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

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

[00:00:22] Villi Iltchev
And this is Villi Iltchev, also from August Capital.

[00:00:25] David Hornik
Who? Villi Iltchev on VentureCast.

[00:00:29] Villi Iltchev
I got invited. I can’t believe it. It’s a true privilege.

[00:00:33] David Hornik
It’s the end of the year. It’s sort of like a holiday treat for you, Vili.

[00:00:37] Villi Iltchev
I know.

[00:00:39] Howard Hartenbaum
Have you ever listened to Venture Cast before?

[00:00:42] Villi Iltchev
I have and it’s been a few years, I have to admit.

[00:00:48] Howard Hartenbaum
Wait a second.

[00:00:49] David Hornik
You’ve been telling us you want to.

[00:00:50] Villi Iltchev
Be on venturecast, boycotting it because you won’t invite me.

[00:00:55] Howard Hartenbaum
Do you even know what Venture Cast is? I guess that’s a better question.

[00:00:58] David Hornik
Yeah, right. Do you know you. That we talk about things. Are you aware of that? We talk about technology, the venture business.

[00:01:06] Villi Iltchev
I get to hear your views on all these topics all the time.

[00:01:11] David Hornik
I know. And you’ve been so how long have you been with August now?

[00:01:14] Villi Iltchev
I’ve been 17 months.

[00:01:19] David Hornik
All right. And how many months?

[00:01:20] Howard Hartenbaum
This is like a mother who has a new baby. It’s not one year old or two years old. It’s 17 months, three weeks and four days.

[00:01:26] Villi Iltchev
It’s been a year and a half.

[00:01:28] David Hornik
A year and a half better. And how many months in till you started rolling your eyes at me? That’s the real question.

[00:01:38] Villi Iltchev
Well, you know, it’s.

[00:01:40] David Hornik
He’s taking this seriously.

[00:01:42] Villi Iltchev
Well, no, I roll my eyes at everybody. It’s just how frequently I do it. And yes, sometimes I roll my eyes.

[00:01:50] David Hornik
But so, so it is the holiday season. So what’s one interesting thing that I’ve noticed? So obviously we’ve seen this at Enterprise Software. You saw this Philly, we’ve had this where there’s this end of year surge where you’re trying to close those last deals and that always happens. But the other thing is we have a number of retail oriented businesses and man, are they, are they fourth quarter loaded. So I was just at the, at the board meeting for Shop Runner and Shop Runner is Amazon Prime. For everybody else it’s get two day shipping free. Two day shipping free returns when you use Shop Runner things at a bunch of great retailers and it turns out because shopping is incredibly fourth quarter loaded, that their revenue is incredibly fourth quarter loaded. And I was sitting at this board meeting, we’ve just recently funded Shop Runner and I was reminded of the fact that Sam Yegan, who is the CEO, was a student of mine when I was teaching intellectual property in the business school. And I said To Sam, at one point along the way, he was a student in this class. And at one point I said to him, you know, Sam, you roll your eyes more often at me more often than my children do. And what was his response, do you suppose? He rolled his eyes at me. That is what happened. And now I’m sitting in these board meetings and I fig he was. He was fairly nice to me in the first board meeting. But I figure he’ll be rolling his eyes.

[00:03:20] Howard Hartenbaum
Maybe you’ll learn to not talk.

[00:03:23] David Hornik
That’s the lesson.

[00:03:26] Howard Hartenbaum
What’s the saying? Better to be thought a fool than open your mouth and remove all doubt.

[00:03:32] David Hornik
Well, then, Philly, maybe you should not have come on Venture Cast. That may have been your best bet.

[00:03:37] Villi Iltchev
Okay, well, it’s over now.

[00:03:40] Howard Hartenbaum
What did Trip say? I was arguing with an entrepreneur a few weeks ago, and the guy was a little bit crazy, but I was arguing with him anyway. And Tripp said, what’s the saying? You gotta, you know, a genius and a fool are arguing with each other, but from a distance, you can’t tell who’s who.

[00:03:56] David Hornik
That Right. You can’t tell the difference, right? Exactly. That’s what our partner meetings have become is like.

[00:04:03] Villi Iltchev
Well, if you are arguing with a fool. Yes. It’s hard to tell them apart because. Why are you arguing with a fool? I was texting you at that meeting as well. Stop asking questions.

[00:04:17] David Hornik
So this is the thing about our business. So the venture business is an all year long, we meet with entrepreneurs, and we meet with some great entrepreneurs. We meet with some fine entrepreneurs, and occasionally we meet with entrepreneurs whose ideas are less compelling. But they all get an hour, right? That’s just. Please come in and pitch us. You’ve got an hour. But you know the ones that are less compelling. In minute 45, when Howard starts asking questions like, Howard, shut the fuck up. Just let the man finish. Just let the woman finish.

[00:04:49] Howard Hartenbaum
I am doing it on purpose. And the purpose is I know that the meeting ends at an hour, and I’m curious if Billy will wait to ask questions after the hour is over, because that’s what he wants to do.

[00:05:00] Villi Iltchev
Only ask questions when they matter.

[00:05:03] Howard Hartenbaum
But you always wait until after the hour.

[00:05:05] Villi Iltchev
I also want to hear the entrepreneur finish their flow.

[00:05:10] Howard Hartenbaum
Who’s the idiot?

[00:05:11] David Hornik
Who’s the genius? Actually, what you used to. You told me in the past, Howard is. And I think this is totally fair. You said, look, I know we’re not going to fund this company, but I might as well ask the. I might as well find out things, right?

[00:05:23] Howard Hartenbaum
You learn Something the guys are all smart.

[00:05:25] David Hornik
And that I agree with 100%. Like, the beauty of our job is that no matter what the pitch, even if you very quickly determine that it’s not a company you would fund, it’s certainly the case that you can learn all sorts of interesting things. And so we had a pitch today by a company that’s in the cryptocurrency space. And even if we don’t fund this company, we learned a ton. It was soup. Like that was a holy macanol. That was interesting. Now some of that is that this cryptocurrency business is like just unbelievable. It’s like a.

[00:06:01] Howard Hartenbaum
We were, we were arguing is speculation 90% or 98%.

[00:06:06] David Hornik
Right. What percentage of cryptocurrencies actually have underlying value?

[00:06:12] Howard Hartenbaum
That’s a good question.

[00:06:13] David Hornik
And what percent are just people buying because they hope the next person will buy at a higher price and they’ll go up in value.

[00:06:19] Howard Hartenbaum
I wonder why Amazon is not taking bitcoin yet.

[00:06:25] David Hornik
No one who has taken bit. Who takes. No, no actual retailer that takes it.

[00:06:30] Villi Iltchev
The transaction cost. Way too high. Way too high.

[00:06:32] David Hornik
Well, the volatility too. Right?

[00:06:34] Villi Iltchev
You have volatility, but forget volatility. To buy anything, 5 bucks and for you to pay 20 bucks transaction cost, it’s just.

[00:06:43] David Hornik
So this makes no sense, right? The whole pitch for Bitcoin is that it takes out all the costs. It becomes this frictionless experience. And damn the financial institutions. We’re going to save a bunch of money. But this is exactly why that’s baloney. Because in the end, when you want to trade from crypto to something else, there’s an end point. There is some entity that has to be the marketplace between dollars.

[00:07:11] Howard Hartenbaum
And the thing is, Amazon doesn’t. At their scale, they’re like Apple with the credit card aggregation where they can just take your bitcoins, they have a price in bitcoin and you just give them bitcoins and they aggregate them all up and sell them at a billion bucks at a time and they actually make the market.

[00:07:29] Villi Iltchev
Yeah. Why would they expose themselves when their margin is already tiny? Why would they expose themselves to currency?

[00:07:37] Howard Hartenbaum
Because they take all of the money they have and put it in bitcoin. Then they announce they’re going to take bitcoin, which drives the market up. That’s where they make their money.

[00:07:45] David Hornik
So this is one of the things we talked about in this meeting, which is that there are all sorts of things that have been tried and regulated in securities law and things like front running trades and other things that are 100% illegal in stocks, that are happening rampantly in cryptocurrencies and yet are not being regulated yet.

[00:08:12] Howard Hartenbaum
They will be.

[00:08:14] Villi Iltchev
Yeah. And we don’t know if the current regulations can, you know, can, can cover this area. I guess the SEC hasn’t gone after anybody yet, but oh no, they’ve had a few.

[00:08:28] David Hornik
Right. Haven’t they had a couple of early suits where they’re saying these were fraudulent offerings. So that’s a step. It’s a step. But I, but is, is the bigger problem that because these are distributed systems, et cetera, it will be hard to prove, it’ll be hard to demonstrate, et cetera.

[00:08:49] Villi Iltchev
It, it’s, we, I, I actually pay attention to this and, and I’m unlike you and me. I am, I am, I’m really, I’m really in awe. And at the same time I just, there’s so much speculation. I just don’t know where this ends. On one hand, the primary, I think.

[00:09:17] Howard Hartenbaum
Most stock market purchases are spec. The problem with that is secondary market transactions. And people are buying because they think that the value is going to go up. It’s based on something many people day trade on no information. They’re looking at their graphs and looking at the trends and drawing lines and it’s no different.

[00:09:38] David Hornik
This is exactly why they’re launching the Long Term Stock Exchange. Right. This is the founder of Lean Startup who said this is exactly the problem, that if you create disincentives to do day trading, et cetera, then you’ll get better behavior in a market and you’ll get better reporting about the things that matter and people will hold for longer. All those things.

[00:10:03] Howard Hartenbaum
The bankers won’t make their money. So that’s why it doesn’t work that way.

[00:10:05] David Hornik
I don’t know. I mean, it’s getting ready to launch.

[00:10:08] Howard Hartenbaum
So I read that last year, 2016, there was $250 million in ICOs and this year it’s going to top $4 billion.

[00:10:19] David Hornik
Wow.

[00:10:19] Howard Hartenbaum
How many. What was the IPO market this year?

[00:10:23] David Hornik
I don’t know actually.

[00:10:24] Villi Iltchev
Well, the tech IPO market, less than $4 billion. I can find it out in money raised in money raised. Tech IPOs are probably in that range unless there’s a really large one. We didn’t have a Twitter or an Uber or anything like that this year. So I’m going to guess in the.

[00:10:41] Howard Hartenbaum
Private markets it’s still bigger, but I’m.

[00:10:42] Villi Iltchev
Going to guess the IPO market. There have been 20 iPodOS. Tech IPOs this year, 200 million on average. So yeah, you’re going to end up the same.

[00:10:53] David Hornik
Right.

[00:10:53] Howard Hartenbaum
So at the growth rate, ICOs are going to be way bigger than IPOs.

[00:10:56] David Hornik
Next year, which is really terribly stupid. I just have to like, have to say now I acknowledge this as a self serving statement because I’m a venture investor and I have no interest in buying coins. I am interested in buying securities which come with a lot of characteristics that are better for investors, but not as far as I’m concerned, worse for, for founders. I actually think it’s better all around. But these ICOs where you’re selling coins, first of all you create a pie that is 100% of the pie. Then you start immediately selling off fractions of that pie. You’re, you have a liquid currency from day one, which we, we know to create a whole bunch of challenges for startups.

[00:11:44] Howard Hartenbaum
They create challenges like insider trading issues.

[00:11:46] David Hornik
Huge insider trading issues, huge challenges of retention of, of employees. Huge challenges when there’s a disunity between early employees and later employees. And we face all of these challenges when we’ve invested in companies that go public and then there are folks who’ve made a lot of money, others who are trying to create value, whatever, but it’s all exacerbated by these ICOs which then add on top of that there are no protections, there are no requirements for reporting. There are just no requirements around these things.

[00:12:19] Villi Iltchev
Yeah, I mean, but even if you rewind, blockchain is a great technology but it has to be a stepping function, improvement to existing technology. So if you are a company tracking, you know, share your share, registrar, your e shares, a computer share one of those tracking ownership changes the existing technologies, you can buy a database today, an Oracle and you can build an application on top of it to track who owns what. You know. So I still struggle to figure out with all these ICOs, how the use case, why the blockchain based use case for that specific, you know, application is better than existing technology.

[00:13:14] David Hornik
Well, this goes back to our earlier comment, which is what percent of them are being used for that at all. Right, sure. It’ll be. Blockchain will clearly be amazing for things like identity and smart contracts and a set of things. But the number of ICOs in which the currency is reflecting those uses is infinitesimally small compared to the number that are just being used to raise capital.

[00:13:39] Howard Hartenbaum
So Billy, you had mentioned today there’s 28 cryptocurrencies worth more than a billion dollars. And when were all of those created? And the reason I ask is maybe they dwarf private company startup valuations over the same period.

[00:13:58] Villi Iltchev
I mean, they’ve all been created in the last.

[00:14:00] Howard Hartenbaum
Not all of them. Like Bitcoin’s been around for a while.

[00:14:02] David Hornik
Bitcoin and Ethereum, which are the two.

[00:14:04] Howard Hartenbaum
Biggest, but all the other ones in the past few years.

[00:14:06] Villi Iltchev
Well, Ethereum was created, what, a year or two ago. It hasn’t been that long.

[00:14:11] Howard Hartenbaum
So if you think about it, they may be worth more than all the private companies created in the same time period. That’s kind of interesting.

[00:14:20] David Hornik
Yeah.

[00:14:20] Howard Hartenbaum
I think we should start selling our private companies to Cryptocurrency Holdings.

[00:14:27] David Hornik
Can we do that?

[00:14:28] Howard Hartenbaum
Maybe it will be anti dilutant.

[00:14:30] David Hornik
Yeah. This market is so exciting. It is exciting, but it’s going to be volatile and it’s going to, you.

[00:14:38] Howard Hartenbaum
Know, I love volatility.

[00:14:42] David Hornik
Did we all live through the first Internet crash? Like that first 2000 time frame when suddenly everything that was supposed to work stopped working and then everybody dumped the things that they had thinking it’s suddenly not worth what it was worth and then the bottom fell out and then that caused other people to freak out and dump what they’re doing. And meanwhile, now you can short cryptocurrencies, which we know is a mechanism that causes people to, you know, to cost people immense amounts of dollars, which causes then them to be forced to sell, which causes the markets to drop dramatically. Right. We’ve put all of the mechanisms in place to make this marketplace as volatile as possible.

[00:15:24] Howard Hartenbaum
I think it’s super exciting.

[00:15:25] David Hornik
I know you do. I’m excited for you too.

[00:15:31] Howard Hartenbaum
Anyway, we’re sitting in David’s office and it’s holiday time and there are gifts wrapped for his plentiful family all over the place here. And so my question for David is, are all of these items branded items or have you bought any Amazon Basics? They’re blue label products.

[00:15:50] David Hornik
It is sort of astonishing. What number of boxes, what percentage of the boxes that have been shipped to my office have been Amazon boxes. Now, I’ve since wrapped them, so.

[00:16:03] Howard Hartenbaum
Weren’t you on the board of Shop Runner?

[00:16:05] David Hornik
Shop Runner is amazing and I’m, I’ve got some excellent Shop Runner purchases here, but Amazon’s an incredible machine of a beast of a, you know, behemoth of a nightmare. And so first of all, no, most of them are not basics, but I bet you I buy, I bet you I buy an Amazon Basic a week in some capacity or other. Here are the things I buy with great certainty. Cables all the time, batteries all the time. I don’t tape, probably what else?

[00:16:42] Howard Hartenbaum
So the number that caught my attention was that there are now over 1500 different Amazon basic items for sale at Amazon.

[00:16:51] Villi Iltchev
What’s the biggest two or three categories?

[00:16:53] Howard Hartenbaum
Batteries. Batteries and cables. Super high margin brands. Don’t matter.

[00:16:58] David Hornik
Yeah, yeah, yeah, yeah.

[00:17:00] Howard Hartenbaum
They do razor blades yet.

[00:17:02] David Hornik
But do you remember, like, this is the thing that cracks me up there. My band in high school was called the Generics and we had T shirts.

[00:17:12] Howard Hartenbaum
That’s fine. Mine was the Blue label.

[00:17:14] David Hornik
Yeah. My band was called the Generics. And my T shirt ready? Bass player and the guitarist, red guitar player. You remember those packages? They were white packages and it said cereal or it said, you know, peanut butter. And the prices were great. And so people bought them. And then at some point, the brands got smart and were like, don’t or don’t eat that terrible crap. It’s all really bad. And they convince you otherwise. But part of the process then was they created their own brand. So how many. How many Kirkland brand products do you buy? Do you know Kirkland?

[00:17:47] Villi Iltchev
That’s the Costco.

[00:17:50] Howard Hartenbaum
We buy some, we buy some.

[00:17:52] David Hornik
And now you can buy Kirkland brand products on Amazon.

[00:17:55] Howard Hartenbaum
They’re better than the label, right?

[00:17:57] David Hornik
That’s what I’m saying. They’re now branded equivalents of generic foods.

[00:18:01] Howard Hartenbaum
My recollection of, like, junior high school, one day I found this six pack in the fridge that said Blue Label Beer.

[00:18:10] David Hornik
Totally.

[00:18:10] Howard Hartenbaum
And I tasted one and it was horrible. So I took them in the backyard and shook them up and was shooting them with the BB gun because they would explode when you hit them. And my dad came home, he’s like, what are you doing? And I said, well, you ain’t gonna drink this shit.

[00:18:28] David Hornik
This is what you were like as a child, like for junior high school.

[00:18:32] Howard Hartenbaum
That’s not a child.

[00:18:33] David Hornik
That’s like. That’s what you did in junior high.

[00:18:35] Howard Hartenbaum
What did you do?

[00:18:37] David Hornik
None of that. A, I had no BB gun. B, I didn’t try the beer.

[00:18:44] Howard Hartenbaum
Wait, what did Billy do?

[00:18:45] David Hornik
Where were you?

[00:18:46] Villi Iltchev
I was shooting empty beer cans with BB gun while drinking. So you were drinking and shooting Sam Adams.

[00:18:55] David Hornik
What?

[00:18:56] Villi Iltchev
Where were you living in North Carolina? Winston Salem, North Carolina.

[00:19:02] David Hornik
You drank Sam Adams?

[00:19:04] Villi Iltchev
We were high end. We actually used to brew our own beer in high school with my best friend.

[00:19:11] Howard Hartenbaum
Are you telling the truth or is this an alternative fact?

[00:19:14] Villi Iltchev
It’s. It’s. It’s not an alternative. It’s the truth we were sitting in.

[00:19:18] Howard Hartenbaum
Because alternative facts are okay today.

[00:19:21] Villi Iltchev
I used to. I used to. I used to clean cars in a car dealership. Used car dealership and used to clean cars in the truck and you found.

[00:19:27] Howard Hartenbaum
Beer in the trunk.

[00:19:28] Villi Iltchev
And we’ll come home at 5:30 in the afternoon and we’ll sit in the backyard, grab a beer and we’re gonna read some, you know, deep philosophy book that made us feel like we are like Plato, smarter than everybody know. Read like Dostoevsky and Kamu and all that crap.

[00:19:47] David Hornik
This is what you did.

[00:19:48] Villi Iltchev
We thought we were smarter than everybody and cooler than everybody because we used to read books and shoot BB guns and drink beer and so I grew.

[00:19:57] David Hornik
Up in New Hampshire. I don’t think we did. We didn’t do any of that. I mean I’m sure there were people in New Hampshire drinking beers in junior high. There was no one reading Camus or Dostoyevsky. Yeah, there was plenty of BB guns.

[00:20:10] Villi Iltchev
That’s what we did. But then we grew up and realized we’re not smarter than everybody.

[00:20:16] David Hornik
And so when did you come here? You.

[00:20:18] Howard Hartenbaum
I thought you were going to say the same thing. And then you’re going to find that the prerequisite to becoming a venture capitalist was junior high school. Shooting beer cans with BB guns.

[00:20:26] David Hornik
Drinking beer.

[00:20:27] Villi Iltchev
Yeah.

[00:20:27] David Hornik
No, I didn’t know that that was the. Although I’m asked by lots of students, what’s the path? And then you could do like say, oh, I’m sorry, you missed out.

[00:20:34] Howard Hartenbaum
No, what you could do is say who here shot BB guns in junior high school? And then two or three raised their hands and who shot beer cans? And then you go, you’re the venture.

[00:20:42] Villi Iltchev
Two of my partners did this. So you fit the profile.

[00:20:46] David Hornik
No. I ask is there anyone here who’s a computer music major and if they say yes, then boom, yes, they’re in. And my friend, that’s the plan. So wait, Philly, you, When did you come to the States you were in, you were in Greece.

[00:21:04] Villi Iltchev
So I was in Greece. I was living illegally in Greece at the time. That was when you were three. 91 and 92. I was 15 and 92 because I was living illegally in Greece. Living illegally.

[00:21:19] David Hornik
You were an undocumented, undocumented alien immigrant.

[00:21:23] Villi Iltchev
Yeah, I was undocumented.

[00:21:25] Howard Hartenbaum
Like three heads, undocumented person.

[00:21:28] Villi Iltchev
Totally doing the same stuff that undocumented people do all over the world. Which is breaking. Look for a job.

[00:21:36] David Hornik
Yeah, right. Now, what were your parents? So you came from Bulgaria?

[00:21:39] Villi Iltchev
Yeah. So 89. Communism collapsed by 91. The country was a complete basket case, kind of similar to Venezuela today. Inflation was 2,3000 and crime was off the charts. The economy collapsed Everybody was. There was lack of the basics. There was no bread. And so my parents went to Greece and we. My dad is a physicist. He’s a PhD in metallurgy and he used to study metal alloys. And my mom is a civil engineer. Anyway, we ended up in Greece. My dad was doing construction. My mom was working as a maid, which at the time of 15, when you see your parents go through that kind of sucks. Going back to Bulgaria was not an option. And so I thought I would apply to boarding schools in the UK and the US and ended up getting a scholarship to go to a boarding high school here in the States, which is how I came here. So it wasn’t this foresight that I had to. To come to America. It was life. And life takes you in directions you didn’t expect. And at the time, that was the best possible life or option I could have imagined for myself. So that’s fun.

[00:23:02] David Hornik
That’s pretty good. Because Howard and I were just a couple of Jewish kids who like, grew up in middle class neighborhoods where we drank generic beer. We’re doing middle class things. I didn’t drink generic beer, but I did go to timeshare. Did you have a timeshare? Remember those? It was like you got a week that you went to.

[00:23:19] Howard Hartenbaum
My dad was an entrepreneur and he built his business while I was growing up. So we were very careful with money for a long period of time until his business got established. And that was right around the time I left for college. So we didn’t get the vacuum. Vacation was like, we’re all getting in the back of the car and driving to San Diego Zoo, which was good.

[00:23:37] David Hornik
Yeah, well, the zoo’s nice. No, my mom grew up that way. My mom grew up in Lawrence, Mass. Bunch of immigrants. Her family came from Russia. My dad’s family came from Germany, and it was the same sort of thing. They came and they didn’t have a lot. But when we were growing up, my mom was very careful. We did a lot of arguing about why I couldn’t get an Izod shirt. And then we’d go to Marshalls and she’d buy one for me and I’d be psyched. And now I think about my children. It’s like a little spoiled, Frank.

[00:24:13] Howard Hartenbaum
They weren’t wearing eyes on shirts.

[00:24:15] David Hornik
I. I’ve come back around to Izod shirts. I feel pretty good about them. I’m not sure if that’s what we intended to discuss on veggie.

[00:24:23] Howard Hartenbaum
You gotta be careful what you wear because Billy will criticize you. As wearing.

[00:24:26] David Hornik
I know. What were you wearing? Some, some Brooks Brothers which really believes is a brand on its way out.

[00:24:32] Howard Hartenbaum
150 years down the toilet.

[00:24:34] Villi Iltchev
It’s just, yeah, it’s their cheaper and better options out there but I don’t want cheaper.

[00:24:42] David Hornik
What do we think is going to happen at Bonobos? So you know there’s some really good things about bonobos. I have a lot of bonobos clothing, they’ve been bought by Walmart. Do we think that bonobos up the game at Walmart and they start doing more interesting kind of direct to consumer brandy things or do we think that Walmart drags down bonobos to you know, common denominator, least common denominator and I think the opposite.

[00:25:05] Howard Hartenbaum
I think Walmart is to up Bonobo’s.

[00:25:08] Villi Iltchev
Game maybe from a logistics perspective. I just don’t know how Walmart helps them with brand and everything they did well to date was create an org.

[00:25:20] Howard Hartenbaum
Create a brand, create an experience relationship with the customers. Something that Walmart really wants and needs to do better at. And I think they’re going to put a lot more money and time and effort into that.

[00:25:32] David Hornik
Yeah, I think they finally come around. I had a meeting with some very senior Walmart execs at the TED conference a handful of years ago. There were a bunch of great people around the table, folks like Ev Williams and Tim O’Reilly and others who were kind of there to discuss the Internet, et cetera. And so we started talking about personalization and at the time Walmart’s view was that they had an absolute understanding of their average customer and they could draw describe their average customer. He said yeah, but what about the individual customer? And they said well you don’t, we don’t need to know that person because we’re Walmart.

[00:26:09] Howard Hartenbaum
They knew about every customer. They were between 5 foot 6 and 5 foot 9 and they paid with cash.

[00:26:14] David Hornik
It was like there was a. But they had a bunch of customers, they took the average. They didn’t worry about who those people were. They didn’t, you know, it was just they were so big and so, so general that they were perfectly fine with that. And I think they’ve absolutely come around. I know that they’ve just given Andy Dunn a bigger role. He was the founder of Bonobos, a really, really great smart guy that we’ve known for a long time. So I think folks like Andy and with the acquisition of Jet and with others, I think that they’re going to end up making huge progress. But it’ll be super interesting to see, see how it’s gone. So. All right, well, look at we. We short venture cast because, you know, we didn’t want to be too taxing on Villi’s first effort here. It’s the end of the year. I don’t think it’s likely we’ll sneak in another venture cast since it took us, you know, six or eight weeks to get to this one.

[00:27:08] Howard Hartenbaum
But certainly in the new year.

[00:27:09] David Hornik
Any. Any end of your wishes, any new year predictions, any. Anything for this, this moment. Howard, what have you got?

[00:27:21] Howard Hartenbaum
Bitcoins for Christmas in Hanukkah. That’s a good gift. It will be well received.

[00:27:25] David Hornik
Bitcoin, that’s. Open up a. Open up a wallet. Open a wallet.

[00:27:30] Howard Hartenbaum
Put 01 in there and give it to your buddies.

[00:27:33] David Hornik
There’s a. There’s a well known investor and bitcoin aficionado in the. In the Palo Alto area who, when he. When he and his family attend bar and bat mitzvahs, give 18 bitcoin 2.

[00:27:50] Howard Hartenbaum
That’s a lot of bitcoin nowadays.

[00:27:51] David Hornik
That has been historically the case. Maybe now it’s 1.8 or 0.18. But historically, if he came to your bat mitzvah several years ago and you hung onto it, that was one serious gift.

[00:28:06] Howard Hartenbaum
18 times 18,000.

[00:28:09] David Hornik
Yeah. What is that today? It’s probably not. He’s probably not giving you 18 at this point. $324,000. So. No, but someone got $324,000 worth of Bitcoin and apartments for some.

[00:28:21] Villi Iltchev
And I hope they forgot about it.

[00:28:22] David Hornik
Yeah, right.

[00:28:23] Villi Iltchev
I forgot about it and they didn’t sell it.

[00:28:25] David Hornik
And I hope they woke up today and they sold it.

[00:28:29] Villi Iltchev
Yeah, I mean, okay, bitcoin. I’ll stick with bitcoin because it’s fascinating. So the value.

[00:28:34] Howard Hartenbaum
This is like at the end of the meeting, that’s when you start talking. Well, anyway, this is Howard and I have to leave.

[00:28:41] David Hornik
Oh, Howard’s leaving us. But Villi and I will keep on. Howard. It’s been a pleasure. Happy New Year.

[00:28:46] Howard Hartenbaum
Yep. Happy New Year.

[00:28:47] Villi Iltchev
Bye, Howard.

[00:28:48] David Hornik
You can finish, Billy. This is like Howard. This is just like Howard. Let’s just talk about him now.

[00:28:53] Villi Iltchev
Okay, he’s gone now. All right. We like Howard. So the value of bitcoin today is about 350, $400 billion, which, by the way, is fascinating. That’s about the size of Exxon today. And the value of gold is 8 trillion. So 8 trillion is that we say 8 trillion. Okay, so what I find fascinating. So the bitcoin skeptics, you know, say it’s worthless. And if I try to play that argument out, the other side is going to say, how about gold? And inevitably you capitulate because you’re right, gold is also worthless. But for some reason, people ascribe value to it. And where I’m going with that story is I don’t know the value of bitcoin. I don’t know where this goes, but I wouldn’t be surprised if it goes so far above people’s expectations. Like people are saying today, bitcoin, next year, 30 to $40,000. Or it’s possible bitcoin will go to 30 to $40,000. I think it’s possible it goes to 300 to $400,000 and it will still be less than the value of gold. And so that’s your assessment.

[00:30:10] David Hornik
Your assessment is that.

[00:30:12] Villi Iltchev
I see.

[00:30:12] David Hornik
Well, it’ll also be a lot less than the value of dollars in the US Economy.

[00:30:18] Villi Iltchev
Oh, dollars is a lot more than that.

[00:30:20] David Hornik
Okay. That’s what I’m saying. So that’s not really the measure.

[00:30:23] Villi Iltchev
Well, people use it as a store of value. To them, it’s not a currency. I know maybe one day it’s going to be a currency.

[00:30:28] David Hornik
It’s intellectual property as far as I’m concerned.

[00:30:31] Villi Iltchev
But it’s. All I’m saying is it’s going to be a wild ride and I don’t know where it ends. Obviously there’s going to be a crash at some point. Nothing goes up straight into the right forever. But where it ends up, I wouldn’t be surprised if it’s higher than anybody imagines.

[00:30:48] David Hornik
Well, someone we know well said. Bitcoin one million. And he’s been saying it forever. And he is now a bitcoin billionaire because he believed it early. Also because he was rich when he believed it, which is helpful. But yeah, bitcoin a million. So. All right. Well, vili, it’s been a great year. I thank you for joining us in this end of year, venturecast.

[00:31:12] Villi Iltchev
Thank you for having me.

[00:31:13] David Hornik
I’ve had an awesome year. I thank anyone who still actually listens to venturecast. That’s extraordinarily kind of you. Big shout out to Grant, the founder of Insight Engines, and to Aaron, the founder of Brilliant, and to. To Sam, the CEO of ShopRunner and any other new investments of mine this year. I think that’s. Those are all spectacular new and exciting ones you have. What do you got?

[00:31:48] Villi Iltchev
I wanted to congratulate Aaron Levy and Joelle on their wedding, which happened this weekend.

[00:31:55] David Hornik
Congratulations.

[00:31:56] Villi Iltchev
Pictures on Facebook. And I thought it was lovely. So congratulations.

[00:31:59] David Hornik
Yeah, you worked back back in the day with Aaron, so that’s awesome. And beyond that, we’re looking forward to an exciting 2018. If you venture cast listeners, have some exciting business you want to pitch us, Bring it on. Hornic at auction, augustcap.com and Philly at augustcap. Com and Happy New Year.