Generated Transcript

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

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

[00:00:22] David Hornik
What is it today? It’s February 10th. Is this our first Venture Cast of the year or did we do one right when we came back?

[00:00:29] Howard Hartenbaum
I have no idea.

[00:00:30] David Hornik
I don’t either.

[00:00:32] Howard Hartenbaum
Dear listeners, welcome to 2017.

[00:00:36] David Hornik
Maybe this is. Maybe this is the inaugural venture cast of 2017. Maybe it isn’t. All we know is that we appreciate that you’re listening.

[00:00:44] Howard Hartenbaum
When we sat down today, like 65 seconds ago and said, what should we talk about? My first comment was, ah, it’s just like car talk. It’s not about the cars, it’s about the talk.

[00:00:55] David Hornik
So who cares? Let’s just talk about whatever. And so far, we’re killing it. Let’s see how long we can go without actually talking about it.

[00:01:03] Howard Hartenbaum
We’ve done it for an hour before.

[00:01:05] David Hornik
No, no, no. We’ve always had something. Something we’ve talked about. But I had this conversation. I don’t know if I’ve ever mentioned this. Elisa Miller, who runs pri Public Radio International. I had this conversation with her where I tried to get her to put us on the radio. Like, oh, you should put. You should put venturecast on the radio. And she was like, oh, we’re not putting venturecast on the radio. We don’t do vertical programming. You know, it doesn’t have a broad enough appeal. And I said, we are Car Talk. We. We’re not talking about venture capital. We’re just like the Car Talk guys. And she was like, yeah, that’s not happening.

[00:01:39] Howard Hartenbaum
We don’t have funny laughs.

[00:01:40] David Hornik
Yeah, that’s what we need. We need. We need someone with a good laugh track.

[00:01:43] Howard Hartenbaum
We should find the person who did like the production of Car Talk and ask him how we need to modify this to fit mainstream.

[00:01:51] David Hornik
But this is. But your point about having someone with a good laugh, I’m saying, so right now, I’m telling you, if Tom Riley is ever out in the Bay Area. Do you know Tom? He was the founder of Planet out and he’s now a ted and he runs TED Fellows. And not only is Tom one of the funnier humans alive and one of the most lovely humans alive, but his laugh is. His laugh is the most distinctive laugh. If you’re sitting at the TED conference, you will know where Tom is sitting no matter what.

[00:02:21] Howard Hartenbaum
We can have a laugh track. A little button you push every time.

[00:02:23] David Hornik
Just him. So Tom giving you a warning. I also told, by the way, since we’re already Talking about nothing. Nothing.

[00:02:31] Howard Hartenbaum
Isn’t that the whole basis for the Seinfeld show?

[00:02:33] David Hornik
Yeah, exactly. Seinfeld of podcasts about technology. I don’t know if you’ve had this conversation, but I was having a conversation after someone. Someone had passed away, and they. They had a. A memorial service that I didn’t think was terribly representative of them. I thought, like, oh, you know what? It was a lovely service. It was very serious. It was blah, blah, blah. But it was like, oh, my God, if I were to die and you were to have a memorial service for me, and it was like that. Which was very kind of respectful and blah, blah, blah. It’d be so wrong. Like, that’d be a terrible, terrible memorial service. So I called up Tom and I said, this is gonna be a strange thing, but I. But I think you’ll appreciate it. If I pass away and there is a memorial service, I want you to be the MC of the memorial service. He’s not. Like, you can’t take. We can’t be having it taken seriously.

[00:03:28] Howard Hartenbaum
What do you mean? I’m just gonna tell everybody you asked me to do that.

[00:03:30] David Hornik
Yeah, well, you can co host now. Who do you want? Who do you want? Like, now that you’re thinking about it.

[00:03:38] Howard Hartenbaum
Like, okay, I’ll be dead. I don’t care.

[00:03:40] David Hornik
I know, but who?

[00:03:41] Howard Hartenbaum
You.

[00:03:41] David Hornik
Oh, but that’s actually very, very. That is the difference between me and Howard. He means that. He means, like, ah, it. I don’t care. I’m. I’m dead. What difference does it make? Whereas I’m like, okay, make it funny.

[00:03:51] Howard Hartenbaum
I told you about my red binder of death, right?

[00:03:53] David Hornik
No, I know about many of your binders. You have binders?

[00:03:56] Howard Hartenbaum
I have a binder of death which has trusts and wills and all that crap in it. And if you open it up, it’s got a call list. First call this lawyer, then call this tax account, and then call this. So if I die, like, it’s all.

[00:04:05] David Hornik
Done, when am I on the list? When do you call me?

[00:04:08] Howard Hartenbaum
I think I’m gonna put you on there as eulogy.

[00:04:12] David Hornik
Paul Hornick. We will attempt to do, like, a respectful but entertaining eulogy. Yes, I’ll be there for you, Howard. Even though you’ll be dead.

[00:04:22] Howard Hartenbaum
I won’t get.

[00:04:22] David Hornik
I know your wife. What if you. What if your wife outlives you? She’ll want.

[00:04:26] Howard Hartenbaum
It’s probable.

[00:04:27] David Hornik
She will definitely. Both of our lives will outlive us. No, the chances that your wife wants me giving your eulogy is about zero. Whereas the chances of Pamela Being super happy with Tom doing the eulogy is pretty high, I think. So.

[00:04:44] Howard Hartenbaum
So that brings up the whole concept of VCs who have stay at home wives. Because you and I both have stay at home wives.

[00:04:54] David Hornik
It is true.

[00:04:55] Howard Hartenbaum
And do we represent the mainstream or don’t we?

[00:04:58] David Hornik
I was telling Howard that I just did this, this podcast with Sarah Lacey. So Sarah Lacey’s writing this great new book about women in entrepreneurship, and I’m gonna screw up the title, but it’s.

[00:05:14] Howard Hartenbaum
Called Women in Entrepreneurship.

[00:05:15] David Hornik
No, it’s something super fun, which I’m gonna look it up after I stop talking, but. So this podcast was about parenting, and she’s been doing these great parenting podcasts with women in entrepreneurship. And I was the first dad. And so we were having this conversation and somewhere along the way she did say, do you think it’s problematic ultimately for, you know, for women entrepreneurs to come in and pitch VC funds when there are a bunch of men who have stay at home wives and therefore their perception of women is not as people in the working, you know, in jobs, but as people who are staying home taking care of children. And do they do. Therefore, are we biased against them?

[00:06:00] Howard Hartenbaum
I think we’re biased for them.

[00:06:03] David Hornik
So that’s your.

[00:06:05] Howard Hartenbaum
Have you ever stayed home with your kids when they’re little? That is harder work than going to a job.

[00:06:12] David Hornik
So that’s, that’s an. I mean, this is actually so.

[00:06:16] Howard Hartenbaum
So this comes down to data for me. One, I don’t know if VCs are more likely to be married to stay at just because your spouse and my spouse are not working full time. I think pretty much all the other partners here, almost all of them, their wives are working full time. And I do believe on a percentage of deal basis, I’d be willing to bet August Capital has invested in more women CEOs than any other firm out there as a percentage of the number of deals total.

[00:06:44] David Hornik
I do know that the last three deals we funded and we almost came close with one who would have been the fourth female founder.

[00:06:53] Howard Hartenbaum
And I have two boards I’m on where the CEO co founders are women.

[00:06:57] David Hornik
Yeah. So I don’t.

[00:06:59] Howard Hartenbaum
I think we’re biased more towards women because of you and I having stay at home wives.

[00:07:05] David Hornik
I don’t, I don’t think.

[00:07:07] Howard Hartenbaum
I think there’s no bias.

[00:07:08] David Hornik
I don’t think there’s a correlation.

[00:07:09] Howard Hartenbaum
Right.

[00:07:09] David Hornik
I think that.

[00:07:10] Howard Hartenbaum
I would agree.

[00:07:11] David Hornik
I think. So what I said in the podcast was, gee, to the degree that it is true that, that VCs traditionally have ended up because it’s traditionally has been historically a lot of men and because it has historically been high paying and therefore people could afford to have one salary instead of two. That there were a number of male VCs who had wives who were at home, that I thought that was shifting. Right. And then if you look at our younger partners, you know, you look at Tripp, who, as I mentioned on that podcast, Tripp’s wife as an attorney is working. Vili’s wife is working. You know, and when Lisa joins us, Lisa and her husband both will be working.

[00:07:57] Howard Hartenbaum
And Vivek’s wife just started a company.

[00:08:00] David Hornik
So there is a. So I think that there is a. I think ultimately there is a trend in younger people to, to have two, two spouses working. But I may be totally full of crap.

[00:08:14] Howard Hartenbaum
I want to figure out how to get my wife working.

[00:08:17] David Hornik
That’s not helping you any. Let’s move away from that. So anyway, I think it’s. I think it’s an interesting. It was an interesting question. And in fact, when my wife listened to the podcast, when we were talking about this, she said, oh, you totally. You sidestepped the question. And I wasn’t trying to sidestep at all. I don’t think. I think that the thing that we talk about at August is that if you invest only from personal experience, you’re a moron. Right? You can’t. If we only invested in things we personally liked or we would personally use or people who, who fit a particular mold that we expected we would fail. We would not.

[00:09:00] Howard Hartenbaum
But think of some of the deals we’ve seen that fit that, that are just awesome. Like, remember the company that was making like single serving wine bottles? Like these little tiny, like eight little wine bottles and each one was a glass of wine and packaging. Who cares if it was an extra 50 bucks or.

[00:09:15] David Hornik
Yeah, no, this is exactly right. These are the sorts of deals. There are more wine deals that get pitched to venture capitalists and then funded because VCs are like, oh, everybody needs wine. Same thing with the art market. There are a bunch of companies now in art. I love art, but it’s not clear to me that the art market is going to be disrupted at a scale that is going to be a big online experience. Maybe it is.

[00:09:40] Howard Hartenbaum
Unless you can turn mainstream buyer into an art buyer.

[00:09:43] David Hornik
And we looked at a company like that, right company called 20 by 200, which was trying to do that. I was like, okay, maybe that, that as maybe the, you know, posters.com or art.com meets fine art is going to be interesting. But. But these things that are. When we looked at Sonos, we had this reaction which was a little bit like, oh, isn’t this just a toy for rich people? Now it turned out they built it into a product that sold to lots of people. And so sometimes you can be fooled in the other direction.

[00:10:15] Howard Hartenbaum
Same thing with Uber, except I think Sonos is going to be just bypassed by the Alexas, the Amazon Echoes and the Google, whatever they call them.

[00:10:24] David Hornik
Yeah.

[00:10:25] Howard Hartenbaum
Where you just. You have those and you. And then they sell you like little wireless speakers that come with them. And pretty soon everything is all integrated and Sonos gets left behind. Just like a stereo got left behind.

[00:10:35] David Hornik
Apparently the numbers are suggesting that, oh.

[00:10:39] Howard Hartenbaum
It’S going in that direction. Tough. I have Sonos too, the great product, but I just don’t see how they make it long term.

[00:10:44] David Hornik
I got this Sonos bar that sits under my tv and it’s beautiful and it works, works great, but. So a buddy of mine, my law school roommate, is a guy named Steve Boom. And Steve Boom was. We both worked as lawyers together and they left to go to Yahoo. And he ultimately joined Amazon and he now runs Amazon Music and he is on the COVID of Billboard magazine, which is completely cool. I was supposed to be on the COVID of Billboard magazine. Dammit, what the fuck?

[00:11:14] Howard Hartenbaum
If you want to be on the COVID of Billboard, you need to start funding some music companies and have one hit. You’re going to be on the COVID of like, NBA magazine for a Second Spectrum. You’re going to be spitting a basketball on your finger and you’re going to be standing next to Shaquille o’, Neal, who is twice as tall as you.

[00:11:32] David Hornik
Someone giant. I hope that if I do end up on like, you know, ESPN Magazine or something, that I am with the tallest, actually. So Second Spectrum, which is doing sports analytics, has a bunch of former members of the MIT basketball team on Club.

[00:11:48] Howard Hartenbaum
Basketball club.

[00:11:49] David Hornik
No, no, no. It’s not a club, it’s a team. And. And so I think we just got one who had. We now have a. An engineer who is. You used to be on the basketball team, who’s 611 or something. So I’m gonna be with him. I want him to pose with me. You’ll only see, like, his chest and I’ll be at his waist. You won’t even see his head because he couldn’t get me in the photo. Anyway, the point is not that.

[00:12:15] Howard Hartenbaum
Back to Steve Boom and Billboard magazine.

[00:12:17] David Hornik
Yes. Steve and Jeff Bezos are on the COVID of Billboard and It’s the Billboard 100 at Disruptors. And so they’re talking about Amazon Music, which is basically you get for free alongside your Amazon prime membership. And they were talking about how it works with Alexa, and it’s awesome.

[00:12:35] Howard Hartenbaum
Like, you just say, alexa, play me this, and it plays it.

[00:12:37] David Hornik
Yeah, they’ve done the licensing. They’ve got it to work. Hey, Alexa, play me songs that sound like this. Hey, Alexa, play me my such and such playlist.

[00:12:45] Howard Hartenbaum
Hey, Alexa, whatever I want Freddie Mercury all dinner long.

[00:12:49] David Hornik
Exactly. Who wouldn’t? And boom, done. Right? And so this is sort of your point. Like, ultimately, it is amazing to me that Apple hasn’t. Yeah, we got the Apple tv. I’ve been waiting forever for the Apple integrated tv, and now we need the Apple integrated speaker. It’s not that the speaker part is not that hard. Right. The software and the networking part is harder.

[00:13:12] Howard Hartenbaum
I used to have, until weeks ago, in front of my tv, I had the Apple tv, I had a Roku box, and I had a Xfinity box. And all I want to get is Tennis Channel for my wife. And in order to get Tennis Channel and Xfinity, you got to pay like 125 bucks a month. You get all these other channels you don’t want, but that one is not in any. It’s like you got to pay extra.

[00:13:40] David Hornik
You can’t buy it a la carte in a package of like, the Everything.

[00:13:43] Howard Hartenbaum
Plus, or you get a nut package and you pay it separate, but you got to pay the $100 package before you can pay the 20. All for one channel. And it was irritating the crap out of me. And we. We went and we were staying down at a condo about a mile away, and my wife couldn’t get it on her phone. And I called Xfinity and they said that their license for Tennis Channel is only good at my house. So you can watch it either on my TV or on the same WI FI network as the tv. And I’m like, that’s it. I can’t take it anymore.

[00:14:14] David Hornik
I just want to exact same thing happen to me. I was sitting on the. I was sitting on a plane waiting to go to a board off site, and suddenly the super bowl went from seeming like it was completely idiotic to actually interesting. And so I tried to stream it on the Xfinity app, and it said, only at home.

[00:14:30] Howard Hartenbaum
And that pissed me off. And I said, who is Xfinity’s competitor? I just called an 800 number for DirecTV and I told them my problem, and they said, oh, we have DirecTV now. For $60 a month, you can get the Tennis Channel plus a bunch of other channels and you can watch it anywhere you go. You don’t need a box anymore. You can watch it on anything. You can disconnect from satellite or Xfinity cable. And I was like, 60 bucks a month? And she said, yes. And if you prepay three months for $180, we will give you a free Apple TV Gen 4, which is worth 150. And I was like, done. And I called up Xfinity and I said, cancel. I was watching DirecTV now a few minutes later and said to my wife, go ahead, you can watch tennis anywhere you go now. And I have officially disconnected. And I am an over the top subscriber to Netflix and Hulu and Amazon prime and DirecTV Now. And no more Dish and no more Comcast. I’m done.

[00:15:38] David Hornik
That. That just cost Xfinity so much money.

[00:15:42] Howard Hartenbaum
Just because all 800,000 people listening to this show today.

[00:15:46] David Hornik
That’s right.

[00:15:47] Howard Hartenbaum
Use this following code and I’ll get $5 more and more Apple TVs. Anyway. I just don’t understand the need to be physically connected and have a box at the home anymore. So now my TV just has an Apple TV in front of it.

[00:16:00] David Hornik
So I gotta think about this. Because the only thing I care about. I don’t know that I care about any of it. I mean, I care about HBO because they have interesting shows periodically. But you can get HBO Go.

[00:16:10] Howard Hartenbaum
Yep.

[00:16:11] David Hornik
And then Netflix and then.

[00:16:14] Howard Hartenbaum
Yeah, but Tennis Channel is only affiliated with major providers, so I had to get direct.

[00:16:21] David Hornik
Most people want, like, local news, although it’s not clear. I watched the 10 o’ clock news with my wife and every time I think to myself, why do I watch this? It is the worst.

[00:16:31] Howard Hartenbaum
You know, it’s funny. Any night you turn it on, it’s the same.

[00:16:34] David Hornik
It’s always the same story. It’s the same. It’s like, you know, and we. So we play the game. You’re going to predict what’s going to be the first story. And you usually can predict it’s either, oh, it’s really bad weather. I’m sure some road is flat, flooded, or someone was shot or, you know.

[00:16:49] Howard Hartenbaum
I mean, I mean, don’t get into politics.

[00:16:51] David Hornik
I don’t mean to downplay that. I’m just saying. I could say what? We can’t talk about politics?

[00:16:55] Howard Hartenbaum
No politics.

[00:16:56] David Hornik
Howard threatened me if I used the T word.

[00:16:59] Howard Hartenbaum
I am physically allergic to politics discussion right now. All right, so the over the Top all of these channels. Video channels that we’re now getting. It seems to me like the same thing is happening with podcasts as well.

[00:17:15] David Hornik
Where radio. We’re not going to need a radio. Terrestrial radio is of no meaningful use.

[00:17:22] Howard Hartenbaum
Like, the only channel I listen to in my car now is npr. Or I whip out my phone and I listen to podcasts because the integration on the phone is so fantastic. I’m driving and I just touch one or two buttons and a podcast starts playing right through the stereo. And it’s perfect. Like, why would I need to go hunting for.

[00:17:43] David Hornik
Yeah, it’s really. So it’s funny because I. I basically only listen to npr, and then we’re the same. Oh, yeah, we are. We are exactly the same, Howard. That’s why Tom Riley will be doing your memorial service. Not me. No, this. But what I have found I’ve been doing recently, which is. Which is problematic for. For AT and T. So I am grandfathered into the all data, all the time, unlimited data plan. And when there’s nothing interesting on npr, then I’m pulling up CNN or Fox News or MSNBC on the Xfinity app, and I’m streaming it to my phone. I’d be happy to. I only want to hear that. I’m not watching it. I’m driving. I’d be happy to just hear the stream, but you can’t do it. So it’s using a whole lot of bits.

[00:18:33] Howard Hartenbaum
I wonder why they don’t do that.

[00:18:35] David Hornik
They should have a mode. It would be much better if you’re listening Xfinity. I acknowledge that Howard just cost you a great deal of money, but now.

[00:18:45] Howard Hartenbaum
I’m going to save you money, because this is AT&T.

[00:18:47] David Hornik
You’re saving money. Hey, AT&T. You should do the audio stream only mode.

[00:18:51] Howard Hartenbaum
No, Because Xfinity probably would pay less because I’m sure that there’s.

[00:18:56] David Hornik
Yeah, for sure. To stream it.

[00:18:57] Howard Hartenbaum
Stream audio rather than.

[00:18:59] David Hornik
But I agree with you. So I, I, so I, I. Not only have I been hearing more about podcasts, I’ve been doing more podcasts. Right. Part of the reason we’re doing this now is that I did Sarah. Sarah Lacey’s podcast the other day.

[00:19:15] Howard Hartenbaum
So you’re cheating on me? Is that what you’re saying?

[00:19:17] David Hornik
I was cheating on you twice. That same day, I did a podcast with. With Kelly Leonard from Second City, the comedy comedy company in Chicago that was super fun. So I got to talk about comedy and business, and then I got to talk about parenting with Sarah. And then I went to the City. And I had lunch with Kevin Johnson, who was the CEO of Ebates, who now runs it as part of Rakuten. And after that dinner, I said. After that lunch, I was going off to another meeting. I said to Kevin, this has been like the greatest day. I’ve had the greatest day.

[00:19:50] Howard Hartenbaum
And he’s like, oh, I’m so glad you’re paid to have the greatest day.

[00:19:54] David Hornik
That’s totally true. This is my job.

[00:19:56] Howard Hartenbaum
You want to hear the problems I had today?

[00:19:58] David Hornik
Yeah. What did you do that day? My day. I chatted with. I chatted about comedy, I chatted about parenting. And then. But here’s the thing about it, right? I then have heard from people who will listen to each of those podcasts about different things. Right? Hey, that was great podcast. I appreciated it. Blah, blah, blah. Hey, David, thanks for talking about that thing. That was kind of interesting. Whatever it is. Our job, like, the venture job isn’t like a normal job. The venture job isn’t. Oh, and then I go do these. No, I better make my phone calls or whatever the venture job is. Go engage with the broader community and try and find amazing people are building amazing stuff. And what’s the path to that? Do you have. If you have a better path, by all means, let me know. I’ll stay, stop podcasting and stop having lunch with Kevin Johnson and do the things I’m supposed to do.

[00:20:48] Howard Hartenbaum
No, no, keep doing them. Keeps you out of the office.

[00:20:54] David Hornik
That’s not fun.

[00:20:56] Howard Hartenbaum
No, no, but honestly, if you’re sitting in your office, you’re probably not using your time to the best.

[00:21:02] David Hornik
That’s for sure. True.

[00:21:03] Howard Hartenbaum
Right? Because the best deals don’t usually come looking for you.

[00:21:06] David Hornik
I hope they do. So if anyone’s listening to this, Howard and I are looking for the best deals. It’s not like we’re podcasting for our own pleasure.

[00:21:13] Howard Hartenbaum
Didn’t we do this once in an Uber?

[00:21:15] David Hornik
Yeah, we did. Yeah, right. We gave him a. We even gave out a code. An Uber code.

[00:21:20] Howard Hartenbaum
I wonder what happened to that guy.

[00:21:22] David Hornik
I don’t know, man. This whole Uber thing. So this is this interesting thing. When we were pitched on Uber, when we were pitched on Airbnb, in both instances, we said, gee, there are all sorts of regulations that are challenging here. Are we worried about those, etc. The entrepreneurs who are running those companies said, don’t be ridiculous. We’re gonna get to scale. We’ll find ways to work with these organizations, with these governments, etc. And by and large, they’ve managed to scale in ways that have gotten around a lot of those regulations, but there are some, you know, there’s some choppy waters it looks like. So that’s interesting. But then we also invested in a drone company, and the drone companies similarly knew that the FAA would ultimately regulate airspace in some way or other. And their regulation was a little more pernicious, right? It was a little more, yeah.

[00:22:24] Howard Hartenbaum
So the new regulation from the FAA says it’s okay to run a drone for business purposes as long as there’s line of sight. And you can always see that drone.

[00:22:33] David Hornik
As long as you can see it.

[00:22:35] Howard Hartenbaum
Yeah, that doesn’t work so good for most drone companies.

[00:22:37] David Hornik
It also doesn’t work.

[00:22:38] Howard Hartenbaum
So how’s that going to work for drone delivery? They gotta have a guy in a plane following behind, right?

[00:22:43] David Hornik
Exactly. No, they gotta have a drone that follows the drone and then a drone that follows the drone. That follows the drone. It ends drone delivery. It basically ends any long distance drone things other than recreational drone use and even recreational drone use. Our partner Vivek is a drone fanatic and he was saying that the other day he was in his. He was at his house and he flew his drone out over the highway, whatever that was, not line of sight. Like, I know where his house is, it’s up on a hill. He flew the drone off, was capturing the view, brought it back to him, you know, and so, so here’s a regulation which actually dramatically changed the market, you know, the available market for drone startups. And so what?

[00:23:27] Howard Hartenbaum
But our new president will probably. Sorry, no politics. But he’ll probably deregulate it.

[00:23:32] David Hornik
That’s true.

[00:23:32] Howard Hartenbaum
He’ll just decide one day, like, it’s okay, drones anywhere.

[00:23:36] David Hornik
Well, we’ll have to have him have a reason he needs drones. So maybe we could like capture him in all his glory doing.

[00:23:43] Howard Hartenbaum
Delivering Ivanka’s products.

[00:23:45] David Hornik
Yeah, delivering Ivanka’s shoes. Maybe it’s direct to direct consumer. Ivanka shoes will be sufficient to get drones deregulated.

[00:23:55] Howard Hartenbaum
Sorry, I started it.

[00:23:56] David Hornik
You started it? I didn’t say it. It’s interesting when we fund companies, so anytime you look at a new company, you say, okay, what are the things, what are the risks for this thing? And there’s always technical risk. Can you build it? And there’s always sales risk. Can you sell it? And then there are other risks. And, and so we don’t fund medical devices. We don’t fund. Because there are huge regulatory risks around getting licensed and getting through trials and all those things. And we just don’t. It’s not something we know, and it’s not something we do, but oftentimes we’ll hear companies say, oh, here’s the regulatory concerns or whatever, and they’re real risks. And I’ve had companies say, oh, here’s a white paper that. That says it’s okay, and you gotta go Uber.

[00:24:45] Howard Hartenbaum
Written by somebody we paid to say it’s okay.

[00:24:47] David Hornik
Yeah, exactly.

[00:24:48] Howard Hartenbaum
But going back to Airbnb and Uber, I think with Airbnb, we didn’t really have any concerns about the regulatory stuff terribly, because that had been going on for a long time, and it was sort of a gray area, and we didn’t get hung up on that. With Uber, the discussion around it, there was some concern, like how evil the taxi lobbies might be and would there be, like, physical harm kind of concerns. And there have been in countries like in Russia, you know, where if you went against a local taxi lobby, you probably got your kneecap shattered.

[00:25:22] David Hornik
Well, and there were other places where it was one off violence, but it was, you know, taxi. Taxi drivers attacking cars of Ubers and probably France.

[00:25:31] Howard Hartenbaum
But.

[00:25:32] David Hornik
But. So anyway, I think it’s an interesting problem because. Because often what we will say is, gee, if it’s a. If there is a single point of failure over which we have no control, then that’s a hard thing to get around. And legislation is for sure that. Right. It’s. Someone could make a decision that dramatically changes the nature of what you’re doing and therefore makes a potentially profitable investment, an unprofitable investment investment.

[00:26:02] Howard Hartenbaum
So Skype had the issue early on. Was it going to be classified as a phone service? And pretty much every country has the nationalized phone service as a government monopoly. And we went through that whole process, and some countries mucked with it a little bit, some made regulations that made it difficult, but for the most part, technically, it was impossible to stop.

[00:26:26] David Hornik
Yeah. Yeah. I had a Skype call this morning. So these days when I have Skype calls, it’s almost always to do teleconference, right? It’s like, oh, Skype, and I can show you what I’m working on or whatever. And this morning I had a Skype call that was just a call with a guy in Virginia. Why would you do that?

[00:26:47] Howard Hartenbaum
Because it’s free, it’s better band, it sounds better than the phone. You can hear more clearly.

[00:26:53] David Hornik
Does it really?

[00:26:55] Howard Hartenbaum
If you have a good connection.

[00:26:56] David Hornik
It just. I thought that was kind of funny. It’s like it used to be, oh, yeah, we’ll do these international things because you save money. And I get that and so I would Skype home from London or whatever. And that’s not as bad as it used to be, but it’s still. That still makes some sense. But I just thought it was funny that the guy was calling me from Virginia is like, oh, yeah, Skype, Skype in. And then I Skyped video because I just assumed, oh, well, why else would you Skype? And there’s like, no, it just did call.

[00:27:25] Howard Hartenbaum
Maybe he didn’t want you, like, doing email on the side. So if you got video going, it’s kind of hard to, like, be going on the phone. Yeah, yeah, I hear you.

[00:27:33] David Hornik
Yeah, yeah, I know, but it wasn’t video. So have you seen. So, speaking of politics, which we’re not speaking about, do you know this messaging platform called Signal?

[00:27:44] Howard Hartenbaum
Yes.

[00:27:45] David Hornik
So, Howard, you’re kind of paranoid guy. Do you have Signal on your phone yet?

[00:27:50] Howard Hartenbaum
I used it for a while just to try it out, but I didn’t really have anything that I care. That people will see. So I’m one of those people who believes that if you don’t do anything wrong, you don’t care.

[00:28:01] David Hornik
Yeah. Which I. I totally get. Right. That’s the. Who needs privacy? Because. What.

[00:28:07] Howard Hartenbaum
Go ahead, look, you know, I’m not hiding nothing.

[00:28:09] David Hornik
Yeah, it’s so. So you don’t look at any porn.

[00:28:13] Howard Hartenbaum
I didn’t say that.

[00:28:14] David Hornik
You just are not ashamed of it.

[00:28:16] Howard Hartenbaum
It’s normal.

[00:28:18] David Hornik
It certainly is normal. Well, I guess it depends on the porn, but. So anyway, back to Signal. So Signals, this encrypted messaging app. And in this era of the Trump administration, actually, I know a bunch of people who are now on Signal, and a set of conversations are being held on Signal for very specific reasons. And it’s interesting, I just got. My wife had donated some money to a Syrian relief organization, and we got the letter back saying, you know, thank you for the donation. It was probably like a tax letter so we could get it. And Pamela said to me, do you think we’re on some list now? And I said, oh, yeah, like, absolutely. Right. This. I mean, I don’t know what was being done before this administration, but for sure.

[00:29:06] Howard Hartenbaum
I think those lists all the time existed before.

[00:29:08] David Hornik
They may. They may well have, but they. But now someone’s reading them.

[00:29:11] Howard Hartenbaum
So the real risk with something like that, unfortunately, is you may think you’re giving to a legitimate organization and it’s not. And there could be some. It could be a bad actor at that organization, diverting funds or doing something wrong. And you’re meaning well to donate money. And you Inadvertently end up in trouble for doing that. That’s kind of scary.

[00:29:32] David Hornik
There are two versions.

[00:29:32] Howard Hartenbaum
Right?

[00:29:33] David Hornik
So there are two versions. Scary for you just g. The money gets misused. Whatever. The other is that it’s deemed that you’re funneling money to the wrong actors and they seize your assets. And actually there’s some suggestion that that might be a tool of the administration to stop people that they’re not thrilled with by doing asset seizure around things like this organization, which we had done the work, it is a legitimate organization, etc.

[00:30:01] Howard Hartenbaum
But a bad actor at that organization could get you in trouble, potentially.

[00:30:05] David Hornik
Yeah. Or just a bad interpretation of that organization. Right. Which is. Which is an interesting. It’s an interesting problem. But anyway, it’s too late. So if I disappear someday, if my assets are seized or I disappear or whatever, call Tom Riley.

[00:30:25] Howard Hartenbaum
We’re not doing it if we can’t find the.

[00:30:27] David Hornik
He’s in charge of that. No, no. He’s also in charge of when I’ve been seized. He’s not just in charge of memorial service in the event that we need to have a telethon. Tom’s in charge in the event that we need to, like, fundraiser.

[00:30:38] Howard Hartenbaum
Find David Hornik.

[00:30:39] David Hornik
Right, Exactly. Go fund me or whatever campaign because I’ve disappeared. Tom Riley, he’s in charge of that. I think he’s in charge of everything. If I’m gone, Tom has to raise my children.

[00:30:52] Howard Hartenbaum
Does he know that?

[00:30:53] David Hornik
Luckily, they’re almost. They’re almost old enough, so he’s. He’s okay. But what other things would I assign Tom? I don’t know.

[00:31:02] Howard Hartenbaum
Do you have somebody that you’re. That Pamela should call, like, to deal with everything? If you die, I should make it.

[00:31:10] David Hornik
You because you’d be very efficient. I don’t think. We do have such a person. I.

[00:31:14] Howard Hartenbaum
So, you know, like, I have a sister who’s a lawyer, and I ask her to do it. But you should have somebody.

[00:31:20] David Hornik
Yeah. I mean, I. There are. There are. There’s certainly people I know who should go to. Right. And they’d be helpful. Yeah.

[00:31:28] Howard Hartenbaum
You know, you just don’t want something to be looked over.

[00:31:32] David Hornik
Yeah.

[00:31:33] Howard Hartenbaum
Or some tax liability or something that gets you. But you’ll be dead.

[00:31:36] David Hornik
It won’t matter. My wife will be fine.

[00:31:38] Howard Hartenbaum
Anyway, back to startups. I got a question for you. So what do you think of this report that. What was it? 3.7 billion in financing into cyber security companies.

[00:31:49] David Hornik
Oh, my God. In 2000. In 2016, that.

[00:31:52] Howard Hartenbaum
$.7 billion.

[00:31:55] David Hornik
No, the. The CB insights. So 3.3.7 billion in, in 2015, 3.1 billion in 2016, and over 500 startups, 550 startups in the last two years in cybersecurity.

[00:32:17] Howard Hartenbaum
It’s going to be like marketing technology companies soon.

[00:32:20] David Hornik
Yeah, exactly. We need to see that infographic.

[00:32:23] Howard Hartenbaum
Cybersecurity is certainly in the press a lot. Everybody’s certainly very worried about it. Will they steal your money from your bank? Will they shut down the power grid? Will all these various things happen? It feels to me like it’s a great opportunity to build a business, even though it’s very, very crowded. Just because if you’re a corporate executive and you haven’t bought all of like the best tools and one of those things happened, you’re fired. So you might as well spend the money.

[00:32:54] David Hornik
Yeah. It is helpful to be in a place where you look so bad if you blow it, they’re like, oh, this thing was available to you and you didn’t use it. Right. We have, we have this company threat Metrics that we’ve invested in and it does point security and it basically has a graph of tens of millions of devices.

[00:33:15] Howard Hartenbaum
I think 90% of the devices in.

[00:33:17] David Hornik
The US now are on the threat metrics graph. So if you go to amex.com or bank or whatever or Nordstrom’s and they have threat metrics and you show up, it can say, oh, this is a device that’s a good actor. Or it could say, oh, this is a device that’s a bad actor. And then for the few that are left that it doesn’t know, then it goes through a bunch of work to make sure that you’re doing the right thing now, why would you not have to your point, like, if you, if someone has aggregated all of the devices in the country and is busy aggregating all the devices in the world, and.

[00:33:53] Howard Hartenbaum
You have that, and you’re running a little credit union and you don’t have this technology and all your money is stolen from you, you could have simply stopped that by having that this is a plug for threat metrics. But you could have simply stopped that by paying this company some money. Why wouldn’t you? And pay other companies money to do other things as well. That’s what cybersecurity. You have to buy that stuff.

[00:34:14] David Hornik
Yeah, no, it’s amazing. It is. And it’s increasingly. So not only is it. Are there all these companies and there’s very good reason to buy, but increasingly actually this stuff is happening. Right. I have had multiple companies that have been threatened with denial of service attacks if they don’t pay a ransom. So we’re going to shut you down by throwing a whole bunch of traffic at your site. If you don’t give us 10,000 bucks or 40,000 bucks, send it in Bitcoin so it’s untraceable, etc. And so. And then all of those companies again in the plug. Our business, businesses world, I point to fastly, which is our, you know, which has a CDN business that is doing great defense for denial of service and say, get on fastly and say have at it, people. Because the reality is that there are a bunch of organizations that are, are, you know, designed to protect against that. I met with the guy who did infrastructure for Facebook, runs all of the Facebook’s data centers, whatever. I said, when was the last time that you were threatened by a denial of service attack or whatever? And he laughed and he said, he said, we have a billion people come to our site every day. That is a denial of service attack.

[00:35:28] Howard Hartenbaum
Have you seen any offensive cybersecurity companies get funded where their business is like you’re Nordstrom’s and you get one of these threats, pay us money or going to do a denial of service, and you call your offensive provider and they.

[00:35:44] David Hornik
Go after you, crush them.

[00:35:46] Howard Hartenbaum
They crush the guys who are trying, who are threatening to crush you. And so it basically becomes cyber warfare at a corporate level. Have you seen any of those?

[00:35:54] David Hornik
I haven’t, but I think it’s because it’s hard. Right?

[00:35:56] Howard Hartenbaum
It’s probably illegal.

[00:35:58] David Hornik
Oh, well, that. Well, this is back to our regulations. Who’s regulating that?

[00:36:02] Howard Hartenbaum
You know what? If you’re attacking somebody in a Muslim country, it’s okay.

[00:36:05] David Hornik
Yeah, totally fine.

[00:36:06] Howard Hartenbaum
I was. That was sarcasm, just to be perfectly clear.

[00:36:09] David Hornik
Thank you. But well done. Like we can’t have, we can’t. We can’t be painted with that brush since we’re 100% offensive side.

[00:36:19] Howard Hartenbaum
Offensive cyber security, I think would be because that’s the kind of thing if you’re a big company and you’re doing that, people start leaving you, leave you alone.

[00:36:27] David Hornik
Well, it’s, you know, so it’s the sort of. There are companies, companies who when they are sued, will never settle. Right.

[00:36:35] Howard Hartenbaum
Amgen ebay.

[00:36:37] David Hornik
And I don’t know if that’s still the case, but in the early days when, when, when my buddy Brad was, was the first lawyer there, said I will not settle because then more people will show up. And so I will, I will take all the time and money it takes to crush you. Because this is not a place that you can bully.

[00:36:54] Howard Hartenbaum
It’s why the US doesn’t or supposedly doesn’t pay ransom for terrorists. Because you do it once, you’ll get more.

[00:37:01] David Hornik
Yeah, so. So now the interesting thing is, if you were doing offensive cybersecurity company, could you find the people who are attacking you? Right. So first thing is the discovery part, and that’s hard. And then the attack. And the other thing is, by the way, there was a recent attack that, that, that I knew through a set of relationships that was coming from the Chinese government. Are you. Our government said this is a concerted attack of the Chinese government on a US entity. So then what do you do? Like set.

[00:37:32] Howard Hartenbaum
You know, then it’s corporate warfare against government.

[00:37:35] David Hornik
Good lord, that’s.

[00:37:36] Howard Hartenbaum
But you would think, you know, along, like the threat metrics model, you get enough companies behind something and that by itself becomes a network. And then basically that is the government. Right.

[00:37:48] David Hornik
Yeah. Imagine if the answer was because. Right. DDoS attack, the denial service attack is that you get a bunch of machines that send traffic in a particular direction until it shuts down the network because it gets overwhelmed. Sort of like the switchboard at Congress right now, no one can get through because there’s a bunch of people calling. So this is a denial of. We currently have a denial of service attack on Congress. So imagine if you could sort of like the patent trolls. So the patent trolls say, oh, we’re going to sue you. So then there were organizations that got together, a bunch of companies and said, let’s aggregate all your patents and we’ll have a joint defense so that if anyone shows up, we say, no, we have all the patents. So let’s do the same thing with endpoints where if someone shows up to do a denial of service tech, all of a sudden you turn all of the endpoints from, you know, Facebook, Google, Amazon, Microsoft, whatever, back on them. Back on them. There is. You’re done. Like, there’s no, there’s no entity, no infrastructure that could withstand that kind of aggregate attack. We should create this.

[00:38:56] Howard Hartenbaum
This is how companies start.

[00:38:57] David Hornik
This is just.

[00:38:58] Howard Hartenbaum
This has to exist.

[00:39:00] David Hornik
This is the next generation. There’s a thing called the bsa, which is the Business Software alliance. And it was started decades ago to try and have joint defense in software copyright cases, etc. This is the next generation BSA. This is the, like Cyber Security alliance, the SSA. And we’re going to get all these endpoints. We’re going to create an.

[00:39:22] Howard Hartenbaum
The Cyber Security alliance is the ssa.

[00:39:26] David Hornik
I’m Dyslexic. Shut up.

[00:39:30] Howard Hartenbaum
Cyber sounds like an S. It does.

[00:39:34] David Hornik
The csa, whatever. Howard, shut up. I guess you’ll be in charge of marketing. Or maybe Thompson.

[00:39:42] Howard Hartenbaum
No acronyms then.

[00:39:43] David Hornik
No acronyms.

[00:39:44] Howard Hartenbaum
That’s what I learned in marketing. No acronyms. They’re bad.

[00:39:47] David Hornik
I was at a dinner a couple of nights ago, and it was a couple of Silicon Valley types and some professors, etc. And we got into one of these total inside baseball conversations. And one of the professors at the end of the long rant said, I just want you to know I understood 20% of that. Like, I have no idea what you people are talking about. And it was such a good reminder. Like, half of our podcast, if you don’t have. If you’re just listening, I don’t know why you just listened to it. But half of our podcast, if you don’t know tech and you’re not into whatever, you’re kind of like, what? And I guess that’s my going back.

[00:40:23] Howard Hartenbaum
To car talk, though. When people, when they’re talking about, like, carburetor issues in a 1967 Chrysler, how many people. And they’re talking about the butterfly valve, how many people know what they’re really talking about?

[00:40:34] David Hornik
That’s a fair point. That’s a fair point.

[00:40:36] Howard Hartenbaum
Fuel injection systems, fuel pumps, that means nothing.

[00:40:41] David Hornik
So it’s more than sufficient that you get to taunt me for not knowing that cyber starts with a C. That’s enough.

[00:40:47] Howard Hartenbaum
Yes, Many people listening didn’t know that either.

[00:40:51] David Hornik
I’m sure they did know that. I’m sure they did. Every so often I am reminded that I don’t actually know how to spell anything. And it’s very sad. It’s very depressing for me.

[00:41:01] Howard Hartenbaum
I wonder when everybody’s typing now, when, like, handwriting will go away.

[00:41:07] David Hornik
It’s apparently going script.

[00:41:09] Howard Hartenbaum
Because in Japan, like in China, like, the ability to write the characters is going away. They can type it phonetically, which brings up the character which they recognize. But if you hand them paper and pencil, many people who are like college graduates will have trouble recalling many of the characters to write them down because they don’t regularly use them. It’s usually you see them and recognize, and it’s phonetic. So you type in Japanese, you type.

[00:41:33] David Hornik
Phonetic, type in sh, blah, blah, blah. And it pulls up the character, the.

[00:41:37] Howard Hartenbaum
Various characters that could fit in that. And then you select the one and then you start typing the end. It automatically goes down to what the second one options would be, for example. So, for example, I can’t write Kanji. But I can type in kanji because I’ll do it phonetically and then I’ll recognize the kanji and I say, oh, it’s that one. But I couldn’t write that.

[00:41:56] David Hornik
Yeah, well, this is how I spell, by the way, because if you just. If there was no spell checker and I just sent an email, you’d be like, this is the dumbest man alive. But courtesy of technology, first, it autocorrects a bunch of stuff.

[00:42:14] Howard Hartenbaum
I’ve never seen you type. You just dictate to Jenna.

[00:42:17] David Hornik
Yeah, right, exactly.

[00:42:18] Howard Hartenbaum
Let’s do a shout out to Jenna.

[00:42:20] David Hornik
That’s true. That’s true. Big changing of the guards. It is a sort of amazing thing, right? So it’s a. It’s a simultaneous shout out to both Mary and Jenna. So Mary Crawl worked with me for 11 years, which. That’s.

[00:42:35] Howard Hartenbaum
I think you said it wrong. She put up with you.

[00:42:37] David Hornik
Yeah, I worked your with Mary for 11 years as my assistant and worked on tons of things, and she knows everything about me. But in the meantime, she was also building this business of, you know, plates and towels and shirts, and it was doing better and better. And finally, on the beginning of this year, she came in and said, david, I love you. Or maybe she didn’t even say that, but I’m going to focus on my business 100%. And that was a shock. Like, shock, because you don’t realize, you don’t think to yourself how much when you have the good fortune, and I know it’s a good fortune to have someone who is your assistant who works with you, you don’t realize how much you rely on that person to do all sorts of things.

[00:43:28] Howard Hartenbaum
But you replaced her, like, right away.

[00:43:30] David Hornik
Well, that was lucky. That was just a very lucky set of circumstances because there was this incredible young woman who had worked with us on the lobby who it became instantly clear once I sat down and thought, okay, now I’m screwed. How do I solve this problem? It’s like, oh, my God, Jenna is the answer.

[00:43:47] Howard Hartenbaum
The lobby is David’s conference that has hundreds of people coming to it, and it’s an administrative nightmare. And Jenna is capable of doing it.

[00:43:54] David Hornik
Yeah, Jenna, right. Jenna is, you know, kind of executive producer of the thing. And anyway, so. So then I had to, you know. But it’s one of those things like, oh, well, then what are we gonna do about the conference? It’s like a domino effect. Like, okay, if Jenna can work for me, great. But then. Then what do we do?

[00:44:12] Howard Hartenbaum
Are you looking for somebody?

[00:44:14] David Hornik
So anyway, well, so I’m hoping we get. We can figure out how to make it all work with a set of people already. Work on the conference, whatever. But in the meantime, Jenna did come and agree to work with. Work with us and work with me and that.

[00:44:31] Howard Hartenbaum
So for putting up with you, a shout out to Jenna.

[00:44:33] David Hornik
Yeah. So welcome, Jenna. I couldn’t be happier. I’m. You know, I got very lucky. Mary, I miss you. And part of my dyslexia is that I can’t remember. I’m searching down desperately to find the name of your. Of your company because it would be completely inappropriate for me to not have a shout out to your company. But in the meantime, this is like one. This is a complete. This is such an example of me not having the capacity to remember anything. Come on, Howard, what’s it?

[00:45:09] Howard Hartenbaum
It’s a Mary Crawl Designs.

[00:45:10] David Hornik
No, it is not. It’s called something Something. Oh, my God. It’s just terrible. Mary, where are you to answer that question? You know who. I’ll ask Jenna.

[00:45:24] Howard Hartenbaum
Gonna find out now.

[00:45:26] David Hornik
What’s Mary’s company called? Honestly Goods. Oh, there Jenna comes through. Honestly Goods. So, Mary, congratulations. Good luck with Honestly Goods.

[00:45:35] Howard Hartenbaum
Everybody buy something from Honestly Goods.

[00:45:37] David Hornik
That’s right. Yeah. Go to Honestly Goods. Check it out. It’s awesome stuff. Welcome, Jenna, and thanks for listening. This has been David Hornik from August.

[00:45:47] Howard Hartenbaum
Capital and Howard Hart and Vaughn from.

[00:45:49] David Hornik
August Capital and Happy New Year. See you soon, Sa.