hornik
Yeah. Or whatever the heck it is. I have a headache just thinking about it. No, those, those computers are beautiful. They are beautiful.

[00:29:29] Howard Hartenbaum
There is the Microsoft store down in the Stanford Shopping center. Maybe I’ll go down. Are they out on the market yet?

[00:29:36] David Hornik
I think so. I think Joe brought it. It had just been announced. I don’t know if that. I bet you they have them in there. I haven’t looked at the new Mac laptop with it’s. It has a lot like a lid just a little bit strip of touch sensitive stuff that changes in context. But that computer hasn’t gotten hugely good reviews. I am, I am in need of a new laptop because my laptop is like slowing down by the second now partially. It’s just oh too much content, too much data.

[00:30:06] Howard Hartenbaum
Why don’t you just wipe it and start over?

[00:30:08] David Hornik
I know reinstall it may be sufficient, maybe sufficient to get the thing to function but meanwhile they keep adding bloated, you know, versions that are. That need faster processing to do. So you, so you have to go through and upgrade cycle.

[00:30:20] Howard Hartenbaum
That’ll be interesting if you switch. Yeah, I’m skeptical that you will. Okay, we shall see.

[00:30:27] David Hornik
I’m going to go check it out. I’m going to go down to the Microsoft store. That looks just like the Apple store.

[00:30:33] Howard Hartenbaum
Isn’t it in the old Apple store space?

[00:30:35] David Hornik
Was it in. I think so, yeah.

[00:30:36] Howard Hartenbaum
May well be cuz Apple opened that nice one down on Universities Cross by the Nik.

[00:30:40] David Hornik
Well no, they have their own. No, they have one in the mall as well but it’s near the Nike store.

[00:30:46] Howard Hartenbaum
I think that. I think that mall is number one or number. It’s number one in the country for dollars of revenue per square foot and number two in the world behind maybe it’s either it’s Dubai or I think Dubai is more or I may have my numbers wrong. Maybe Las Vegas is more and this is number three. But it’s if you look at the.

[00:31:08] David Hornik
Stores that’s a little troubling. Right?

[00:31:10] Howard Hartenbaum
Well it just has to do with you know, location and what they. And it’s the stores. You know you walk down there and if you’re not Tiffany’s they’re kicking you out. You know they have these stores will sell you sandwiches for Lunch where they’re losing their shirts. But they have to have that. Otherwise, people. Otherwise somebody will leave the mall to go someplace else. You want to keep them there the whole day. So you have to have, like, a bride chip.

[00:31:29] David Hornik
Probably subsidizing Max’s Opera Cafe or whatever, right? Where I go to get my matzo ball soup. Because there’s nowhere else in the Bay Area to get matzo ball soup.

[00:31:38] Howard Hartenbaum
Dan Rosensweig Chegg. He eats matzo ball soup every day of the week.

[00:31:43] David Hornik
No, he does not.

[00:31:44] Howard Hartenbaum
He does because he’s been eat. They’ve been eat Club customer for, like, five years, every day, all their employees, and he’s the only guy who doesn’t eat it because he eats matzo ball soup every day. I assume it’s Max’s or somewhere because he said, no, I don’t eat that eat club stuff. All my employees love it. But I eat matzo ball soup every day. And you guys don’t have that.

[00:32:02] David Hornik
Matzo ball soup is very fattening. I mean, if you didn’t eat the.

[00:32:07] Howard Hartenbaum
Matzo ball, isn’t the matzo ball, like, just a big piece of lard?

[00:32:09] David Hornik
It’s like a giant fatty, you know, piece of, like, bread and lard. It’s like. I mean, that’s a big commitment. What does he do for dinner?

[00:32:23] Howard Hartenbaum
I’m just saying what I know.

[00:32:26] David Hornik
You know, I had this realization during this election, which we’re not talking about, but if we were talking about the election and if we were talking about the idea that suddenly there. There were these sort of increased examples of anti Semitism, I had this moment where I was talking with my daughter, and I looked it up and said, like, how many. How many Jews are there?

[00:32:43] Howard Hartenbaum
Like, there’s like 84 in the whole.

[00:32:45] David Hornik
All these people, like, blaming the Jews. Like, how many Jews are there? So do you know?

[00:32:48] Howard Hartenbaum
12 million.

[00:32:49] David Hornik
It’s like it’s 14 million or something.

[00:32:51] Howard Hartenbaum
That was close.

[00:32:51] David Hornik
You’re very close.

[00:32:52] Howard Hartenbaum
It would have been a lot more not for the Holocaust.

[00:32:54] David Hornik
And. Yeah. Oh, yeah. No, absolutely. And in fact, I Forget. There are 5 million in the US there are 5 million in Israel, and then the rest are sort of scattered around. But if you compared to billions of Christians, billions of Muslims, and they’re five.

[00:33:11] Howard Hartenbaum
You know, they’re easy to blame.

[00:33:13] David Hornik
10 million of us.

[00:33:15] Howard Hartenbaum
14, whatever.

[00:33:16] David Hornik
I’m just saying it rounds to nothing. Small numbers to nothing. But, well, no wonder I can’t find the soup. It’s not a big enough market.

[00:33:25] Howard Hartenbaum
What do you mean? Max’s Opera Cafe is Driving distance from me.

[00:33:29] David Hornik
That’s probably the right ratio of places that sell matzo ball soup to everything else.

[00:33:35] Howard Hartenbaum
Isn’t there some venture backed delivery service you could like? Matzo ball soupdelivery.com or something.

[00:33:41] David Hornik
If you want it funded, come to me, David Hornik. Or better yet, go to the seed funds because there’s so many of them. There’s plenty of seed funds available. Someone’s got to fund that.

[00:33:52] Howard Hartenbaum
So I was at one of the original seed funds and maybe, I’m sure it wasn’t the first, but it was one of the early ones, Draper Richards, which got going in like 96, I.

[00:34:05] David Hornik
Think it was, or so very early, Very early. I think Draper Richards was possibly the first maybe fund of that size. Right.

[00:34:17] Howard Hartenbaum
And it was, the model was invest 500k to maybe a million or over time up to a million and a half. As the first money in. No money in the company yet. You’re the first money in at a, I’ll call it a modest valuation, you’ll call it a low valuation, but kind of Targeting, you know, 2 million, 3 million kind of pre money range.

[00:34:41] David Hornik
So a million bucks buys a quarter.

[00:34:42] Howard Hartenbaum
Of the company pretty much. Or half a million buys a quarter of the company kind of deal. Like we’ve had some like that. I mean Bill Draper was telling me one of the deals, 300k bought 30%. So it was a 700k pre and it went public, it was worth billions. He said that was a good deal. But what’s happened is back then there was one or two or maybe it became five seed funds like that. So there was really not a lot of competition. And now there’s 140ish funded seed companies. And so naturally because of competition, prices have climbed and it’s not as great a business anymore.

[00:35:20] David Hornik
Well, it turns out there are two phenomena at work here, right. One is that you used to, you know, the seed funds, it wasn’t seed funds, it was individuals. And so no individual was going to put in a million bucks. Like actually because Draper Richards was had a chunk of money early, they were doing 500k. But originally you do like 10 entrepreneurs would put in 50 to 100k a piece. Right. And so it’d be a low price, whatever. And then these funds got started and.

[00:35:52] Howard Hartenbaum
Like, like Airbnb, Wasn’t it like 10, 100k bought the first 10% or something?

[00:35:58] David Hornik
Something awesome like that’s gonna be good for them. That may well be that or Rob Hayes investment in Uber will be.

[00:36:06] Howard Hartenbaum
It was like a for free. Those were great.

[00:36:08] David Hornik
Best investments ever. Right. But in both of those instances. Well, the 100k in is A. Is a weird one. But these days, not only are there a bunch of these funds, but they need. They can’t share. Right? They can’t. It’s not like, okay, I want to do Uber. So, you know, we’ll do. Ten firms will do it. Because if 10 firms invested in that round, Uber, everybody’d own 1%. And then over time, it would be diluted down to a third of a percent.

[00:36:35] Howard Hartenbaum
I think that.

[00:36:36] David Hornik
Right. And no matter what the outcome is. So. Yeah, but let’s think about it.

[00:36:40] Howard Hartenbaum
Even if it’s 200 million.

[00:36:41] David Hornik
Right.

[00:36:41] Howard Hartenbaum
Third of a percent is 200 million bucks.

[00:36:43] David Hornik
Okay. But you know, if you have a. If you have a $150 million fund. Yeah, that’s. That’s the best deal, right?

[00:36:50] Howard Hartenbaum
Ever.

[00:36:51] David Hornik
Very possibly the best angel deal ever. It was better than the angel deal in. In. In Facebook. Right. Facebook was 5 pre. Well, maybe it wasn’t. Maybe Facebook is still in there. But anyway, like, we’re talking about the best deals in the history of time. Whereas a typical deal, you put in some money, if it works out, gets sold for 100 million. It used to be like, oh, seed funds can do great by funding these things, and they’re sold for 100 million bucks. But they can’t really. Right? You can’t. Let’s. So you own 10% of a business, you put in a million bucks or. And you buy 10% and it sells for 100 million bucks, and you make $9 million. That’s not gonna, you know, if you have a $50 million.

[00:37:30] Howard Hartenbaum
So this is where you got to, like, sit back and say, there’s somebody in Minneapolis listening to us say, well, you only made $9 million.

[00:37:37] David Hornik
I know, but you had a $50 million fund.

[00:37:39] Howard Hartenbaum
You could buy the whole town for.

[00:37:41] David Hornik
$9 billion more to go before you’re even, break even. This is the problem. This is the problem I have these days. I sit and listen to pitches, and it’s like, I heard one this morning. Really like the entrepreneur solving a real problem, doing something smart and interesting. If he claims 100% of the market that he described, he has 900 million in revenue, nobody really claims 100% of the market. So let’s say you get to 10% of the market, you’re at 90 million in revenue. Even if a company that’s making $90 million in revenue is valuable, it’s only valuable because it can go to 150 million in revenue. Right. So Markets of that scale are really tricky to build. Billion dollar businesses, which are the things that drive the economics of the venture business and they drive the economics of the seed fund business.

[00:38:28] Howard Hartenbaum
There’s very few companies where are doing seed investing that are getting enough ownership. Our friend Mark Toulouse at Mangrove, he bought 20% of Wicks for a million dollars and it’s now worth $2 billion and he still owns 20%. So like a hundred million dollar fund and his $1 million investment is worth 400 million bucks. That one deal. And that was a good deal.

[00:38:57] David Hornik
I just saw Mark when I was at Silicon Valley, comes in the uk, said boondoggle that you were pointing to. He became chairman of Wix and as a result held his shares. And the byproduct of that was that he ended up doing really well.

[00:39:14] Howard Hartenbaum
Yeah, it’s public and worth $2 billion now.

[00:39:18] David Hornik
Yeah.

[00:39:19] Howard Hartenbaum
What are you looking for?

[00:39:20] David Hornik
I thought I was going to show you, but I can’t find it. But yeah, it’s all about ownership, right?

[00:39:25] Howard Hartenbaum
Yeah.

[00:39:27] David Hornik
Darn it.

[00:39:28] Howard Hartenbaum
What are you looking for?

[00:39:29] David Hornik
I had a picture.

[00:39:30] Howard Hartenbaum
Oh, you and him.

[00:39:31] David Hornik
Yeah.

[00:39:31] Howard Hartenbaum
Going crazy.

[00:39:34] David Hornik
Darn it. Oh, well, you people can’t see me rummaging through my office, but I’m not gonna find it.

[00:39:41] Howard Hartenbaum
I like him, he’s a nice guy.

[00:39:42] David Hornik
I enjoy Mr. Toulouse. We had a very nice. It was nice to see him at the palace. It’s funny. So Prince Andrew, now do you know, do you have your royal geography? The Queen, Queen Elizabeth II is 90. She was at this event, which is completely amazing, in a purple suit, looking very regal. She met a bunch of entrepreneurs and shook their hands and like they would. And then her son, Prince Andrew, who is Prince Charles brother, was there as well. And he has taken it upon himself to try and encourage entrepreneurship in, in the uk and so he has this thing called pitch the Palace. I forget, I think it’s St. James Palace. And you come and there are a set of entrepreneurs who’ve competed to then pitch in a pitch competition before the, you know, the most interesting people group of people that the, that the Prince can bring together. And part of the draw is it’s in, in St. Jan. Saint. St. James Bells. Howard’s like, I don’t know. And secondly, the Queen came and I was really impressed with the Queen because again, she’s 90. And she would walk down the row of all the finalists and then her handler, this lovely woman who must be her secret personal secretary, would say, your Royal Highness or whatever this, this is so and so from such and such a company. Then she’d shake their hand, say, very nice to meet you. And then they’d have to explain to her what. What they did, you know, like, oh, we’re making a company that creates billboards that are aware of who you are based on artifact, whatever. And then her.

[00:41:18] Howard Hartenbaum
And she goes, I like Minority Report.

[00:41:20] David Hornik
Yeah, right, exactly. And she would kind of listen. And then her son, Prince Andrew, would come over if it looked like she didn’t quite understand, and he’d dumb it down a little to try and explain it to her. And then she, being very charming, would lose sort of smile and shake their hands and be thankful. But the cool, but the smart thing. What’s. What Prince Andrew is doing that is super smart, is he’s using the position of the. Of the crown and access to this cool venue to get a bunch of people to show up. And then he says, I want you to help these companies like you are here in my palace now. Do me a favor. Help these companies, make these into big and interesting businesses, which I thought was smart and obviously works because they’re. Mark Toulouse was there, you know, checking out what people working on and I’m sure helping people out, which is pretty cool.

[00:42:08] Howard Hartenbaum
When I lived in Luxembourg, that’s where I met Mark. And he lived in Luxembourg. Once he called me up, he’s like, hey, I’m gonna go out drinking with the Duke. You want to come? I was like, sorry, I got plans with my wife. Click.

[00:42:21] David Hornik
Duke of York. York. Which is, by the way, Prince Andrew is the Duke of York. Was that the Duke that he was going out?

[00:42:27] Howard Hartenbaum
Duke of Luxembourg.

[00:42:28] David Hornik
Oh, there’s a Duke of Luxembourg. It’s very tricky. I don’t know if you saw, I’m.

[00:42:32] Howard Hartenbaum
Sure in the pecking order.

[00:42:34] David Hornik
Yeah, right. Did you see John Cleese’s letter? Not that we’re talking about the election, because we’re not, but John Cleese wrote a letter that was, you know, dear American people, you can no longer be trusted with your democracy. So we’ve revoked your independence and you’re now a subject to the Queen.

[00:42:50] Howard Hartenbaum
I’m okay with that.

[00:42:50] David Hornik
It was very funny.

[00:42:52] Howard Hartenbaum
Are you okay with that?

[00:42:52] David Hornik
Yeah, I just met her. She’s very charming.

[00:42:54] Howard Hartenbaum
Great. I’ll take that.

[00:42:55] David Hornik
Suddenly. Well, I guess we’ll leave it at that. I guess it’s. You know, perhaps when we next do Venture Cast, we’ll be subjects of the royal crown.

[00:43:04] Howard Hartenbaum
I’m okay with that.

[00:43:07] David Hornik
And we will be at the pitch the palace. Until that time. Thank you as always, for listening to Venture Cast.

[00:43:14] Howard Hartenbaum
I am still David Hornik and I’m still Howard Harttenbaum. Thank you very much.

[00:43:19] David Hornik
Have a good one.