In the fourth episode of 20 minutes VC, host Harry Stebbings interviews seasoned venture capitalist David Hornik of August Capital. With a background in law and a pioneering role in venture blogging, Hornik shares insights from his two-decade tenure in the startup ecosystem. He discusses his unconventional journey to VC, the influence of Stanford's entrepreneurial environment, and the transition from attorney to investor. Hornik emphasizes the importance of big market opportunities for significant VC returns and the value of a "giving" mindset in business, as highlighted in Adam Grant's book "Give and Take." He also expresses skepticism about Peter Thiel's "20 under 20" program and predicts that tech giants like Google, Facebook, and Amazon are contenders for becoming trillion-dollar businesses, with Google currently in the best position.
"Now, it's hard to find an introduction that fully justifies David's incredible career in the technology industry, but he's been in startup industry for 20 years, starting his career in the legal profession, and in 2000 he moved to August Capital."
The quote highlights David Hornik's impressive career trajectory from law to venture capital and his significant tenure in the startup industry.
"Yeah, it was not exactly a straight path. [...] I was a litigator for a while, but eventually in the late ninety s, I ended up back in Silicon Valley where I had gone to college at Stanford, and in particular I was out here because some of my classmates had started Yahoo."
This quote describes the serendipitous connection between David's legal career and his eventual move into the venture capital space, facilitated by his return to Silicon Valley and his relationship with Yahoo's founders.
"And since then there have been a string of companies that have been started by Stanford people, Yahoo and Google and others. And so when students are sitting in Stanford, it's a model that they look at and say, this is something one could reasonably do."
The quote emphasizes the influential nature of Stanford's environment and alumni success stories on current students, encouraging them to pursue entrepreneurial ventures.
"And once I started working with startups, I realized that this was the most exciting thing I could imagine [...] And after a while they sort of said, hey, have you ever thought about the venture business? I think in large part because I was such a loudmouth in board meetings."
This quote demonstrates how David's legal expertise and assertive participation in board meetings caught the attention of his future partners in venture capital, leading to his career shift.
"But largely, lawyers are trained to be very conservative, right? The training is to find all of the problems that one might run into and to try and worry about those things and not say to yourself, what are the possibilities? What are the opportunities?"
This quote highlights the conservative nature of legal training, emphasizing risk aversion over opportunity seeking, which can be counterproductive in the venture capital industry.
"There are really two kinds of people out there. There are agents, and there are principals, and agents are the folks like the lawyers, who are doing what other people tell them to do."
David Hornik differentiates between agents, who follow instructions, and principals, who make decisions, emphasizing the different roles and mindsets required in each position.
"I think it's a mindset. To tell you the truth, one of the reasons why I wasn't terribly worried about that difference when I joined August capital is that I sort of always did it anyway, even when I was in a position where it wasn't my job to, a make decisions or b act autonomously."
David Hornik suggests that adopting a proactive and autonomous mindset is key, even in roles that traditionally do not require it, which helped him transition from law to venture capital.
"Well, hopefully, because otherwise this job is really tough. And actually, the reality is that this job is really tough. There are some indicators."
David Hornik acknowledges the difficulty in predicting successful investments, suggesting that while there are indicators, venture capital remains a challenging field.
"The venture job is one of pattern matching, that it's understanding a bunch of business patterns and a bunch of patterns of the kinds of entrepreneurs who are likely successful."
David Hornik explains that venture capital involves recognizing patterns that have historically led to success, which can inform investment decisions.
"You really have to spend a whole lot of time smashing through walls. So first and foremost, you have to find people who you think are well suited for that or excited about that, will want to build giant businesses."
David Hornik emphasizes the importance of a founder's determination and ability to overcome obstacles as critical attributes for a startup's success.
"And so in order for an investment in that size fund to be successful and meaningful, it has to actually have quite a big outcome, right?"
This quote highlights the necessity for large outcomes in venture capital investments due to the substantial amounts of money involved.
"You really need to have markets that span billion dollars of available opportunity, because in all likelihood, you're going to get small fractions of those markets."
David Hornik points out the need for targeting billion-dollar markets to ensure even a small market share can result in substantial revenue and company value.
"You're not spending it, you're investing it. And you have to understand the about you are not out shopping, right?"
This quote captures the essence of the venture capital mindset, which focuses on the strategic allocation of funds rather than indiscriminate spending.
"If it's not helpful to entrepreneurs, don't write it, don't say it in venturecast."
David Hornik underlines the importance of creating content with a specific audience in mind, ensuring it provides value to entrepreneurs.
"When we started it, first of all, venture blog was the very first venture capital blog, right?"
David Hornik notes the innovative nature of his venture blog, being the first in the venture capital space.
"You need to always have some sort of target audience, whatever you're doing."
This quote stresses the importance of having a clear purpose and audience when creating content, ensuring it resonates and provides value.
"The book is called give and take. And it's by a professor named Adam Grant."
David Hornik suggests "Give and Take" as an inspirational read, reflecting on the traits of successful individuals in business.
"It's a little more complicated than, you know. One of the reasons I think Adam includes this particular story, and it's the story of my investment in a company called pay near me, and an investment in an amazing entrepreneur named Danny Shader."
This quote introduces the context for why David Hornik's story is featured in the book, highlighting his successful investment and collaboration with an entrepreneur, which aligns with the book's theme.
"The presumed moral of the story is being the nice guy is stupid, right? That you're to allow all of this opportunity for a potential partner to then work with other people. But the reality is, and that it's more complicated."
This quote highlights the misconception that being nice in business can lead to missed opportunities, but David's experience shows that the situation is more nuanced.
"Danny himself, after making this decision, sort of thought maybe this isn't the best choice, and maybe I'm missing out on some value that David could provide, et cetera, and ultimately decided to figure out a way to make it possible for me to invest as well."
Danny's reconsideration exemplifies the realization that the value provided by a supportive partner like David can be significant, leading to a better outcome for both parties.
"This book is about sort of debunking the myth that you can't be a successful person just because you're a nice person, and that being helpful and trying to be part of this ecosystem and pay it forward is actually good for business."
David refers to the book's message, which advocates for kindness and helpfulness as strengths in business, rather than weaknesses.
"For Adam is it has been a bestseller. It's been an amazing success in the business books. And that, I think, has been good news because I think the message is so important."
David acknowledges the book's success and its importance in changing perceptions about kindness in the business world.
"I think it's bullshit."
David's blunt response indicates his strong disagreement with the idea of young people skipping college for entrepreneurial pursuits.
"I am not a believer in skipping college. I think that it's one of the great places to meet amazing people and having an opportunity to find kindred spirits and amazing people in concentration is important."
David elaborates on his belief in the importance of the college experience for personal and professional development.
"You will see if there ever is one? But my sense is that there are a set of companies that are all basically creating the same business."
David is uncertain if there will be a trillion-dollar business but observes that major tech companies are evolving in similar directions.
"I think that Google is in the best position to do it today. I think that Facebook is the one that's being the most aggressive and thoughtful about how to continue to capture the minds of people."
David assesses the positions of Google and Facebook in the race to become a trillion-dollar business.
"I think that Amazon has done an amazing job of capturing the wallets of very. And what's interesting is I left out Apple, which is currently the biggest of the bunch."
David acknowledges Amazon's success in consumer spending and notes Apple's current standing, suggesting it needs to adapt its approach.
"I've enjoyed it and I apologize for swearing."
David apologizes for his language, indicating his awareness of the podcast's clean content standards.
"Now, for all the products and resources mentioned in today's episode by David, head on over to the twentyminutevc.com where you can find them all under episode four with David Hornig."
Harry directs listeners to the podcast's website for additional resources and mentions the episode number for reference.