Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSE and at ICE's 12 exchanges and six clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
You keep your eye peeled on CNBC long enough or talk to some of the CEOs who come in and visit us here at the New York Stock Exchange, you tend to see coverage of media tycoons gathering at the Allen & Co Conference in Sun Valley, or other types of CEOs at the Microsoft Conference in Seattle, the Milken Conference in LA, or the Aspen Ideas Festival in Colorado. You wonder to yourself, how can these CEOs get anything done if they seem to spend most of their time as panelists in fireside chats or on chairs watching said fireside chats unfold. I mean, a lot of the same names show up at a lot of the same events. And those are just the events that we hear about. There's also a small number of smaller gatherings that fly largely under the radar. One of them is the Lobby Conference now in its 12th year, which is founded by and continues to be executive produced by David Hornick, the general partner at August Capital, one of Silicon Valley's leading venture capital firms.
Josh King:
You see a lot of what gets done around these events happens in the periphery. Really smart people share on stage what has driven their success or what their vision is for the future, but during the breaks, those folks get to know each other, share ideas, and sometimes billion dollar ventures are formed or combinations of those ventures begin to take flight. We are in the 11th year of a bull market that refuses to yield. And this year, the New York Stock Exchange has broken records for the number of IPOs and the size of the capital raised. And many of those firms got their first funding from VCs like August Capital. In 2019, we've welcomed among others, Fastly, Levi's, PagerDuty, Pinterest, Slack, and Uber, ticker symbols, FSTLY, LEVI, PD, WORK and UBER to our public markets. All of whom called the Bay Area their home base.
Josh King:
Now, David Hornick has been making investments in technology companies like these for almost 20 years, but he's also truly a Renaissance man. In addition to his passion for technology, he's an avid collector of art and a lover of music. It's an enviable introduction that we've had to David, and I'm certainly eager to learn much more about it. Join me as David and I take a look at the current VC landscape, what to look for in the founders and conversely, a great investor, and maybe how someone can score a ticket to the Lobby Conference. Our conversation with David Hornick right after this.
Speaker 3:
And now a word from Artur Bergman, CEO of Fastly, NYSE ticker symbol, FSLY.
Artur Bergman:
Fastly is a edge cloud platform. We help deliver digital experiences for amazing customers like Spotify and Ticketmaster and New York Times. We have started eight years ago. It's been an amazing journey. We work very closely with our customers. We're a very critical part in their business and we're very selective in type of customers we want from our network. Fastly is built by developers for developers. Fastly is listed on the New York Stock Exchange.
Josh King:
A recent selfie of David Hornick shows him inside a Stanford University lecture hall sporting a floral shirt, glasses, goatee, and welcoming smile. "Getting ready to talk AI and NLP in the Gates Building," goes the caption. Okay, so it's not your average college lecture hall, the Gates Computer Science Building or the Gates Building houses the computer science department at Stanford University. And yes, Microsoft founder, Bill Gates donated $6 million for the building's construction in the mid 1990s. For David Hornick, I imagine he feels right at home there. He graduated from Stanford undergrad with a bachelor's in computer music and went on to receive a master's in philosophy in criminology from Cambridge University and a JD from Harvard Law School. And when he is not investing in a wide range of technology companies at August Capital, he teaches courses at Stanford Business School and Harvard Law School on entrepreneurship and venture capital. David, welcome inside the ICE House.
David Hornick:
Thanks for having me.
Josh King:
What brings you to the East Coast on this trip?
David Hornick:
We've been spending a lot of time on the East Coast. I'd say half of the opportunities we're looking at these days are sitting on the East Coast, Chicago and other cities that aren't the Bay Area. And so we are increasingly spending a lot of our time enjoying the New York summer.
Josh King:
What kind of shift does that represent from where it was maybe 10 years ago?
David Hornick:
10 years ago was dramatically Bay Area, but still the occasional non Bay Area investment. 20 years ago when I joined the venture firm, it was almost entirely in the Bay Area. So it's a big shift.
Josh King:
We've seen Steve Case running around the country in his bus looking for other investments outside East Coast, Chicago, Silicon Valley. Are you finding things in pockets inside the rest of the country that are worth putting your money into?
David Hornick:
Yeah, for sure. I mean, the most of our investments, the largest number of our investments are in the Bay Area, but we have five or six investments in Chicago. We have seven or eight investments in New York. We have several in LA, San Diego. We have a number in Toronto. So our view is amazing smart people could start a company anywhere. This economy is absolutely global. And our goal is to find great entrepreneurs who are building amazing things and fund them where they are.
Josh King:
What do you like to do in New York when you're not talking to potential portfolio company? You've talked about enjoying the amazing Northeast summer.
David Hornick:
Yeah. I mean, there's more culture in a minute in New York City than everywhere else. So I'm a Broadway fanatic and I'm an art fanatic. And you can't find a better place for Broadway or art.
Josh King:
Were you doing that this past weekend or is that still on the the schedule?
David Hornick:
Yeah, lots. In fact, I was at an incredible art show this morning before hopping in a car.
Josh King:
What did you see?
David Hornick:
There's a collection of African art, and in particular, a piece by a wonderful artist named Zanele Muholi who we've been big fans of. Muholi is a South African artist and she has been taking a bunch of photographs or self portraits that have gotten incredible acclaim. In fact, she was featured in the Venice Biennale this year and she has a big one woman show at the Tate coming up. So she's just exploded. And her work is incredibly interesting. It's all about identity. She's an LGBTQ woman who has featured the gay and trans community of Africa. And so it's great work.
Josh King:
So let's get this out of the way first, the Lobby 2019, it's scheduled for October 23rd, 25th. How's the agenda shaping up? And how do you get a ticket?
David Hornick:
Yeah, no, that's a great. I mean, I appreciate the intro about the Lobby. When I joined the venture business, I had never been a venture capitalist. I'd been a lawyer, I'd represented startups, I'd worked with entrepreneurs. And I said to myself, "How do you meet these amazing people who are going to start companies?" And I decided that I'd go to these conferences where people seemed to gather. So I went to the TED Conference and the All Things Digital Conference, the Early Demo conferences, Tim O'Reilly's amazing conferences. I went to just an unreasonable number of conferences. And what I discovered was the most interesting conversations took place in the lobby. And so I just decided wouldn't we be better off if we had a conference that was just that? Was just the lobby. It was just a bunch of conversations and relationship building with the most interesting group of people you could gather.
David Hornick:
So a dozen years or so ago, I created the Lobby Conference to say, look, no speakers, no panels will have it in a beautiful place. We'll bring together... At the time, the first one was 150 people. It's now 250 people. And every one of those people would be a speaker at any other conference. So you're not missing out. And the idea is to get people talking about the things that are important to them, and some of that is business and some of that's life, some of that's about how you combine life and business. And so the way it works is the week before the Lobby, I reach out to all the attendees and I say, hey, what's important to you? What would you like to lead a conversation about? And I get hundreds of topics back and they range from developing technology with Kubernetes or do I need an executive coach or distributed teams? Or how do I recruit in the Bay Area? Topics that are really important and top of mind. They also include things like raising kids in an affluent society, or how do I deal with so much darn email?
David Hornick:
And so it's a broad range of topics and it's really a non conference. I create a schedule and from 1:00 to 2:00 in the afternoon, there'll be 10 different conversations and you pick the one that's interesting to you. And then 1:00 to 2:00 and 2:00 to 3:00 and 3:00 to 4:00 and then you go and jump in the swimming pool and chat with whoever you're hanging out with, then you have some drinks and dinner and a party. And then you do the same thing the next day.
Josh King:
Often you go to these conferences and you're not exactly sure who's going to be there or what their areas of focus or passion are. Some conferences do it very well providing a bio book and materials to read in advance. What have you found over 12 years is the most effective way in those first few hours to break the ice to get people who have never met each other, don't really know what drives particular passions to let their hair down and have a real conversation?
David Hornick:
Well, number one, it's in Hawaii, that helps. Number two, before the conference, I send everybody information about the attendees, but it's never just, hi, here's a picture and it's David Hornick from August Capital and he's a general partner. That's not terribly telling. And so my conference always has some kind of fun theme. And my favorite one, I have to tell you was I had a book theme once where I asked every attendee to pick a book that was important to them. I had them buy three copies of that book and in their own handwriting inscribe in the front of the book why it was important to them. So my book was a book called My Dyslexia by a guy named Phil Schultz. I'm dyslexic. And this book of is a beautiful book. And I wrote in the cover, "As a dyslexic I've read many books on dyslexia and I found them all very unsatisfying, but as I sat reading this particular book on an airplane, I was weeping." It was an amazing book.
David Hornick:
And so people picked different books based on who they were. Someone picked Strunk & White, someone picked a child's book, someone picked business books, et cetera. And once they finished inscribing in them, I gave them a FedEx label and they shipped them to me. And we photographed every book and its inscription and made what I called a book of books. And before you got to the Lobby, you received a book and it showed my picture and David Hornick's general partner at August Capital, but then it showed my dyslexia and my inscription, and then you'd flip to the next person and it would be Howard Hartenbaum, general partner, August Capital and his book and his inscription.
David Hornick:
But then the really fun thing is when you got to the Lobby, one of the things you got when you arrived was three random books from your fellow Lobby attendees that had their inscription saying, hi, this is why this book's important to me. And I was just looking through those and found these beautiful books that people cared enough about to inscribe and send. So that's the kind of thing I want to do so that when you show up, you're like, "Oh, I want to talk to so and so." I love Strunk & White, I agree. I'm so infuriated by the failure to use an Oxford comma or whatever. And so every year there's something like that. This year's theme is the Lobby Movie Festival and people are sharing their favorite movies and their favorite documentaries or whatever. And so to me if someone else lists Exit Through the Gift Shop as their favorite documentary, I'm like, "Oh, this is someone who loves documentaries, loves the art world, is fascinated by the next generation of artists, et cetera. That's someone I want to talk to.
Josh King:
You are a general partner at August Capital. I know the work that must go into that. How do you find time to do the work of executive producing a 250-person conference really? I mean, what's the team that you have? There has to be some synergies involved in your day job and producing the show. But as a kid from Sudbury and Hollis and a person who was originally educated and had as their master's, computer music, the idea of performance and production must be somewhere really deep inside your bones.
David Hornick:
Well, I love it. I mean, one of the challenges with the venture business is that everything you do is about helping and supporting others. When you're a company founder and a company creator, you're building things, you're making choices, it's your own. The venture business is actually about being a supporting player. It's about how can I help you? How can I give perspective? How can I help push the ball forward? But you are not the decision maker. It isn't your job to do those things. And so the Lobby for me has been that thing I get to own. And so I like to say it's the thing I do in the back of my mind when other things are happening. I certainly spend many hours a year... And I have two of them. I have the Lobby, which is in October, it's a digital media event. And then I have Lobby Enterprise, which is in March and that is infrastructure, SaaS, et cetera.
David Hornick:
And so I'm always in these cycles because actually it turns out the really, the most important thing I do all year is trying to figure out what great people should come to the event. So you earlier asked, how do you get an invite? Well, first of all, you should just email me or go to the website.
Josh King:
It's on the website. There's a whole section on how to get invited.
David Hornick:
Yeah. Right. You can click through and you can say, hi, this is who I am. And it asks, why you want to go to the Lobby? Don't say because it sounds great. I want to know who are you? Why does this appeal to you? Whatever. But the number one way people end up at the Lobby is at the end of every Lobby, I reach out to the 250 people who went and say, "Who should come? Now that you've experienced it, who is the perfect person?" And that's led to an amazing group of people over time. In the early days, it was just gathering a group of my friends and saying, "Who should we have?" And that crew were, I mean, really dramatically interesting people. But at the time they were doing pretty small things.
David Hornick:
It was Ev Williams and Reed Hoffman and Dan Rose and Mark Pinkus. They were great entrepreneurs, but they weren't the people we know them to be today. Megan Smith before she was the CTO of the US government. It was DJ Patil before he was the chief data scientist of the US government. And our goal is that every year we have those next amazing people. Morgan Beller who just had this big profile because she was really the driving force behind Facebook's digital currency. Morgan was there as a smart, young, thoughtful entrepreneur. We want to always have that next generation of amazing people.
Josh King:
Do people get any repeat visits or is it one time and done?
David Hornick:
No you do. You do. I think we try and get about a fifth of the people are new and the rest are folks who've come... We're down to probably a handful of people who've come to all of them. That's a big commitment if you made it. I invested in this company, ShopRunner and the CEO's a guy named Sam Yagan. And Sam is an incredible entrepreneur. And he was a student of mine. I taught intellectual property class at Stanford Business School while he was there. He was a force. I invited him to the very first Lobby and he's been to everyone but one. And the one he missed is that he was just taking Match.com public. He was the CEO of Match and he was taking it public. And he said, "I was going to tell the bankers that I need three days out of the roadshow to come to the Lobby, but I decided that wouldn't be well received," which is a fair point, but he's pretty bummed that he missed that one.
Josh King:
Those of us like you who are podcast enthusiasts must have heard the first season of startup with Alex Bloomberg raising seed capital from Chris Sacca. Did you hear that? And did you think the medium would soon serve up 700,000 different things to listen to?
David Hornick:
Yeah, look, we all looked at this podcast world. If you look back, the blogging world was this first incredible explosion of content where suddenly everybody decided that they had to be a content creator. And a couple of my colleagues at August and I started the very first venture capital blog, a blog called Venture Blog. And it was because there hadn't really been anything written about it. Now the number of VC blogs out there is massive. The amount of content is... So if you're a founder, if you're a startup founder or someone who thinks that entrepreneurship is interesting, the things you can find out now are amazing. And so it's served venture capital and entrepreneurship really well and it continues to. They're the next generation. I mean, my biggest shout out to folks like Fred Wilson and Brad Feld, who were there in the beginning when I was writing as well, but have continued now for 20 years almost of just writing great content, giving their perspectives, et cetera. So there's a ton to be heard.
David Hornick:
Well, early in there then the podcast world emerged. And my podcast, Venture Cast wasn't also the venture capital podcast. And originally it was recorded with a digital recorder driving up and down to meetings. So it was super noisy. Its David Hornik and I driving along. At one point I was recording an episode and I got to my board meeting. And so you hear me park my car, you hear me turn off the car. I mean, it's just ridiculous. Now the incredible technology makes it super easy. And so I guess I'm not terribly surprised that it's massive. And I find it fascinating. I mean, I do the nightly dog walk and I'm torn between books on tape and podcasts. The amount of content that one can consume while one's commuting or riding a bike or walking the dog or whatever is massive. And it's spectacular. I mean, you can learn a lot while you're doing something else. That's amazing.
Josh King:
David, speaking of investments, cloud software is attracting I think, a little more VC money than podcast companies at the moment. You sit on the board of cloud company, Fastly, which went public here at the New York Stock Exchange in May, currently trading around $21.50. Explain for our listeners the software that Fastly provides.
David Hornick:
So I got involved in Fastly when it was a pretty small nascent business, but the premise was this, the early days of the web were very big web pages that had to get served up from servers that sat somewhere in the country too far away and it took a long time. And so companies like Akamai created this network of computers where you could push your content out to their computers and those would be closer to the person requesting the data and therefore you'd get it more quickly. The only problem is that the technology changed and the way content got delivered changed. And yet the infrastructure didn't. And so Fastly was created to solve that problem. It was created because webpages now change all the time. And there are these little bits and pieces and they're shifting and changing. And so by the time you would push that content out to these thousands of computers at the edge, it would be outdated.
David Hornick:
The founder Fastly was the CTO of a company called Wikia, which was one of the top 10 most largest content servers in the web. And their content was always changing. And he couldn't use an alternative to make the content faster. So he created his own CDN. And it was so good that all of his nerdy friends were asking if they could use it. And eventually he decided that the best way to do that was to spin out a company. And the company originally served Twitter and Wikia and a handful of folks. And I came in in the series A. I funded the company. I knew the team. I knew the founder from an earlier company. It was an astonishingly thoughtful technology company and they have gone on to be a really thoughtful business company.
David Hornick:
So their technology is now serving... We streamed a very big sporting event that will go unnamed flawlessly. We work with companies... It's now much bigger than just a content distribution network. All of Airbnb's photos sit on Fastly servers and when someone calls up a photo, the Fastly server says, what's the device and what scale should it be scaled to? And does that in real time. So you don't have to store thousands of versions of the same photo. It's a security layer for websites and it does that really well. So it's really wonderful technology.
Josh King:
In addition to Fastly, you recently joined the board of DevOps lifecycle tool, GitLab along with Sue Bostrom, the former EVP and CMO of Cisco. I read that you had heard about GitLab through the famed startup mentorship program, Y Combinator. What caught your eye with this business?
David Hornick:
Yeah, no, GitLab's an amazing company. We actually funded the series A. What was clear about GitLab is if you look at the early days of DevOps, this is how is software developed? The thought leader was this company GitHub. And GitHub was very smart software, but it's the same story all over again. Got in early, built something important, but didn't evolve with the scale of the opportunity. The reality is that the DevOps life cycle today, the development cycle for software around the world is a very broad practice. It's not just about checking in software and figuring out who was the creator of that software and then pushing it out to production. But it's a lot of things. It's a lot of things about security, about management, about streamlining, it's about a process, it's all of those things.
David Hornick:
And so the thing that caught our attention about GitLab is that rather than being this little silo, which is how do we manage who's writing code and whether it's part of the production software or not, it manages that entire life cycle in one platform. And that has proven to be truly valuable for companies and is really the fastest growing company I've had the fortune to be associated with. And it's growing like crazy.
Josh King:
It has been very public in its desire to have an IPO. And both you and Sue Bostrom will be able to provide the experience and expertise to help guide them to that finish. Explain for us the role of a board member in these companies. Someone who's been there, done that in guiding management through the decision too, and then the execution of the IPO.
David Hornick:
Yeah, I think that these are the sorts of things that experience board members can be really helpful with, because you've seen... Right now you made this point in the beginning, the 11 year bull market... There are people in the business who have never seen a down market. They've not seen what that looks like. They haven't seen the challenges, whatever. I came to Silicon Valley in the last great bull market. It was shorter, but man was it fast. So got to Silicon Valley in '97 and from '97 to 2000 was truly one of the most incredible times in technology, in business creation. But then from 2000 to 2004 or '05, it was terrible. And then it was good again and then 2008, it was terrible. And then march forward and we were back to doing interesting stuff.
David Hornick:
So first of all, I think it's important to have people who've seen cycles because you have to be cognizant of timing of what happens, build a great company that can be sustained through good times and bad. And that includes being a public company. When should you become public? And what are the advantages of that? And what are the challenges to get there? So Sue and I have been involved in a number of public companies through a number of processes. And I think that that's been valuable so far and I think we'll give lots of feedback.
David Hornick:
The other thing that I've found is having been an attorney before this and having been on the legal side and gone through this process, I really actually have the fun of when the time comes to look at that S-1 and share my thoughts, I have a lot of perspective, not just on the storytelling, but on the legal underpinnings, all of that stuff. And so that may just be my own illness, but it's pretty fun.
Josh King:
I mean, I could read the litany of boards that you currently sit on right now where people can find it probably at the August Capital website, but it is long and vast. And it makes one wonder how you have enough time and attention to pour through an S one and find some of those legal landmines that an investor has to be worried about. You recently tweeted a comment related to Elizabeth Holmes and Theranos in response to a question about whether VCs should have seen some of the problems coming. You wrote, "This one day didn't require technical brilliance. It required the directors to ask pretty simple questions about projections that didn't materialize, attrition, something that all good directors obsess over, expenses, litigiousness, always bad in a startup, regulatory compliance..." Are the current crop of today's board members up to these tasks, which might be pretty simple about pouring through the disclosures?
David Hornick:
Yeah, I certainly hope so. I mean, I think that one of the advantages of having a seasoned venture capitalist on your board is that these are the things we take seriously. There is an obligation, not just to the company, but to our investors to take seriously the compliance, the management, et cetera. I mean, the idea that you would fire multiple management team members and it wouldn't become a conversation at a board meeting, it's inconceivable to me. We know, anyone who's helped alongside great startups knows that the absolute lifeblood of a startup are the people. And the very worst thing that you can see are large numbers of people leaving that company. And so I've never been on a board where that hasn't been a conversation. Financial, it doesn't always work. I don't mean to suggest for a second that the board members are negligent if the company doesn't work. But the reality is... And I'm basing this on a movie and a book, so take it for what it's worth.
Josh King:
A good book and a really good movie.
David Hornick:
I enjoyed the movie. I enjoyed the book. One of the producers of the movie was the sister of a great venture capitalist. So she knows the inner workings of venture capital. But look, there are just certain things that one should reasonably ask about. And in the end, VCs are ultimately subject to the information that they're given. It's not that one couldn't be misled, et cetera. It's just that there were a lot of telltale signs here that I think one could have reasonably spotted along the path if there were people who were focused on that. And venture capitalists, that is our job. And good venture capitalists take that seriously.
Josh King:
The New York Stock Exchange, David, recently announced the launch of the NYSE Board Advisory Council, which will address the need for inclusive leadership by connecting diverse candidates with companies seeking new directors. And I look through your Twitter feed and you are deeply connected with a lot of groups that try to raise up participation among women and minorities. Is there a good bumper crop of available board members for the vast number of companies that need the kind of leadership that you're talking about?
David Hornick:
Oh, yeah. This weekend, I was at the board meeting for GLAD, the LGBTQ advocacy organization. It's an incredible organization. And I had this conversation with three different board members from GLAD. The chairwoman of GLAD is this incredible African American lesbian Coca-Cola executive who would serve on any board with honor and would help the business and as thoughtful and incredible. I mean, the CEO of GLAD, who is a former media exec and incredibly thoughtful executive would be a fantastic candidate, et cetera. So I'm constantly finding myself surrounded by people who are not getting these opportunities but they should and I think that the number one thing we have to do is take it seriously. We have to expect that the right thing to do is find great people and put that at the top of the list.
Josh King:
So let's go back to 2013 for a minute. You published your first LinkedIn post. I think it was entitled the Value of Fundraising, in which you discussed your own fundraising as a venture capitalist. You wrote, "Venture capitalists are investors. And the vast majority of the money that we invest is not our own. Where does the money come from? We go out and raise it from foundations and endowments and fund to funds who raise it from other investors." So I'm asking you David, over the past six years since this post was published, how has the VC fundraising process changed and how has it stayed the same? We certainly saw news from August Capital late last year that you were returning some of the money from your latest fund to focus on your portfolio companies. You'd raise another fund later after you got this crop up and running.
David Hornick:
Yeah. No, I think that's right. I mean, it is an interesting time in venture right there. When I started in venture and when I was out raising those first set of funds... And by the way, my firm had been in place for some time. The founders of August were the first and only investor in Microsoft, in Sun, Compaq. Those early days, there were a smaller number of investors. There were a smaller number of funds. We had a bunch of good conversations and then people gave us money. Since that time, the range of funds has changed dramatically. There was no such thing as a seed fund when I started in the venture business.
David Hornick:
Josh Kopelman one day said, "Gee, wouldn't this be easier if I wasn't investing my own money but I raised a fund?" And first round capital was born and that started an avalanche which today my understanding is there's something like 800 seed funds of $100 million or less, 800, from zero as recently as 15 years ago. The late stage capital world has changed dramatically. You have firms like Andreessen Horowitz that started out with a mere hundreds of millions of dollars fund, now with billions of dollars they're putting to work. You had firms like DST where Yuri Milner was an early big investor in companies like Facebook and then that became a clear and big market. Let's put aside SoftBank and the scale of that.
David Hornick:
So I think that the number of opportunities for investors in funds to put money to work has changed. And therefore they're going through the same evolution, where do we put our dollars, et cetera. And as you say, I went through this process and by the time I got to commitments to fulfill my fund, I thought, you know what? I would rather take Fastly public, work with these great companies and get them to liquidity and say to my existing investors, "Hey, here are millions of dollars. How about you give me some of them back to go put to work in my new fund?" And that's what we've been doing.
David Hornick:
So stay tuned, beginning of next year when the next fund is being raised, but it'll be raised from a really smart set of investors. And I'll tell you, the biggest change I've had in these 20 years that I've been in the venture business is that now that I've been at it a long time, and I know that the core objective of the venture business is to turn money into more money. But what happens with that money? My biggest goal is that my investors put that money to work in things I'm excited about. When your investor is a big university and it pays for scholarships, that makes you happy. When your investor is a big foundation and they're putting money to work to make the planet a better place, it makes you happy. And so my goal in this new fund is to raise money from folks who are going to put my money to work in things that I feel are making the planet a better place.
Josh King:
So from the explosion of VCs and the different definition of what they do from these large pool of seed investor funds to these late stage funds and the hundred billion dollars of SoftBank's Vision Fund, one effect that that has is says to companies and entrepreneurs, I don't even need to tap the public markets. I don't need to go public until much later stages in my growth. And Uber is a perfect example of that. Is there a problem with fewer companies going public sooner and not providing the investment opportunity to the retail investors or those who wait for public investment that aren't part of the VC community and sharing in the dramatic hockey stick growth of the stages of the company before they get to ringing the bell at the IPO downstairs?
David Hornick:
I mean, the good news as I sit here in the NYSE is that I'm a hundred percent believer in sooner is better. I think that this trend of I'll be a private company for a long time is misguided. And the reason it's misguided is look, ultimately companies are valued by growth. And growth gets harder over time. And so I would love for people to be able to take advantage of the early days of those companies to invest and take advantage of the continued explosive growth of these companies. If you push it out by billions of dollars in private investment and years of growth, the number of companies that continue to grow in that capacity are infinitesimally small. It's just a very, very small number relative to the number of companies that get started. So I would rather see companies build real businesses, build big businesses that they think have of the capacity to be self-sustaining and grow and go to the markets and demonstrate that value.
David Hornick:
And there are real advantages. I find that there are real advantages to having public currency. And I was the earliest investor in this company, Splunk many years ago. Funded three founders. We got that company public after, I don't know, seven or eight years. And it's just been an absolute explosive and amazing story since that day. I took it public at a couple billion dollars, today it trades at 20 billion. I took it public with a thousand people, and now it has 7,000 or 8,000 people. I would rather that the markets take advantage of that growth then think that it's in our interest to have private investors getting all of the advantage of that.
Josh King:
I was recently listening to a podcast interview with Marc Andreesen and Brian Koppelman, where Marc said he sees the ability to get an introduction as a test of pitching. If an entrepreneur is willing to put the time into networking and forming relationships, maybe by going to the Lobby with people who either are VCs or can connect them to a VC, that's the introduction that they're looking for. It shows the drive and dedication. They've got to get their company and grow it. Advice for VCs trying to get those introductions so they can get in your door when your next fund is ready.
David Hornick:
So I a hundred percent agree with that. It is certainly the case that you are infinitely more likely to get funded if you are introduced to a venture investor by someone they know and like. The one challenge I have with it, and I have not come to a good answer for that, is that under-represented communities have a harder time getting to us. And so why is it the case that they should be disadvantaged by the fact that someone is an outsider? So I'm struggling with it, because I have to say in all the time that I've been in the venture business, I have not to date ever funded a company that didn't get introduced to me in some capacity or other. So-
Josh King:
But I see you putting your telephone number and your email address in your tweets when people are reaching out to you. You're an open book dude.
David Hornick:
Yeah. I mean, I meet with lots of people and I spend time with all sorts of people. Tristan Walker's a great example of this. He was a young student at Stanford Business School who reached out and said, "Hey, I'm thinking about X, Y, and Z, can we get together?" And I said, "Great." And he came and sat down with me and he was smart and thoughtful, et cetera. And by the way, when he reached out, I had no idea that Tristan was a young African American guy. I just knew him to be a smart young student. Now he had the advantage of coming from Stanford Business School. So that's cheating already.
Josh King:
That was a screen.
David Hornick:
But good for him. And he came and sat down and I loved him. And I thought he was a great guy. I introduced him to Ev Williams who hired him. And Tristan's had this meteoric career since. So good for him for doing the work of reaching out to lots of smart people. I give him credit for that. And I try and say yes to those because what's the harm? What's the worst that someone tells you about something interesting they're working. But it is the case that you would be way better off to find the opportunity to go meet people, to find common ground. If you are a young entrepreneur who came from New Hampshire and you know I grew up in New Hampshire, amazing, reach out and say, "Hey I grew up in New Hampshire near where you lived." And there are lots of those relationships.
David Hornick:
I was hanging out with a really amazing thoughtful guy named Denmark West and Denmark grew up in Detroit. And he was telling me all these amazing people who are coming out of Detroit, some of whom he went to school with, some of whom are just Detroit folks. And now my friend Suneel Gupta who went to run for Congress had been an entrepreneur living in Silicon Valley. He'd been a senior executive at Groupon, et cetera. He'd been at Firefox and now he's living near Detroit and he's engaging with great young entrepreneurs. Get to know Suneel, get to know Denmark. These are people who have a connection to Detroit and suddenly Detroit can be this interesting and amazing hub for entrepreneurship.
David Hornick:
Tristan Walker just moved to Atlanta. If you are a young entrepreneur in Atlanta, you should be reaching out to Tristan. And this is true. Sam Yagan, Zach Kaplan, a bunch of these amazing entrepreneurs who sit in Chicago. If you're in Chicago, you should get to know them. And these are generous people who are excited to meet with great thoughtful people. So all you have to be is great and thoughtful. You have to be giving and thoughtful and reach out and know who these people are and they will likely give you time.
Josh King:
Giving and thoughtful, a person who is very giving and thoughtful as David Hornick. After the break, David and I take a look back at his path from Stanford to litigation onto Silicon Valley and the Lobby. That's right after this.
Speaker 3:
Now a word from Jennifer Tejada, CEO of PagerDuty, NYSE ticker symbol, PD.
Jennifer Tejada:
PagerDuty is a digital operations management platform leveraged by developers, customer support, IT and security to help ensure the brand experience for their end consumers runs perfectly all the time. Our organization reflects the diversity and the richness of our community. We're really excited about global impact. We chose the NYSE because it's a place where iconic companies are truly born in the company of giants.
Josh King:
Back now with David Hornick, general partner at venture capital firm, August Capital. Before the break, we spoke about the IPO process and what it means to be a board member of some of the most cutting edge companies out there today. You grew up in Sudbury and moved to Hollis, New Hampshire. Your dad worked at Digital Equipment Corporation, which was a huge name in New England and Massachusetts back in the day. Where did the Hornick come from originally?
David Hornick:
Yeah, I mean, my mom grew up been Lawrence, Mass, which was a Jewish immigrant population in Lawrence. Low income population, they worked hard and her brother and sister did wonderful things. Her uncle went on to be the head of the electrical engineering department and Columbia, just through sheer force of education. But Lawrence is a challenged community and that's where they grew up, before that coming from Russia and over in Europe.
David Hornick:
My dad grew up in Collingswood, New Jersey. His parents came over at the time of the Holocaust to escape the Holocaust. His mom was an opera singer and was studying opera. His dad and his aunt came to study pharmacology, not because I think they cared about pharmacology but because I think their parents understood it to be the best way for them to get out of Europe. And similarly, that is a family that believed in two things, education and classical music. That was what my dad's family believed in. And my dad went on to get a great education. He was a math major and a teacher and saw the emergence of the computer science world and jumped in. And he was a computer scientist for 25, 30 years. And he continues to be more on top of the technologies of today than I am.
Josh King:
Well, when I hear about the... Who was the opera singer? It was your grandmother?
David Hornick:
My grandma, Ria Becker turned Ria Hornick.
Josh King:
Ria Becker turned Ria Hornick, the opera singer. And I hear about your dad. It all begins to make sense to me because you attended Stanford University and while at Stanford, you majored in computer music. And speaking of Bostonians who followed that path, Ray Kurzweil was certainly an innovative force. What does the major of computer music entail? And how did you come across it saying, this is where I'm going to plant my flag at least to start?
David Hornick:
I got to Stanford intending to go to law school. And so I took a lot of history classes. I took a lot of political science classes, but I was a musician and I loved technology. And this was in the mid '80s when the synthesizer was changing the sound of pop music. And it turned out that the most important synthesizer of the day had been created by a professor at Stanford, a guy named John Chowning, who created this thing called FM synthesis, which became the core of this Yamaha DX7, which was an instrument I worshiped. Gives you a sense of what a distorted young man I was. But this instrument changed everything in pop music. So I marched up the hill to this place called CCRMA, the Center for Computer Research and Music and Acoustics and met John Chowning and said, "Hi, I'm here." And CCRMA was this very nerdy center that was graduate students, et cetera. There were a bunch of classes that I ultimately was able to take and things like acoustics and physics and psychoacoustics and MIDI and all this.
David Hornick:
One of my classmates was Tim Westergren, the founder of Pandora. Tim and I wrote music together in one class. So he wrote the music because he was a better musician than I. And so as I got through school, I realized I had spent as much time in the computer music lab and taking modern music history and theory and all this as I had taken in history and political science, et cetera. And so I created my own major. There was no such thing as a computer music major, but Stanford is very flexible and they have a committee and you fill out a form and you find some advisors. And so I created this major that was basically music, technology, computer science, acoustics, and the aggregation of all of those things. And managed to convince the committee to allow me to get this degree. And since that time, it's actually been adopted within the music department. So now you can get a music degree with an emphasis in technology. That's very much looks like the degree that I helped to invent back in the day, which is amazing.
Josh King:
So with that box checked, the computer music major satisfied, and actually launching an ongoing major at Stanford, then you attend Cambridge University where you earned your master's in philosophy studying criminology. Your thesis was Bias Crime in Britain and America. Was crime and the law always going to be something that you... Were you ever going to get off the train that you said, mom, dad, I'm going to be a lawyer? Or was this a way to thread the needle in a different way?
David Hornick:
Yeah. You know what? If you look at the stuff I've done, I've just done whatever I thought was fun, what was fun and engaging. I graduated from Stanford and I hadn't spent time overseas and I really wanted to. And so I applied for a bunch of fellowships and I got this Rotary fellowship, which was an incredible gift. The Rotary clubs of America donate money to send US kids around the world as ambassadors of goodwill. And they sent me to England to study at Cambridge. And I still, at this point as much as I loved technology, as much as I loved music, I was still very much drawn towards social justice and I had every intention of being a public defender. And so the opportunity to study criminology and understand the penal system and penology et cetera, was a great chance for me to enjoy Europe, to get to England, to study something I thought was interesting and important. And it was all of those things.
Josh King:
Well, the next stop was Harvard and Harvard Law School. And we'll pass over that because last year you took a selfie outside of Cravath, Swaine & Moore, their headquarters here in New York. And the caption reads, "Spent some serious hours in this building in my late twenties and glad I did. Cravath was a fantastic post doc." Now, David, I've got lots of friends who came up through places like Cravath and Perkins Coie. What did you learn in those early days as a lawyer that translated into your role today as venture capitalist? We mentioned earlier the ability to get yourself through an S-1 even by being a dyslexic.
David Hornick:
Yeah. Cravath, Swaine & Moore is full of incredibly smart people. It's a law firm you hire when you have to win. And the byproduct of that is that the people there are amazing, the resources are amazing, the problems you are working on are amazing. I think that that was all an incredible gift. I worked for a lawyer named Frank Barron. And Frank Barron is not only one of the great lawyers of our day, but he also is one of the most lovely humans. And the fact that that's possible, the fact that when... I was working on a big case. And the first thing we did was we had to fly to Washington, DC to help prepare the CEO of Ticketmaster to testify before Congress. And my wife, who wasn't my wife then, I was just engaged, I had just moved to New York City and was alone and she ended up coming with us to DC so she wasn't sitting home alone in New York. And we'd get invited to dinner when we're busy working by the CEO of Ticketmaster, "Hey, where's Pamela?"
David Hornick:
What I learned was you don't have to be ruthless and mean and mean spirited to be successful. What you have to do is work extraordinarily hard, be focused, care about the outcome, work with people you believe in. Those things are amazing. So to this day, I mean, there are lots of places you leave and it's a place you left, whereas when you leave Cravath, just like when you leave a place like a Stanford or Harvard, you are a Cravath alumni. That is a huge difference. I think if you can think of the number of places where the people who leave think of themselves as alumni, they don't just think of themselves as, oh, I passed through that place, it's a pretty small number.
Josh King:
So as we think about where you are now, while you're a member of all the corporate boards that we talked about, both pre IPO and post IPO, you're also a member of three nonprofits as well. We mentioned GLAD earlier, where you're the vice chair. You are a member the Stanford Alumni Association and Leaders in Tech. Why add these responsibilities to all the other demands in your time that you have?
David Hornick:
Yeah, good question. My life is chaos. Let's go back to Cravath. One of the things that Cravath did train me was how to sleep less. I'll give you that much. You had a lot of work to get done. And at the time I had little children and you're always juggling. A handful of years ago I had this realization that I was spending all of my time on for-profit boards and I decided that was not an appropriate distribution of my time and energy and focus. And I purposefully sat down with my wife and we said, "How should we think about putting our resources, our intellect, our time, our whatever, and our economic resources to work?" And came to the conclusion that I should do more in the nonprofit world.
David Hornick:
Leaders in Tech is a wonderful organization started by a woman named Sue Kim to create greater inclusion, to create networks of young entrepreneurs who, as we talked about before, will have the resources to get into places like in August Capital. And so I've been honored to be part of Sue's journey and to help her with that organization. And obviously GLAD is extraordinarily important. I think that the LGBTQ rights are our next civil rights journey. It is worthy of my time, even if it means I sleep a little bit less.
Josh King:
So through the course of our conversation, David, in which we've been talking about all the businesses that are coming up through August Capital, some of them that have IPOed here, the New York Stock Exchange, the roles of boards, the roles of VCs. We've also touched as we began the conversation about your visit to New York City and the photography exhibit that you went to this morning. We talked about literature and your love of Alice in Wonderland. Let's finish on music. You're a lover of music. Spotify listed right here on the NYSE under the ticker symbol SPOT. As our listeners look for something that isn't podcast talk, talk, talk, what new music have you discovered that they should add to their summer vacation playlists?
David Hornick:
Wow. We started out by saying that I'm a big fan of Broadway. And I occasionally invest in Broadway shows, not because I think they're going to make me money. I mean, they might, if you invested in Hamilton, that was as good as a venture investment. But every so often I invest in shows that I think really should get made because I think they're really beautiful. And the most recent show that I did, that was a show called Hadestown, which is incredibly beautiful show. I saw it off Broadway multiple times. It's written by this incredible composer. It's a folk rock anthem. So if you have a second, definitely check out Hadestown's music. It's been a pleasure to listen to that one.
Josh King:
So David, on that note, we'll let you get back to your next show and your next activity that you're having here in New York. I hope we have you back here inside the NYSE for an upcoming IPO.
David Hornick:
Yeah, me too. I certainly hope so.
Josh King:
Thanks for joining us in the ICE House.
David Hornick:
Yeah. Thanks for having me.
Josh King:
That's our conversation for this week. Our guest was David Hornick, general partner at August Capital. If you like what heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet to us, @ICEHousePodcast. Our show is produced by Theresa DeLuca and Pete Ash with production assistance from Steven Romanchak and Ian Wolf and Ken Abel. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.