The Learning Leader Show With Ryan Hawk - 218: David Hornik - Why Givers Win

Episode Date: August 13, 2017

Episode #218: David Hornik - Why Givers Win Show Notes: Sustained Excellence: Great story-tellers -- Every message is better told as a story Great sales people Why generous people win in the long run -- David is naturally generous He answers every email VC's invest in people more than investing in a product The story of Danny Shader and their daughters' soccer team The many conversations which led to working together after Danny initially turned David down because he thought he was "too nice" -- Why he was wrong The aspect of the job that David doesn't like -- Narcissistic people - "You don't have to be that way" "In the long run, doing the things you like, with the people you like, will be better" What percentage of your job do you love? -- "North of 80% of it. I've been doing this for 17 years. You have to do it with people you enjoy. If not, it's terrible." Do you have a boss? -- "Not really" How to handle a bad loss? -- "We lost $35m at one point. A lot of sleepless nights. It was very hard. This business is not all about succeeding." Why doesn't David use hard end dates on his term sheets like all other VC's? "Investing is a big decision." How to differentiate from other VC's? Money is all the same, does not differentiate "It's about help, guidance. I tell them to speak with every person I've ever worked with. Ask them what they think." "I genuinely care about people I work with" "The Lobby" -- David's annual conference -- "The best values from conferences are the relationships with other attendees." Do work outside at a table in Hawaii -- It promotes better work Best advice for hosting and event?  "Maniacally curate the guest list. It has to be full of givers. If takers are there, it won't work." Start the conference with a fun game Do NOT gather in conference rooms (Hence the name "The Lobby") - The best conversations happen during the breaks in the lobby Goal is to break even on the event. The budget is more than $1m -- Get sponsors, the guests all pay "The goal in life is to have a good time... To have a good life. What's the point otherwise?" "My goal is to surround myself with great people and enjoy my life. See what's out there if you don't like what you're doing." Making a lot of money... Impact? "If I make more, I can give more away."

Yeah, it sucks. It's stupid. And the opposite is also ridiculous, which is that there are some who feel like being a narcissistic asshole is somehow a good thing. You know, oh, well, wouldn't we all like to be more like Steve Jobs? It's like, well, really? I don't know that that, you know, no, I don't think that that's right. I don't think that there is a natural correlation between being a tough, hard ass and being successful any more than that. there's a correlation between being a nice guy and being unsuccessful. And as Adam Grant pointed out, give and take, it turns out that the data suggests exactly the opposite. This episode is brought to you by my friends at Callaway Golf. Calloway's business and marketing approach has turned heads over the last several years, helping the company make a dramatic turnaround from losing millions of dollars per year to being a leader in the industry.

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Instagram. My team will gather all of the quotes and you can enter as many times you like. The more times that you enter, the better chance you have of winning. And over the course of a few months, we will gather them all and then we will draw a random winner and my friends at Calaway will send you the GB epic driver. Thank you so much. I look forward to seeing all of your great responses on Twitter and Instagram at Ryan Hawk 12. And thank you to my friends at Callaway Golf. Hey and welcome to the Learning Leader show. I am Ryan Hawk. Thank you so much for being here. It is mindful Monday. Go to learning leader.com. Enter your email address.

receive an updated note every Monday morning with the latest trends, topics, conversational pieces that we're discussing in the learning leader community would love to have you. Go to learning leader.com, enter your email address. Now, on to tonight's featured leader. Man, I love this one with David Hornick. He is a venture capitalist. Was featured in an entire chapter to kick off Adam Grant's bestselling book titled Give and Take, primarily for the fact that David is known as a nice guy and a giver. answers the question, can nice guys win? I loved this talk.

A few of the other topics we got into. How David differentiates himself from all of the other venture capitalists out there. Then the one thing that the greatest entrepreneurs have in common. David lists one specific trait, and I was fascinated by it. And then how to handle failure. He tells an incredible story about the time they lost 35. million dollars and how he reacted and learned from it. Ladies and gentlemen, this one is so good with David Hornick. All right, David, thank you so much for being here on The Learning Leader Show. Welcome.

Thanks so much. So I first learned to you and probably a lot of people, fans in my realm, I would say, we read this interesting story about you and give and take by Adam Grant. It basically leads the book off about your process. for doing deals and really for just in general for how you are labeled as a giver. And so ever since, there was about three years ago, I believe I read it, three, maybe a little longer. And I was fascinated and wanted to actually get to know you at that point. What, did your life change much after a give and take went on to become a bestselling book and Adam Grant went on to become pretty famous guy?

Yeah, I mean, it did in some ways. and it didn't in others. It was a great thing. I think that, first of all, Adam's an amazing guy, and he really does walk the walk. He's a guy who, he talked about giving in a way that, that I think gave a lot of people permission to focus on how do I, you know, how do I pay it forward? How do I work with other folks and be a little less selfish and a little more generous? And I think that's completely in keeping with who he is. And it was actually, sort of a gift to be to be included in that. And so, so mostly it has been, it's been amazing to have that out there in the world and have people sort of view me as, as a generous person by nature.

But it does come with some interesting consequences as, as Adam himself has discovered, which is that you actually have lots of people who reach out to you by virtue of the book. And Adams, sure, it gets more of these emails than I do. I get plenty of emails and messages where sort of say, hey, David, I read about you and give and take. And then they take on one of two forms. One is sort of the giver form, which is, hey, I really appreciated the story. And I like the idea that one can live one's life in a generous way and still be successful. And so I just want to thank you for that.

That was amazing, right? That's one version. Interestingly, there's a taker version, which is I read about you and give and take. and was so amazing to hear about all the good things you do. And so I'm wondering if you can do a particular thing for me. And you'd be surprised how many of those you get, even though it runs completely counter to the message of the book. I mean, the book sort of says, don't do that.

And then the reaction is to say, hey, it's so great that you're a giver, give me something. Like what are people asking you to give? Like, I mean, money? Is it in regards to investing? or advice, what is it? I mean, investing is fine because really that's my job. I'm a venture capitalist, and so it makes perfect sense to reach out and say, I'd love to tell you about my business.

That's fine, and that's not really what I'm thinking about. But it's often like, oh, I ran about you. It's amazing what a giver you are. And I also noticed that you're friends with selling, so I'm wondering if you can introduce me to her. Oh, man. You know, it's like, no, no, actually, I can't. Or, you know, things like that.

So how do you, how do you balance it? Because Adam told me, I had him on the show too, and he told me that he basically, uh, feels an urge or a need to respond to every email. And he gets thousands of them probably every day. And, uh, and, and so when you're labeled, the, the Robin Hood or a giver and being generous, is it tough to live up to that? Because you, you're, you're, just from a general standpoint, you're a good, giving guy. And it feels like, do I need to live up to something now?

How do you balance that and still live a, you know, a happy life, so to speak? Yeah, it's funny. I mean, Adam and I are exactly aligned on that. And so when we are emailing each other, it's one of those things actually. The other thing I've noticed is that it's hard for either of us to let the other person have the last word and not say, oh, yeah, thanks so much. And then, oh, thanks so much. And so it ends up a string that could be a couple of emails ends up being five, you know. Hey, another thing.

And I definitely am in the same camp where I think if you email me in the vast majority of instances, you deserve a response. You know, the exception is I get plenty of emails that are sort of form emails or sales emails. It is amazing to me how many emails I get from this one private charter jet company that seems to think that every third day I need a jet somewhere. and no amount of me either telling them that I'm not interested or just deleting their emails will stop me from receiving the constant barrage of private jet emails. So I don't respond to those anymore. And I get form emails, dear sir, and I feel like that's not really deserving of a response. But if you a person write to me as a person, then I think it's appropriate to respond,

even if the response is just this isn't a great fit for me, which is our, often the case or unfortunately I don't have anything that could be helpful. But I think it's important to respond. But the byproduct is a whole lot of email and a whole lot of inbound email because people like to get a response and when they know you're responsive, they email you. So it is a real challenge and it is a, I think of it as a very clear choice, right? I have made this choice. I want, that's the person I want to be. That's how I want to engage in my business. But it comes at a cost, and that cost is that you better get online and do some email from midnight to one in the morning or from 10 to 10 to midnight, at least every other night, or you're going to, or you will

fall behind. And you better hope, as I do often, that you, they have a cross-country flight, because that's the best time of all to catch up on email. So you, you mentioned your venture capitalists and you're getting pitched all the time and you're looking at entrepreneurs and the good ones, they're actually the story in the book, and I won't hit on it right now. We might get to it later, but the good ones have many people who want to invest. But I'm curious from your perspective, when you're getting pitched and you're thinking about investing, and if you had to draw from your experience over the years to say, these are the few things, the few common themes or characteristics I've found in the best of the best when it comes to entrepreneurs.

leaders, business owners, whatever you want to call them, those types of people and those roles. What are the few common themes that they all seem to possess? They're good storytellers in the end. I mean, ultimately they're good salespeople, and sales is about storytelling. And frankly, everything is about storytelling. I'm increasingly of the mind that every message,

every parable, every thought is better delivered in some. form of story and that ultimately those people who can do that well will be successful. And so entrepreneurs, that's 100% the case, right? Ultimately, to be a successful entrepreneur, you have to convince other people to join your company, even though it's very risky. You have to convince customers to buy the product, even though in the first instances, it's hard to convince them to do that. You need to raise capital, which is really about selling. and telling a good story about what you're doing, et cetera. So my experience is that the very best entrepreneurs are good at telling a story that

explains why it is they're doing what they're doing and why there's a real opportunity and why they're the best suited to solve that problem and why, if they do, they'll be disproportionately successful. And it turns out in the venture business, as with all entrepreneurship, they're almost assuredly wrong. They're almost assuredly wrong about whether they'll be successful or whether they'll be successful or whether it is the right approach or whatever else. But even if they're wrong, they ultimately are more likely to be successful in the next

thing that they try or in the next approach or whatever if they are, you know, if they're thoughtful about that. It's interesting. I just talked to Jason Kalakhanes and he's an angel investor, which is different than a Series A investor like yourself. Do you know Jason by chance? I know Jason will. Okay.

Are you guys friends? I'd say we're friends. Okay. Jason gives me crap a lot, but... Okay. It's interesting, I just talked to him because I feel like he was great on the show, and he was very giving, and he was a fantastic guest. Although I don't think it would be surprising to hear that he said some things that surprised me

about just about how greatest life is, and would you get on a plane with a 25-year-old pilot if you had a life as good as mine? You know, things like that, that I just laugh because I was surprised to hear him say. And he's really big into gambling in high-stakes poker. Very Jason. Yeah, yeah. Very Jason. Yeah.

What he told me when I asked him when he invested in Uber early on, he said he invested in Travis Kalanick, he didn't invest in the product. He invested in people. And I'm curious to get your take when it comes to making decisions. And obviously, you do want to take a look at the product and understand it. But he basically cut checks to Elon Musk. or cut checks to Travis without fully vetting even the product market fit or any of that, it was mainly based on the people involved. Talk to me about your thought process on investing in people versus their actual product

or service. Well, I think in general that's right. You know, in the end, people are the folks. It's the people who are going to make something successful. There are some rare amazing ideas that will be successful. independent of the people building it, but they're pretty rare, whereas there's some amazing people who will come up with an idea and make it work, even if it may not start out as the greatest idea, or if their first idea failed, right? I have a company called Top Hatter,

and the founder's original product was an amazing thing called Blippy that I loved, that was basically Twitter for your credit card, and it turned out there just wasn't enough to make for it, but the team was an incredible team and they thought about what assets they had and how they, what business they could build and they shifted and rethought and and became this company Top Padder. And Top Padder is a, it's an app that allows you to do real-time bidding and sort of a real-time auction for goods on your phone. And so it's like costume, jewelry and makeup and tablets and etc. And so people,

it's sort of like a game-like experience where you go on and you're like, oh, I wouldn't mind buying that, but that, you know, game device and it's a 30-second auction. Someone wins that it gets sold and then you move on to the next one. And because they were so talented,

the business is a many hundred million dollar business now, even though they started out doing something completely different, right? So those sorts of folks are the kinds of people you want to back. Now, I'm a kind of later stage investor than Jason is. And so there will be some indicators by the time I invest as to whether the thing they're doing is going to work, has what we call product, market, fit, et cetera. And so, you know, I'm likely to spend more time thinking about how big is the idea, how big is the market, et cetera. But like Jason, absolutely the people are the first and foremost criteria when I'm deciding. And one of those people that I initially learned of you about, which a lot of people who became fans of Adam Grant, was, does Danny Shader?

Is that how you pronounce his name? Yep, that's right. So the story, I mean, it's obviously beautifully written and a great story, but basically you and Danny happened to meet at your daughter's soccer game. Is that true? Yep, it is 100% true. A little cliche, but it is true that in Silicon Valley, you just never know whose kid is on your soccer team. And in this instance, got to chatting with one of the dads while the girls, one of the girls on the team was having a birthday.

And so all the girls were having cupcakes and the parents were sitting around waiting for them to finish up. And I started chatting with this gentleman. And at some point he said, well, what do you do? And I said, I'm a venture capitalist. And he said, really, what's your firm? And I said August capital. He said, August capital, who are you? I said, oh, I'm David Hornick.

And he said, you're David Hornick. I said, well, who are you? And he said, I'm Danny Shader. And Danny and I both knew of each other, but obviously I had never met each other. And so once we made that connection, like, oh, you're Danny Shader. Oh, you're David Hornick. Then soccer games changed, right? Instead of a lot of sitting around on my phone or whatever, I spent a lot of time chatting

with Danny. And when we went to tournaments, he and I would drive together to the tournaments. Our poor daughter is sitting in the back going, oh, my God, do we have to hear more about business? You know, we're going to put in headphones because the two of you are going to chat the whole way to Sacramento and back, which is true. We didn't. It made it really fun and ultimately resulted in me learning about Danny's business and funding it. And initially, though, he didn't choose you. And one of the reasons he said is because he thought you may be too nice and wouldn't push him enough. And he felt like he wanted somebody who would push him, which blew me away. But

how was that able to then eventually change? Well, first of all, he's a punk. Well, basically, I pushed him. No, it's funny, actually, if you talk to Danny now, Danny kind of laughs about that. He's worked with me for a bunch of years and has had the experience of having me sitting on his board and working with him.

And he now knows that that's a little bit of a caricature of who I am. and I remember talking with one of the CEOs I backed and I made some comment. You know, it was sort of like the nice guy. Someone had commented about being a nice, me a nice guy, et cetera. And the CEO said to me, yeah, you're not as nice as you pretend to be. And I was like, what do you mean by that? And he's, you know, he basically, and he wasn't saying I wasn't a nice person, whatever.

He was just saying like, look, you're not a pushover. It's not like you sit there and are just yesing us to death. And that's the reality. The reality is that I think there are good ways and bad ways of doing business and delivering feedback and whatever else. And my view is that I'd much rather do it with a smile and try and be helpful to you. But I'm not a yes man by any stretch of the imagination. I just think that you might as well be respectful and thoughtful in the process of trying to get to the same outcome. And so Danny over time came to not only came to realize that that was the case and that I was able to be a, be a,

valuable business partner, not just someone who would, you know, who would be pleasant to be around. And so, in fact, he often ends up doing reference calls for me because he said, you know, one of the problems he had with the reference calls he got was that they didn't emphasize the fact that I would do, that I did all those things as well. And so he's like, yeah, forget about whether or not David's a nice guy. That's irrelevant. Here's what it's like to work with him, which I, which I appreciate. Isn't that kind of a shame that being a nice guy, a person you want to to hang out with and be around could be viewed as a negative? Yeah, it sucks.

It's stupid. And the opposite is also ridiculous, which is that there are some who feel like being a narcissistic asshole is somehow a good thing. You know, oh, well, wouldn't we all like to be more like Steve Jobs? And it's like, well, really? I don't know that that, you know, no, I don't think that that's right. I don't think that there is a natural correlation between being. being tough, hard-ass, and being successful anymore than it's, there's a correlation between

being a nice guy and being unsuccessful. And as Adam Grant pointed out, give and take, it turns out that the data suggests exactly the opposite. Yeah, I was, I loved, that's why a book was life-changing for me. I think before I read it, I thought more of a zero-sum game, worked in profession of selling and thought like the only way for me to win or to win the awards or to be number one was just to push everyone else down and to try to win. And I learned not only from that, but then from my own experience is following that book, that it didn't need to be that way. It absolutely was not and is not a zero-sum game that in fact it would be much more productive and better and we'd all be happier if we all tried to help one another as opposed to just

trying to beat each other up. Yep. Was there a moment or an inflection point in your life that that change or have you always felt this way? No, I think I've always kind of taken this view. I'm definitely not a zero-sum kind of person and I'm not the kind of person who thinks that I don't believe that life is better lived at someone else's expense. So I was in law school in a really,

cutthroat environment and my view was, this is not about me winning and you're losing. It's about us trying to survive this. So how can I help you? Right. And that was a rather unusual point of view. And ultimately, it led to me making set of choices in law school that I think served me well, but others might have thought were strange choices. I ultimately chose rather than to join the law review, which was sort of the path to becoming to clerking on the Supreme Court and blah, blah, blah, I chose to work in this organization called the Board of Student Advisors because it was the group that taught legal writing for incoming students

and ran moot court in orientation and seemed like a, it was just a more collaborative, positive kind of experience as far as I was concerned. And so I did that because I felt like it was the better use of my time. And others said, well, that was a, you know, that's a crazy choice because these other things are move you forward more. And I've had plenty of instances like that. And I think in the long run, ultimately doing the things you like with the people you like

will be more satisfying and you will ultimately be more successful than if you make a set of choices that you think are optimizing for some outcome when the vast majority of the time those outcomes you think you're going to get to don't happen anyway. And then you've had a pretty unpleasant experience along the way. So that's kind of a lose-lose, right? Yeah, a question I've been asking of mentors of mine recently is sometimes it's peculiar, I guess, but I like to understand the percentage of their job that they really love, that they enjoy doing and the percent that they dislike strongly. I don't like to use the word hate, but what percent? So if you had to break it down on a hundred percent scale for you, David, now that you, you're into it. What percent of your job do you love? Oh, I think it's probably north of 80 percent.

This is a really good job. Yeah. It's very hard. You know, the bad stuff about this job actually aren't really bad things about the job. They're just that sometimes the things that you do don't work, you know, they don't work out, right? You make choices and then things don't end up working out for some reason or other, as opposed to, you know, man, that's a bad, that piece of this job is really unpleasant. You know, I think that. What's unpleasant? Like, what's part of that 20%? You know, there are, there's no ability to perfectly predict how interesting an opportunity is or on rare occasion the sorts of people who, you know, with whom you'd like to to engage. And so, you do inevitably end up spending time with people who are either the sorts of people that you

do not, you would rather not back or you would rather not engage with. And you do, on occasion, end up spending a lot of time listening to ideas that are just not a good fit for you and therefore not a great use of your time. And so those things can, in years one through 10, those are not the end of the world. In years, I'm 17 years into it. And so, So in year 17, you're sort of like, oh, man. I mean, with the people who are not the sort of people you'd want to spend time, that one is terrible. Where you're just like, look, you know, I'm just not going to, I'm not going to work with someone who thinks about the world this way. With the pitches that don't work out, it's just part of the deal, right, which is you're going to be pitched by a lot of businesses and you're going to, and you're going to, the pitch is going to last an hour.

and in 15 minutes in, you're going to often know that it's not the right deal for you. That's just how it goes. Although that can be frustrating at times. Do you have a boss? Not really. No. So from like my kids are true. From an accountability perspective, it's, it's just on you to hold yourself and your team accountable, correct?

Yeah. I mean, at the end of the day, venture capitalists. raise money from what are called limited partners. There are investors and they put money in. So when you go out to raise a fund, you say, hey, I'm going to do this set of things and I'd love for you to give me $500 million, whatever the answer is, something crazy. And so hopefully you convince them and you've got a group of people say,

fine, here, we will agree to do this. And they're a set of rules. It's just a contract. And it says, if you do these sets of things, we'll give you $500 million. And that will go, that will last for 10 years and you'll do a sense. set of things, right? So once you've raised that money, then you really don't have a boss. You're kind of on your own making a set of choices, trying to be good stewards of the money that they have, that they have handed you and trying to turn it into more monies to give back to them, which is,

which is the job. In about three years after you raise that last fund, three or four or whatever, you then go and say, hey, I'd like to raise another fund. And you have to go back to basically the same set of people and say, here are all the things I did and here are the things I'm going to do. And will you give me another $500 million? And that's as close as we come to having a boss where they then get to say, like, why did you do this? Or why didn't you do this? Or why aren't you thinking about this thing, et cetera?

That's not really the same as having a day-to-day boss where you're engaged in a set of tasks and answering to a person or whatever. I don't have any of that. Do you have to report out there? If someone gives you $500 million, I would think they would want updates on a regular basis where you're up there presenting saying this is what we're doing. This is the way we think. This is what we've done. This is how it's performing.

Do you have to do that on a regular basis? Yeah, sort of. I mean, we meet with our limited partners whenever they're interested. So if they're in town and they want to sit down and talk with us about how things are going in the industry and all that, then great. Happy to do it. it's more of a conversation than sort of a you know an accounting and I guess it's a little bit about how are you doing and how well you're doing those sorts of things what if it's going bad yeah I mean you got to admit it so like can you think of a time when it's gone really bad and

you're like oh my god what what am I going to say when they come into town well how is it going to go or maybe that hasn't happened I don't know I'm just curious I guess thinking about the average person listening who you know everybody who's listening who's listening who's listening probably has some sort of a job where it hasn't gone well and they have to answer to it and they might have to stand up and do it and it's hard and it's not fun and they they maybe could could learn from from people here who have on the show who have gone through moments like that yeah well look for sure companies fail all the time i mean in my instance my biggest loss from any given company i think i lost 35 million dollars on a single company so obviously that's a that is a not a fun

conversation with your investors to say, oh, you remember that company that I thought was exciting and I put $35 million into it. Turns out it went out of business and we lost all $35 million. That's not a pleasant conversation. And the first time that happened while I was in this business, it was becoming clear it was going to happen that we were at the end of the, at the end of the rope and we were not going to raise more money and the company was going to fail. And I had a lot of sleepless nights of sort of rocking around going, man, what can I do here? And ultimately, the company failed and we lost the money. And I did have to say, I had to talk to my investors and say, here's what happened. And what I realized when I did that was, this business is not about always

succeeding. This business is about making reasonable choices and succeeding more often than you fail. And so that conversation actually turned out to be a good conversation where what they wanted to know was, why did it go wrong? And could we have predicted it earlier? And if not, what lessons we'd learn. And all of that was super valuable. And so, yeah, to a certain degree, it's unpleasant to have to go in and say, hey, I got it wrong and this thing didn't work. And we lost many millions of dollars. On the other hand, And because I think in general the investors in my fund and in me respect the choices that we make and understand that it doesn't always work, and because I've seen it on both sides, both not working but also working spectacularly well, that conversation isn't nearly as bad as one would think, right? And the same thing is ultimately true. Look, in any job, you may do things that don't work out.

the question is, did you make a set of choices that caused it to not work out? And to what degree you could have anticipated that? And to the extent that you figure out, hey, look, it wasn't really about me not anticipating this thing or was really about a set of circumstances that were out of my control, et cetera, then that conversation, while you should always say, gosh, I'm extraordinarily sorry that it has gone this way, you should also be honest about what are the things that were your responsibility. What are the things that were outside of your control? And what are you going to do to optimize for the things you control and to minimize the impact of the things you've done?

One of the interesting things I picked out as a guy who's worked in sales for basically my entire career and led sales teams is when you were giving the offer sheet to Danny, you did not put a hard end date on. him or basically to try you do not try to stop him from from pitching others and people said that's crazy you have to do that so you could try to put pressure on him to say yes or it's off the table and you just said no go ahead check it out let me know what you think you know you left it really open in it and most sales people would say you say David what are you doing that's crazy man you got you got to you got to create some sort of urgency to get the deal done and and that's not your style, Lisa, it wasn't for this story. Can you talk about that aspect of your approach to, because I know you also have a very high, high percentage rate when it comes to people you

make offers to and the ones that, and the percentage of them that say yes. So I'd love to learn about your thought process around that. Yeah. Well, that's still my, that's still my approach. In fact, I just gave a kind of term sheet this past. I'm trying to think when he got it. this past Monday, I guess, I had a call with him. And we talked about it. And then he said, so, you know, there's no time frame on this term sheet. How are you thinking about it? And I said, look, in the end, you have to decide you want to work with me.

Not this isn't about, and by the way, investing is about working with people for 10 years, 15 years. I've been on the Splunk board for 14 years. I've been on the NOMIS board for 11 years. I was on the eBay's board for 14 years. This isn't something like little decision. make, this is about a big chunk of time in your future. And so my, my view is, if you ultimately decide for whatever reasons that you're not going to take my money, it won't be because I put a gun to your head or whatever. It's going to be because you went through a process, right? And I want

you to want to work with me. I think that's the thing that's going to make it most successful. And more importantly, I think when you understand that my goal is to do the thing that will make you most successful that you're more likely to work with me in any event. So this gentleman, when he said, gee, I'd love, you know, how are you thinking about it? My answer was, you need to do the work you need to figure out if this is the right thing for you. I am happy to give you the time you need. If we could get to some answer by the 4th of July, that seems like it'd be great, you know. And his answer was, yeah, that seems like a very reasonable, that seems like reasonable timeline. and I appreciate it, right?

And so, you know, if you're someone else and you come back and you give him a term sheet that has a, what we call an exploding term sheet that has a timeline on or whatever, he's going to go into it thinking, you know what, David was a good guy and was worried about the big picture. And this person is someone who is trying to, you know, trying to put a gun to my head, who do I want to work with, right? Which person would I rather work with? So I just think that you're better off taking the long view than the short view and

that's why I think about it that way. Do now other peers or other people in your industry, have they adopted your methods, or do they still use exploding term sheets? Oh, I think it's always been divided, right? I mean, my firm and my partners have always agreed that this is a fair and reasonable approach. There are others who have always put a time frame on their term sheets. And, you know, I'm not trying to change their behavior. In fact, I think when they do it, it actually creates an advantage for me.

So if you want to put an exploding term sheet in the face of one of my term sheets, which is saying, hey, I'm here to help you figure out what's the best thing for your company. I think that creates an instant contrast in terms of how I think about your business and someone else does. So that's definitely one way to differentiate yourself in this business. Are there other ways that you actively seek to be different from others who are all? offering term she's. Well, you know, look, what I am ultimately selling as a venture capitalist is money, right? I have money and you need money and you want to run your business, whatever. And money is the ultimate and fungible things. You know, it's like my money and everybody else's money is

exactly the same. If you give me a million bucks or someone else gives me a million bucks, I can do the exact same thing with it. So in that regard, the venture business is undifferenti if you think that it's just about getting the money. Now, it turns out that's not what it's about, right? It is about getting the money, but then it's about having the help and the relationship and the guidance and all of these things that venture capitalists can provide. And so my view is, like, in the end, the best thing I can do is tell you to go talk to the people with whom I work, because I've been doing this for 17 years.

And so I've worked with lots of people, and they can give you. a sense of what it, what is it that you'll get out of a relationship with me that is more than just money. And, and hopefully the answer they get is that is, is that you're getting a thoughtful long-term investor who's, who's worried about your interests at, at the end of the day. And that turns out to actually be differentiated. Like, there are, there's certainly plenty of VCs who take that same worldview and want to be helpful and want to be, think long-term, and they consistently put the companies ahead of their own. Because in the end, you know, venture investors have more or less the same interests as those founders they've backed.

The earlier you invest in a company, the more likely it is that what you're trying to do is make the company more successful, get to some outcome that's good for everybody. And so I don't know. I mean, I ultimately think that the best thing I can say from a differentiated standpoint, differentiation standpoint is that I actually genuinely care about the people with whom I work. And I take a very long view and I will do the things necessary to help make them successful. And you provide a list of every single person you ever worked with, right? So, hey, call them. Call all of them.

I knew anybody want, right? I just did it. The guy, again, the guy I just gave the unending term sheet, along with the term sheet, got a spreadsheet of, here are all the founders, here all the CEOs, happy to introduce you to anyone. And by the way, this particular individual had worked with me. And interestingly, this individual who I just gave a term sheet to had been involved in the company where I lost $35 million. So he has seen what it's like to work with me in good times and bad. That company got up to over $100 million in revenue. It was doing great. And then it wasn't. And I didn't

change who I was in that process. And the byproduct of that is that when this particular gentleman went on to build another business, he came to me and, you know, and was interested in working with me. And that's, you know, as much as anything, that's the sort of thing that you hope for. You also created a conference called the lobby. Is that right? You still do that? I do. I actually have two of them now. I have a digital media conference and an enterprise sort of business to business conference. So talk to me about the lobby. I know there's some differences about that.

No panels. I saw Reid Hoffman writing about that. The fact that panels are the worst at conferences. Mainly, I went to a great conference called Mastermind Talks by Jason Gainard, who's been a guest here. And Jason sets it up, I think, in a similar manner in the fact that a lot, some of the best work or best conversations happened during the breaks. people are getting lunch or coffee or just in between sessions.

And so he tries to create an event where it's almost like the entire thing is a break. So is that and from what I read it, it sounds like you have a similar viewpoint when it comes to conferences and that's what the lobby is all about. Can you share more? Yeah, that's right. I mean, it's my, my view is that the best value you get out of conferences, the best value from conferences are the relationships and the conversations you have,

not the content. You know, and I go to great, great conferences that have great content. I've been going to the TED conference for almost two decades, and it's obviously known for its content. And yet, even at the TED conference, I get way more value out of the conversations I have with the other attendees than I do sitting in the room listening to these TED talks. They're great.

You know, we've all seen them. But the real and interesting conversations are happening out in the lobby. There's this really entertaining Israeli investor named Yossi Vardi. And it was funny. Yosey and I were sort of circling around it. And Yosey had a table that he sat at for the entirety of the TED conference, where people would come and go and sit down with them and chat with them, whatever. But the whole time, Yosey was sitting at this one table because his view was,

oh, I want to catch up with the people who are here. It's not about the TED talks. It's about the folks who are here and I want to talk to them. And that's the lobby. In the end, it's an invite-only event so that I can get the very best possible people. And all of the people who come to lobby would be speakers in these other conferences. They'd be the panelists. So it's not like you're not going to get valuable knowledge, but you're going to get it directly from them and you're going to get it in a conversation. You're going to have it. You're going to propose the topics you think are interesting to you. and people sit around, it's in Hawaii, so you kind of sit out on the lawn. I have a warehouse in L.A. full of beanbag chairs, and you sit around in a circle with 15 other people

who care about the thing that you think is interesting, and you have a conversation for an hour. And you get way more out of that discussion than you would sitting, having the leading experts in a particular area up on stage talking about those things. So let's say people are listening and they think, oh, that's a great idea, David. I would love to do something similar, whether it's from my industry or maybe my community or whatever maybe. What's some advice you'd give to people to creating a great event? It doesn't even have to be a big event. It could be a dinner.

It could be just a regular event if you're trying to create something, but maybe someone who has not done that before. And I'm personally interested in this after going to Mashmind Talks and seeing other good conferences. What's the advice? because it sounds like the most important aspect of this is getting the right people in the room. And a lot of it probably is built upon the fact that you've built these great relationships over the years, I would imagine. So what's advice for people who would love to do something like the lobby? Well, again, start with the audience, right, because it's the most important thing. So you, you know, maniacally curate the folks who are going to participate.

If it's in your industry, then make sure that it's the folks in your industry with whom you want to deal. And this goes back to the earlier conversation about givers and takers, right? My conference, if it was full of a bunch of takers, would not work at all. Because everybody would be trying to figure out how they could extract value from the other people at the event. My conference is full of a bunch of people who I think are givers, and therefore they're willing to have a set of conversations where they're exposing things they've done wrong in the past or offering up opportunities or advice, et cetera, to others in the future. And as a result, it becomes a real community of people.

And so when something comes up, you can say, oh, I remember I was having that conversation with David Hornick at the lobby, and you email me and say, hey, do you have two seconds because I have this issue? And whoever it is emails you back immediately because it's a community. So gather the right set of people. Then the format that I like is what's called an unconference, and I certainly didn't invent it. I went to Tim O'Reilly's conference called Fu Camp,

which was basically a gathering of the, Fu stands for Friends of O'Reilly, where he gathered up an incredibly smart group of people, and they just proposed the things they wanted to talk about in any given conference room, people gathered around and talked about it. So that's the format, and the question is just how do you gather the topics,

and then how do you convince people to engage in the conversation? And a lot of it, the magic is about that. And for me, all I do is reach out to the community you are coming and say, what's interesting to you? What is something that's sufficiently interesting you want to spend, you'd be willing to lead a conversation about it. And I get hundreds of topics. I kind of look through and go, all right, here's some that people shared interests in, put them together, etc. And then I just put out a schedule and say, you know, from 10 to 11, at the big number one is this discussion or the big number two is this, the three is this, the three is this, at the four is that. And people get a schedule and they look and say, oh, this conversation is interesting to me and they go and sit down.

And the byproduct is the people who show up for that conversation are the ones who are interested in it. So not surprisingly, it becomes a more interesting conversation. And you've been doing this for how long? This is the 11th year of the lobby conference, my initial conference. And in the meantime, I'm engaged in this. lobby enterprise business, which is my enterprise conference, I think this is the fifth year. Okay. What's the difference in the 11th year from the first year? I made some tactical choices in the first year that were ill chosen.

Like what? The two most significant were that my conference actually starts with a game of sorts. It's sort of this complicated puzzle race that gets everybody to have fun and do interesting stuff. And the first year, that puzzle lasted the better part of a day. And that was just too much, it turns out. It was awesome and people had a lot of fun, but it was too much. That was the first one. And then the second one is that when I started it, I thought I should still have conference rooms

and have people gather in conference rooms, et cetera, for these conversations. And quickly people sort of took their chairs and went outside. And I realized that, oh, actually, it's way better when you're sitting out on the lawn or you're sitting on the beach or what, you know, people are just more relaxed when they're outside and enjoying the sun. So now as long as it's not raining, I take everybody out on the beach or out on the lawn or out, you know, out under the stars and make sure that they enjoy the outdoors. That's awesome. I love the thought of that. I know you could probably tell them. I'm just innately curious about getting quality givers together with the hope that they could,

the sum of those parts would be better than each of them individually. And I'm very interested in doing that. That's why I was asking. When I was reading about it, I loved that you did it. Is it even something that you make money on ours or just, or maybe it's a cost or you break even? Or what's the, how do financials play into an event like that? Yeah, the goal is to break even.

I do lots of crazy things that cost a bunch of money. I used to think that it was going to be, oh, this is a pretty cheap event to run. You just go out to a hotel and you sit around the lawn. The budget's more than a million dollars for a couple of days, so it's an expensive event. And so I have sponsors and people pay for it, et cetera. But I don't worry too much about it. And so occasionally we lose some money and my partners and I make up the difference. but our view is that in the end this is about creating a great experience for the attendees

and that's what we're optimizing for. We're not optimizing to break even. We're not optimizing to make money. We're trying to create this community event that creates value. About the experience. Well, David, thank you so much for being here, man, and chatting for 45 plus minutes. I really appreciate it. Is there anything that you really really?

wanted to say or that I potentially missed, whether it's advice or thoughts or just a mindset that you want people to have before we take off? No, I mean, look, I think that the goal is, the goal in life is to have a good time, right? Is to enjoy your life. All these other things are just serving that as far as I'm concerned, right? What's the point? What's the point of being quote unquote successful if it was an unpleasant process, you didn't enjoy it. You were unhappy, et cetera. You were surrounded by people you didn't like. And so, you know, I think

my goal is to surround myself with people who I enjoy doing something that I think is, is on the whole fun and engaging. It can't always be fun. It can't always be engaging. It doesn't always work. But, you know, but the goal is to enjoy my life. And if something you're doing is not meeting that criteria, then see what else is out there, right? I was I was a litigator and then I was a corporate attorney. I bounced around for multiple firms. In every instance, my change in life was a very positive one and I moved my life forward and into a sort of happier, happier world. And so think about, think about what makes you happy and optimize for happy. Don't optimize for any of this other stuff. How is making, I don't know how much money you're worth or

how much you make, I assume you do very well. How has made, you know, being financially secure changed, or maybe it hasn't, or what effect has it had on your life? Yeah. I mean, look, if you have to choose between having a job you love that makes, you know, a little bit of money or having a job that you love that makes a lot of money, you might as well choose the latter. And it just depends.

Like I have partners who, their goal is to make a bunch of money because they like the money, They want to accumulate money, and for them, that's what that creates happiness. And to them, I say that's fantastic. You can do whatever you want with the money. For me, it has always been the case that if I make more money, I can give away more money, I think that that is fulfilling, which isn't to say I live some austere life. I don't. I love a very good life.

I'm very lucky in that regard. But truthfully, I think the biggest difference is the capacity to support the things that are important to you, right? I'm on the board of Glad. I think it's an important organization that supports the LGBTQ community, and I've had the good fortune to be able to support it both with time and money. My wife and I are involved at Stanford's Art Museum, and we've had the good fortune of being able to afford to buy some amazing art to give to the museum. And that's great. It's art that will be there forever and we'll make lots of people happy. And so, anyway, having money is great, but I don't think it's the be-all and end-all.

And there's a bunch of research that says that after you've made $75,000 or $100,000, the rest of it is not going to change how happy you are. Now, in the Bay Area, it's probably a higher number than that. And in New Hampshire, where I grew up, it may be a lower number. But in the end, happiness is about the people with whom you surround yourself. It's not about the stuff that sitting, you know, the car you drive or whatever. And so, you know, I happily drive a mini. It's not a very expensive car.

But it's fun and it's a convertible. Drive a what? A mini, a mini. Like a mini cooper or what? Yeah, exactly. Really? That's your primary car? An orange mini cooper.

Why do you drive that? It's fun. Do you also have like a Tesla in the garage or? No, I have a penny. Nice. I love it, man. That's great. David, this has been even better than I expect.

I had very high expectations. I just, I could tell from your demeanor, you know, you can tell some people just seem to be happy with what's going on. They don't have to fake it. They just kind of are. And I get that sense from you. So I had to acknowledge that feeling where you're not trying to overcomplicate things or try to sound smarter than you are. You're obviously a very intelligent guy, a Harvard law school guy. You go back and teach.

You're very giving, but it seems like your reputation of having a very small or non-existent ego seems to be exactly dead on, man. So I really appreciate it. Hey, thanks so much. All right. Thanks, David. All right. Bye.

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