Prior to joining August Capital, David was an intellectual property and corporate attorney at Venture Law Group and Perkins Coie. In his legal practice, David represented high tech startups in all aspects of their formation, financing, and operations. Before that, David was a litigator in New York City at Cravath, Swaine & Moore.
David holds an AB in Computer Music from Stanford University, an M.Phil in Criminology from Cambridge University and a JD from Harvard Law School.
In addition, David is currently a lecturer at Harvard Law School, where he teaches entrepreneurship and venture capital, as well as an Entrepreneur in Residence at Harvard Business School. David has also taught at Stanford Business School, Stanford Law School and the engineering department at Stanford University. He is the author of VentureBlog, the first venture capital blog, and VentureCast, the first venture capital podcast.
Spindle Law: Who inspired you to be a lawyer?
David Hornik: I always wanted to be a lawyer growing up. I imagined myself being a public defender or trial lawyer, fighting for justice. My law hero was Clarence Darrow. So much so, in fact, that I named my daughter after him — no, she isn’t “Clarence,” she’s “Darrow.”
SL: You initially studied computer music before training as an intellectual property lawyer. How helpful is a technology background in first picking up and, thereafter, practicing IP law?
DH: My college major was a multidisciplinary major in Computer Music. It was a little bit of everything. While the subject matter was pretty esoteric, it gave me the opportunity to explore all facets of music and technology, which was great training for IP law. While I don’t think that you need to have any particular background in technology to be a great IP lawyer, you certainly have to be able to speak tech fluently. I suspect the tech stuff I’d studied in college helped me in that regard. And it certainly helped that my father was a computer scientist and I was surrounded by technology from as early as I can remember.
SL: You worked for a number of law firms before joining August Capital as a venture capitalist. Would you describe the trajectory that took you from litigation associate at Cravath Swaine & Moore to intellectual property and corporate attorney at Venture Law Group and Perkins Coie; specifically, as it applies to both the types of firms as well as to the areas of practice?
DH: When I graduated from law school, as far as I was concerned the practice of law was all about litigation. All that transactional stuff was really foreign to me. It never struck me as interesting or fun. In fact, it never really struck me as the practice of law. I had the good fortune to join Cravath, Swaine & Moore coming out of law school. Cravath seemed to me to be the quintessential litigation firm and I was ready to dive in head first. And dive in, I did. When I landed at Cravath I was assigned to work for Frank Barron. Frank is one of the best litigators in the world and had plenty of exciting cases to keep me busy. Within weeks of joining Cravath, Frank took on the representation of Ticketmaster in its dispute with Pearl Jam and the Antitrust Division of the Department of Justice. I quickly found myself reading every document ever created in the history of Ticketmaster. If you want to truly understand a business, read everything they’ve ever written. My stint at Cravath was interrupted briefly by a clerkship on the Second Circuit, but I returned to Cravath and the world of high-stakes litigation. I helped Frank fight the good fight on behalf of big investment banks, a large industrial manufacturer, a Big 5 accounting firm (when there were 5), etc. It was all new and challenging and, often times, really fun.
But, by 1997, the Internet had emerged. As a tech nerd, I found myself really excited about what was going on with the Internet. And through a bit of luck, it turned out that one of the most important early Internet companies, Yahoo!, was founded by a friend and dorm mate of mine. While I didn’t have the guts to jump into his startup at that time, I did end up leaving New York to join Yahoo!’s law firm, Venture Law Group (VLG). My law school room mate was already working at VLG representing Yahoo! among other startups. He would tell me all about the exciting projects he was working on. He was busy with fast moving M&A deals, licensing deals in Asia, and closing million dollar financings. While I had never contemplated the practice of corporate law, the opportunity to work with the next great technology companies was really exciting to me. I jumped at the opportunity to move back out to Silicon Valley (I left the Bay Area in 1990 when I had graduated from Stanford but had always wanted to get back out to California) and start working with startups.
It turns out I found working with startups absolutely intoxicating. Startup founders were smart, thoughtful, aggressive. And the world of startups was a whole lot less hierarchical than big New York law firms. The clients valued my point of view and they looked to their attorneys as business partners. While I had no formal business training, I found myself in the thick of the Internet revolution and, as a result, I got a hands-on MBA pretty quickly. I was working unbelievable hours, but I was loving it. The harder I worked, the more my clients let me get involved in their businesses. In fact, while I started out practicing corporate law at Venture Law Group, my clients quickly had me doing licensing work for them as well. The late nineties were crazy times and every minute counted. So rather than let my clients wait around for contracts to get drafted by others in the firm, I just did it myself. As a result, I got even closer to the business of my clients.
After a short stint at VLG, my Silicon Valley mentor Jim Brock left the firm to create an investment partnership. As part of his departure, he became of counsel with Perkins Coie, which had just opened up a Bay Area office. When Jim announced that he was leaving VLG, I approached him and asked “where are we going?” He looked puzzled. “We?” I told him that I would happily follow him wherever he chose to go. Soon enough, I was interviewing with Perkins Coie to help kickstart their new startup practice. I ended up joining Perkins Coie, along with a fantastic young attorney named Buddy Arnheim (at least Buddy and I were young at the time) and we were off to the races. Over the next year and a half, Perkins Coie’s Bay Area office increased in size more than five-fold. We were representing some amazing companies and helping them with their meteoric ascensions. It could not have been more fun. When I was asked to join August Capital as a Venture investor, I was certainly excited to try my hand at the business side of the startup world. But I was sad to have to leave Buddy and the folks at Perkins Coie with whom I had shared such crazy, exhilarating, intoxicating weeks and months.
SL: You are teaching “Entrepreneurship and Company Creation” at Harvard Law School this Spring. What are the main principles you strive to convey to your students? And, what balance — between theoretical and practical — does the course take?
DH: My HLS course is a quick, one-unit class in the Spring. I think of it as an introduction to entrepreneurship. My goal is to get my students excited about the idea of entrepreneurship and to understand some of the challenges and opportunities facing startup CEOs. I would say it is a fair bit more practical than it is theoretical. The students have to write an executive summary. They have to negotiate a term sheet. And every so often one of them uses the course as a jumping off point to start a real honest-to-goodness business after law school.
SL: You also have taught IP law at Stanford Business School. How different is it teaching MBA students from those in law school?
DH: I taught intellectual property law at Stanford’s Graduate School of Business for six or seven years. It was really fun to talk about Intellectual Property from a business standpoint. I co-taught the class with my good friend Brad Handler. Brad had been the first in-house attorney at Ebay and then gone on to start a couple of businesses, the most recent of which is vacation powerhouse, Inspirato. Brad and I taught IP in a strictly applied manner. We brought in entrepreneurs and lawyers who could talk about the various forms of IP protection (copyright, patent, trademark, etc.) from a very pragmatic perspective. Our primary goal with our GSB class was to make sure that our students knew when it was time to call a lawyer.
The biggest difference between teaching lawyers and business school students is that the lawyers all want to start businesses, but business school students all do. My GSB students were the founders of Trulia, OK Cupid, Bonobos, and many others. They approached intellectual property as a business tool. They weren’t interested in the “right” answer or a good theoretical justification for a particular approach — they were unendingly pragmatic.
SL: How did you move from representing start-ups to investing in them professionally at August Capital?
DH: I got lucky. I was representing the company Evite and got to know its board members because I was attending all the board meetings. I would often chat with the members of the board before and after the meetings. And, during the meetings, I wasn’t particularly shy about sharing my opinions — not just on the law but also on Evite’s business. August Capital had invested in Evite and two of the four partners from the firm sat on the board. So I had a good opportunity to get to know the firm and its partners well. After one board meeting, the founding partner from August, a guy named Dave Marquardt, asked me if I’d ever thought about the venture business. After a small celebration (inside, where it counts), I calmly suggested that I would love to learn more about his business. So Dave invited me to come to the office and meet the rest of the partners. After four months of interviews and lunches and dinners and partner meetings, I was invited to join the firm. But it wasn’t without a warning. Dave told me that lawyers traditionally made terrible investors. That said, he liked me so he was willing for me to give it a shot. He happily reported to me that if all else failed I could always go back to being a lawyer. I have to admit, I did take some comfort in that over the first decade of my venture career. But now that I’ve been at it for over a decade, I suspect I am no longer qualified to be an attorney. So this venture business better work out.
SL: In what ways has your legal background and perspective influenced your work at August Capital?
DH: The practice of law is very much grounded in logical reasoning. The same is true of startups. While there are a lot more variables in startups, most of the time logic prevails.
One very useful skill I learned as a litigator was to look forward in time and try to imagine all the ways that a contract or statute or lease could be misinterpreted. That ability to see the problems coming before they hit is unbelievably valuable for startups.
SL: As a venture capitalist, a technologist and a lawyer, what trends do you see emerging in the practice of law?
DH: I have heard it predicted that lawyers will be replaced by technology. I don’t personally subscribe to that point of view. Lawyers are unbelievably valuable, whether they are solving problems for individuals or corporations big and small. Lawyers are able to process and synthesize huge amounts of information and provide extraordinary insight in ways that I doubt machines will be able to do any time soon, if ever. That said, I do predict that technology will increasingly augment individual practitioners. Discovery in litigation has changed dramatically with the ability to digitize, categorize and search documents. Legal research continues to evolve, as tools get better at pinpointing the best possible case or quote or precedent. It seems to me that increasingly machines will do the more menial tasks of the law (discovery, research, etc.), leaving only the most interesting and challenging issues for the lawyers. The good news is that lawyers will get more interesting work at the end of the day. The bad news is that there will be a need for far fewer lawyers overall.
SL: Do you have advice for law students and new lawyers?
DH: Do what you love. And if you don’t love what you’re doing, go do something else. Students are always surprised when they ask me what law firm I think they should join that my first question is: “Which firm had the people you liked the best?” It never strikes law students as the most important factor. Yet, to my mind, it is by orders of magnitude. If you don’t like your colleagues, it won’t matter how exciting the work is or how well you’re paid, you will ultimately hate what you’re doing.