SaaS Acquisition Stories w/ Mark Davis - Managing Partner at Interplay

Foreign.

I'm with Mark Davis, the man, the myth, the legend from Interplay. And Mark, I'm super excited about this, this podcast. So thanks for joining me.

Yeah, thanks for having me. It's awesome.

Check out this. I see the coffee cup, the, the micro choir mug I'm representing. Are Lois flying everywhere as you said it or what?

Of course.

So Interplay. For those that aren't familiar with Interplay, do you want to give maybe a two second background on what it is? I said two seconds, so try.

Yeah, I'll give it short. We're starting. This is never going to work. The way we talk about it is we say we're a startup ecosystem. We've got five different divisions that all kind of feed each other and help entrepreneurs. The whole thing is really centered around a belief and I think this is one engine that you share. We believe entrepreneurs are the people who drive society forward more so many cases than nonprofits and government organizations. And so we are trying to build an institutional grade platform that will be here 100 years after I'm dead helping entrepreneurs. And so we've got five different divisions of it. The cornerstone of IT is an early stage venture capital fund where we invest to kind of seed to be North American technology companies. We also do some latam. We are about to launch a blockchain fund. So that's coming. We have a services platform. So seven companies we've co founded that provide core operating services to entrepreneurs. These are things like commercial and health insurance, marketing, leadership training, accounting, tax, CFO law, business process, outsourcing. That's a 550 person team now. And we provide services to about 15% of all venture backed companies in America. We've got an incubator where we coach pre seed and post seed companies and operations. About 15 companies a year that we work with. And the goal is really just to help entrepreneurs nail the business development, how they're setting up, getting the company on the rails. And it's a very hands on program. It's like private tutoring. We have a foundry where the mandate there is the partner who oversees that is trying to launch five to ten venture backed companies a year. And then we have a multi family office which is a little bit less obvious how it fits into the mission than some of the others. But I'll run down that if you're open to it. We've got it's a standard family office in the sense that it's trying to do estate tax, asset management for people who have made money partners and other traditionally venture backed CEOs who have had liquidity. Not all of them are venture backed, but a lot of entrepreneurial types are members of the family office. But there's a really important mission in what the family office does that kind of jives with this whole thing. There was, remember in college, I feel like there was three things that stuck. Three things I carried with me for the last 20 something years that I remember. And one of them was I took this writing course and the writing course itself wasn't interesting, but we happened to be reading Andrew Carnegie. And one of the things Carnegie said, paraphrased, is more or less that capitalism is really good at allocating resources to capable hands. My hands, your hands. But really falls apart when you and I retire because we put our money in bonds and the S and P and we're essentially handing the money to bureaucrats. We're not reallocating it to the next generation of innovators. So the social mandate of the family office is a great one. It's keeping innovators money back in the hands of the next generation through venture capital firms, through space technology investments, through life sciences and genetics. And all of those things kind of fit together to provide like what we think is a great product for families that need, need that management. Because it's not just making money. I believe that's actually where you make most of the money. People creating value, add value. But it's also a great way to kind of have like a social impact and believe your money's at work, working for society when it's. While you're sleeping. So that's, that's what we do at Interplay.

So you got a lot going on. What's your favorite part of the. The whole ecosystem? I could ask. That's kind of like asking what your favorite kid is, but like it totally is. What. What part gets you most fired up these days?

But it's. The answer is. It's like a, it's a, it's a layer of it. It's not one business line or the. I love everything we're doing. I'm really passionate about. Cause I feel like it all moves the needle and matters and you know, we're 10 years in at Interplay and I don't plan on retiring. So we got a long, you know, God willing we have a long way ahead to keep building this and having impact. But the, the thing that gets me most fired up is brainstorming. And what's great about this particular job for me is when I'm hearing company pitches, when I'm getting phone calls from founders or I'm ideating on a new business to start. All of those things are moments where you're kind of on that whiteboard being creative. And I think in a normal job, as an executive in a company, you really have that breakthrough moment once a month, maybe, maybe twice a month. But the beauty for me as a person who's obsessed with that experience is that by virtue of being part of this bigger platform, I get pulled into that moment of ideation a couple times a day. And so I get to have higher frequency of living in those moments that give me goosebumps, get me all fired up about like something cool we're doing or way we're gonna make someone's job better or whatever it is. But that create creative outlet's awesome.

You get that feeling of like finding product market fit like every day.

Yeah, we don't always figure it out, but it's a, it's. To me, that's the most exciting adventure in entrepreneurship. It's the brainstorming part.

Well, Mark, I, I love your mission. I love everything you're doing. But what strikes me and what I've always admired about you is just how authentic you are in your mission. Because, you know, there's a lot of firms that kind of say, you know, kind of the fluffy words, founder first, you know, this and that, and it's all in, you know, good faith, what have you. But you're so authentic about it. So like, how did you get into entrepreneurship? How did you stumble into this? What, what created this passion within you?

I think it's not something I really chose. I don't even think it happened. Best guess I have is it's actually like some sort of DNA type thing. You probably share it. My story is I'm a middle class kid from West Covina, Los Angeles, outskirts of nowhere. And I've been a lifelong entrepreneur. There's not a lot of other entrepreneurs in my family. I didn't, wasn't taught, but I was selling baseball cards in elementary Canyon Junior High computers, graduating seniors in high school. I'm sure there's a lot of people listening to this who have a similar story. I tried to start five companies in college. No idea what I was doing. I did my undergrad at Duke and the school has become very entrepreneurial since then. But at the time one of two entrepreneurs on campus and I badly needed mentorship and didn't get it came out. Knew I needed to learn real business skills. Did a lab through consulting at Bain and then doing Diligence and M and a transactions at KPMG. Did my MBA at Columbia, and then about 16 years ago was fortunate enough to land in a venture capital job. Had some really great mentors, learned a lot about the business, and then 10 years, thought it was time to go out on my own and set up intervoy.

Nice. That childhood story is shockingly similar to mine. I think I told you this, but I used to start a company every year in college, every summer, kind of knowing it would fail. But it was just, I got free time and I wanted to learn. I was addicted to entrepreneurship from a very young age. So it's interesting to see how those, those traits can kind of add up.

What was your, your favorite one you did?

What was the, the one that worked?

Oh, that's good.

Well, I can tell you the four One was like a website design company for local apartment companies. Like, hey, rent my apartment for your students or whatever. Just so I could learn web design. So I learned web design. The second one was a more of like a marketplace type. And this was actually with a friend. His name is Chris Rudy Grab. He CEO of Sendozo. Now that one didn't work out either did the first one. And the second one was a job board that connected mobile developers businesses. And the fourth one was a drag and drop mobile app builder. And the funny part about all those is same thing with Chico State. The entrepreneurship program wasn't that developed. And I would apply to the business plan competition every single year. And I'm proud to say I've won fourth, third, second and first. Like, wow. And then every time I would get like second place, I'd have like a paragraph. I'm like, what? Like, here's why I should have. I was like that annoying entrepreneur kid. Like, how did like literally I remember losing to a girl whose idea was to put chips in babies so you track them or something like that. And I was like, the capital requirements for this are so high. Like the tech. Is this even legal? And I was lucky enough I had a teacher, his name was Peter Strauss. He kind of pulled me aside and recognized like, maybe let's give this kid a little bit more attention or he's going to just keep emailing us, right? So that's awesome. So I love this fast forward where you are today. You know, there's a lot going on with startups and just, you know, the environment changing. How are you kind of absorbing that? How, what is your kind of perspective? You know, it's July 13th, I believe we're. This is the third biggest drop on the NASDAQ. You know, probably not your first rodeo in terms of a downturn, but how do you, like, view? I'm sure you've done this, but what advice are you giving entrepreneurs right now in terms of, like, how to view a downturn, how to think through a downturn?

Yeah, so this is my third downturn, second one in Adventure seat. I think the first thing I'm telling people is that this is normal. I think the extent to which people are feeling a sense of panic or a hopelessness that comes with this, I think that's not the right lens to look at it. The market's like a wave and sometimes, you know, it's up and down and you got to surf all different angles. And so this is the downturn part of the wave. Now, within the downturn market scenarios, there's kind of two types. I liken it to a car. There's a type where you are intentionally shifting down gear. The people who are puppeteering the market, the Fed, are intentionally slowing the economy. And there's a different type of downturn. It's when the engine breaks, a piston pops and smoke's coming out of the hood. And that's the downturn we had in 08. And that was a cataclysmic downturn. That was a downturn where we were not sure if the system still worked. There was questions about trust in the equity markets, in the debt markets, trust of capital flows. No one really knew what was happening. This is much more of a downturn that was frankly, predictable. And it's a controlled. From my perspective on it, it's a controlled scenario where the Fed is intentionally shrinking market by increasing interest rates. I can go through the whole. My macroeconomics professor would be happy. I could take you through the whole thread. I think this story really started, frankly, when we had a long, long bull market that eventually landed in a pandemic with stimulus that triggered inflation and triggered the interest rate regime to change, which I think was probably going to happen anyway. When that happens, it changes the economic flow of the whole community. What we're going through now, I think is first and foremost normal and navigable. Now, the tough reality of it is what happens in these dynamics is that the capital supply changes vc. So for public companies, we all know their stock prices are down in the tech sector. That means they can't raise money as fast. They also know that the market's going to slow and it's going to be lower revenue. So their projections that they had done in internal business planning, no longer apply and that's going to result in a bunch of layoffs. They can't get outside capital and they're not going to grow as fast. So those two dynamics mean, hey, that plan we had, we're going to hire 1,000 people. No longer relevant, let's cut 1,000 people. So that will have a market impact. But there is a similar but different parallel impact happening in the private market. And it's driven by what we call the denominator effect. The way the capital markets work for VCs is that they raise money generally from large institutions as they get kind of more and more mature as a venture fund. Those institutions are pension funds, university endowments, insurance companies. And the people who manage those pools of capital, which are billions and billions of dollars, typically the way they do that is they've got a target allocation percentage. They might say, we want to be 20% venture. And what happens in a down market when valuations come down in the publics is as public equities decline, the value of the whole portfolio for that manager shrink. So they might have had 10 billion two months ago, which is now 8. Now here's the problem. If they had done 20% of their capital already allocated in venture, let's say it's 2 billion in this scenario, they're now overweighted. Instead of being 2 billion of 10 billion 20%, they're now 2 billion of 8 billion 25%. And so the numerator, the value of their venture portfolio doesn't change that quickly. Company valuations will come down, but our mark to market is a little bit slower. In the private markets, we wait for outside data, revenue shifts, or most commonly external valuations, which for venture could be 12, 18, 24 month cycles before a company raises money again. So our valuation is going to stick at around 2 billion on their books, but their total portfolio is now 8. And so while venture hasn't performed poorly, the reaction that they end up having is saying, hey, we're overweight adventure. We're not going to give any money to VCs for a while. And VCs know this. And so the net result is VCs say, okay, well it's going to be really hard to raise capital. Let's hold our breath. Let's, you know, Instead of doing 10 deals this year, let's do 10 deals over the next two years, five deals a year, so we can be raising in a more favorable economic environment when the LPs are going to be ready to give us cash again. And the result is there's a short. There's a reduction in the amount of capital going into startups, affects valuations, affects hiring, affects everything.

I mean, that was super helpful. I never excelled in economics, so thank you for that. I mean that sincerely. But in regards to just company building, I'm sure you've heard the theme of so many companies are usually built in, you know, downturns. And I'm a big believer of that because constraints when you're building a business really helps you focus on, you know, what really like the core part of your business in terms of, you know, building companies compared to when it's easy to get capital, when it's not.

You.

Know, how much do you think that comes into play in terms of building like iconic companies?

There is a pattern. A lot of great companies have risen from the ashes of these markets. Probably a couple factors. I think there is what you're saying, some discipline. VCs as they're shifting their own investment frequency, they're also looking for different things. Six months ago, 12 months ago, we were looking for. Most VCs were looking for growth at all costs. Almost irrationally, people have reverted back to fundamentals, which is where we always live at Interplay. We love looking for good unit economics, good fundamentals in the business. So it's more important to have a healthy, functional economic story. Knowing your LTV CAC ratio makes sense, et cetera, et cetera, et cetera, good margins all the way through than it is to grow at an insane clip, maybe an outsized clip in this market. So the first thing that shifts, I think for entrepreneurs that we give advice to, is growth at all costs is no longer as critical as having a healthy business. That doesn't mean a profitable business because bottom line, profitability is a choice to not reinvest money in growth. But there are moments where you'll find entrepreneurs out there with a negative gross margin. That's insane. You can never scale into profitability or a healthy company with a negative gross margin unless it eventually rights itself. So I would say business fundamentals are back on the table in this market. I would say to folks, don't panic, but understand there will be a flight to quality. Companies that don't have the same durability or strength aren't going to get a free pass right now. They're going to die. That's hard, it's harsh, it's going to be painful for a lot of people. But there is a beautiful silver lining to it on a macro perspective. It's a process of society, humans, innovators, all the incredible people on our teams reorganizing around visions and things that will actually impact society. So companies that aren't going to make it anyway are now going to die more quickly. Those teams are going to be freed up to join the companies that have trajectory and momentum. And I hope that actually makes the companies are going to survive stronger. So I would say it's a game of managing your cash a little bit differently, knowing that growth expectations aren't as high and that allows that there's alignment between what the companies are expected to do and that the VCs are looking for in the next round. And it's going to have some realities around the number of companies that get killed. But the good news is, the most important news is my experience in 08, which was a much more drastic financial event than what we're experiencing now. The market kept moving. Companies that needed capital and were good and deserve capital continued to raise capital. Maybe their valuations weren't as high, maybe there's a little bit more dilution, but we're going to see good companies continue to get funded. And so at Interplay, we're actively investing. We are not changing actually our deployment strategy at all for this market. We think it's a good time to put in capital to work. There's going to be great companies being built, as you said, I think, I'm sure there will be market changing companies that are founded in this kind of next couple year window. And the last thing I'll say on that, just to kind of take it the last thread and bring it fully back to what you're asking, why do we see great companies built in these markets? Probably a lot of factors. I think there's great companies built in every market. But one thing that's an interesting ingredient in these downturns is it really frees up talent. Executives who maybe would never had made the risk calculation to be entrepreneurs because they had big golden handcuff paydays coming while their stock might be underwater, companies might crash. People who have a job that they know there's no hope of a bonus might say, hey, the opportunity cost has never been lower for jumping in and starting that company and always been dreaming about starting now. Not all those will hit, but a lot of great people who maybe didn't have the risk appetite for entrepreneurship, maybe aren't as insane as you and I are when we do it kind of addictively are going to come out and build wonderful organizations that we'll be talking about in five or 10 years as.

They go public I love that and I love just the positive perspective because in a sense, I agree with. Markets are cyclical. They go up and then they go down and they go up and they go down. And this will probably, probably go on for it. Actually. It will go on forever. But just that positive sort of perspective in terms of looking at, you know, the good parts of it rather than just focusing on the bad parts. I think it's so important, especially as an entrepreneur. You're going through so many things on a daily basis. If you're checking the stock market, you're checking some stuff that really probably doesn't correlate to your business directly. You know, having that positive mindset, just staying focused on your core business and being a little bit more thoughtful with how you're deploying your capital. I think all that in the end will definitely lead to, like you said, great companies. And I love the point you made in terms of. I agree. I think we will see a lot of entrepreneurs finally taking leap just because they had a great job and now they don't. And now this is an opportunity for them to maybe chase this idea they've been cha. They've been thinking about for years, and they've never really had that push that they needed. And I've always kind of been under the belief that one of the biggest hindrance of just entrepreneurship for a lot of people is just fear of failure. Because, you know, it. It's hard. It's super, super, super hard. And it's even harder when you have, you know, a really good job. It's a stable job, but when that gets taken away, you don't really have too much to lose. It's kind of like similar, like starting a company in college. You just do it because what do you have to lose?

No downside.

So I think that's a really, really good way to look at it in terms of companies that really get you excited. Aside from unit economics. I know you mentioned you're going to be launching a fund for different industry sectors. Just kind of a question I'm curious about. What part of the tech or startup ecosystem are you really bullish on right now? Would it be B2B SaaS? Would it be blockchain? Maybe I'm asking you to pick a favorite again, but what's maybe one sector that you're really looking at?

So we do B2B SaaS, B2B marketplaces, consumer technology. I think those continue to be. And we're launching a blockchain fund. So I think all of those continue to be super exciting spaces. I think where you pick the favorites, if you're doing this right, is you look at kind of the cycle of innovation. And innovation is really coming from pain points. And you can't experience every pain point with a finite amount of time in your life and a finite amount of experiences. We're all living on different journeys through this life. So there's someone out working on a farm, experiencing different technological gaps when I'm experiencing in my office here in SoHo, New York City. Right. And those experiences are really important because I can sit in an office all day and come up with spaces that I think are going to be areas where there's opportunities for disruption. And I do that. But the reality is the real innovation, the real creativity is coming from people who are feeling a pain point in an area where I'm not touching. So we love, kind of our method for looking for entrepreneurs is not to say, hey, we think the acquisition environment needs to be disrupted. Who's doing that? Very few VCs. And I think very little of the real innovation cycle actually happens that way. We try to find patterns. So when someone walks in and says, hey, we need a better way to. There's a better way to be smart on a farm. And we need a software solution that you don't know about. We're looking for patterns and heuristics in the way they're thinking about that business to see if that is a business that we think is going to be successful or not. And we let the entrepreneur teach us about that market and then we go get smart on it in our diligence process. So one of the favorite things about the role is we're constantly learning. We're learning from entrepreneurs who know their industries way better than us. The idea that VCs know their industries better than the entrepreneurs is almost always ludicrous. There are exceptions, right. And we're constantly learning from really sharp, smart people. And if you're not in the VC job as a student, I don't know how long you're gonna last. So that's the mindset I think you have to have. If it's okay. I wanted to add one thing to what you said before, a little bit of a tangent. It struck me you were talking about people reading the news and panicking because of this market dynamic. I have a different approach for this. I'm going to say something a little bit contrarian here, and I think it will be helpful to a lot of folks. Don't read, don't read. You know, what.

Do you want to hear what I do.

Yeah, tell me.

I don't know if the stock market has been up or down for the past two weeks. I don't check. I don't own any crypto. I don't have any risky investments. And my philosophy is I like to build businesses so much that I like to clear out every sort of distraction or noise or something that would affect maybe my mood. Like stock portfolios down a little bit. I'm not nearly as successful as you, so looking at it probably wouldn't hurt as much. Sorry, that was a dad joke.

Yeah, it's right.

But I try to just remain laser focused on what I'm building. Obviously, with what I'm building, there is some correlation, but I don't look at the broader markets. I look at our internal metrics first, and I look to see how we can improve those first before looking at what's going on in the stock market. And it is kind of inevitable to not hear something. If you're on Twitter or just the Internet in general, you'll bump into some news article of it, but I have no idea what's going on. From a macro perspective, I try to keep that focus super, super narrow because you only have so much energy and so much time in the day. And I'm a firm believer that, you know, focus is just one of the most powerful things you can apply to a business. And it's. It's just always worked for me. And it reduces stress levels and it just, you know, can focus on what you can control and then tune out all the noise and just execute. And that's what I tell my team, too, is tune out the noise. We have a clear plan, goal. We're confident in it. Let's go.

I think that's so healthy. I think, you know, you're a successful serial entrepreneur despite your comment. And the reality is that frame of mind, it's something I started doing, but I found validation through a book that was written that talked about this explicitly. And it was. It's. The book is called the Contrarian's Guide to Leadership, and it's written by a former president of the University of Southern California, so usa. And there's different chapters on different things, but there's one chapter that really landed with me. And the concept was, if you're sitting there reading about your competitors and pulling your hair out and reading all the ups and downs of your stocks, pulling your hair out, how is it serving you? How is it helping you advance the things you need to do in your business? Right? And some of that data is relevant. But the point that was made in the book, which I liked a lot of, was that if you try to consume less and very tactically, I do read headlines, but very focused. What happens is when there's other headlines out there that matter, if you surround yourself by great people, they'll tell you when you need to know something, and they become your filter. So you get a little bit of the things that are putting you in the emotional tailspin around a political dynamic or something else that you have no control over. They take that out of your day. But when a competitor does do something relevant, which is very infrequently, almost always, the competitors have little impact on your progress as an entrepreneur. Right. It's usually distraction paying attention to them. It will make its way to your desk. And so it's a little bit extreme to say, don't read. I obviously read, but I think I do a lot less than other people who are trying to kind of stay abreast of every news item, every tweet. I do my quick scan, make sure I'm current on what's going on in the world, but do not obsess over the flow of news.

Yeah, I couldn't agree more with that. And, yeah, I guess, you know, reflecting back, you know, when I say don't read anything, you know, you still want to be somewhat informed, like, okay, this is. This is happening. It's. It's going down. Okay.

Right. You'll know that because you'll talk to people, tell you about that, even if you didn't read it, which of course you will.

Yeah. But, yeah, I totally agree with not every day, every hour. That sort of stuff that can just be unhealthy, especially if you're actively running a business. You're just kind of stressing yourself out and bringing, you know, like, I'm a firm believer that, you know, when you have, you know, a clear, positive mindset, you make better decisions. You're. You're funner to be around, so you're a better leader to your team. So that. That's what's always kind of worked for me. And then also, I just have more fun while building. So, you know, I guess my next question is, you know, so you have all. You have so much going on. How do you manage all of this? That's kind of one thing I was trying to wrap my head around, as you said, all that. Um, yeah, great question.

So I've got an incredible team. This short answer. Uh, we have seven partners currently at Interplay and a Lot of other people around, around the room who are playing very important roles. I believe if you're managed with transparency, consistency, you delegate, but you hire really competent people and empower them, you can get a lot done. So I'm not working crazy hours doing what I'm doing. I don't like to, I'm not a four hour work week guy. I don't want to be. For me, 40, 50 hours a week is ideal. And I'm probably doing 50 to 60 right now. But I've got people in the partnership. I try to think every partner could be someone who could take the firm over and run the whole thing. So they're all awesome, right? It's really easy to support them in the things they're working on when they're doing, you know, when they have such great capability. A lot of them have been CEOs before, so it's just the caliber of the folks that makes it really easy to scale.

Nice. I like that. Yeah, that's pretty much the cure to everything is, you know, if you get, if you get the team right, everything else kind of solves itself. And I've had some sort of debates around this like you can give a bad idea to a great team and they'll figure it out and obviously a bad idea is a bad idea, but a great team evolves it into a good idea and then eventually into a great idea. But if you give a great idea to a bad team, it's going to be really hard to capitalize on that opportunity. So I'm, I'm, I'm definitely in the boat of team and culture. And giving your team autonomy and encouragement to lead not only makes your job as the head of, you know, this, this firm, but the same for entrepreneurs as well that are leading companies. You gotta, you gotta build a team, set the cultures at the pace and trust your team and encourage them, support them.

Right. But that, that balance is kind of a catch 22. It's a little bit trick. You know, I deal with a lot of CEOs who have trouble delegating. And it's a big thing being able to delegate. It sounds like you do it really well. But the thing is, delegation only works if the team's competent. Right. And you have to have both. You have to have a team that's competent and a leader who's willing to let go to scale. You can't have one or the other. You have to have both. And I coming back to what you were saying before about ideas and teams, I think you have to have A good idea and good team.

Yeah. The way I learned that, though, was the hard way. For my first business, I had a really hard time letting go. I was young. You know, a specific example was we were hiring a VP of marketing at the time, and I was like three years out of college. And the going rate, this was like 2013, let's say, and salary 150 to 200 or something like that. And I was like, there's. I'm not paying that, like, because I was making like 30 grand the few years before. And obviously in hindsight, that was a huge mistake. But, you know, sometimes you just gotta, you know, you learn the most through your mistakes. And that's what I personally have really enjoyed about building microquires. Every mistake. Like, it's really hard to forget a big mistake. You know, it's just kind of, at least for me, you know, it's okay to make mistakes, but I don't think it's okay to make them twice. It's always okay to make mistakes. But for me personally, my goal is to never is to learn from mistakes. And that's, I think, where I really, you know, towards the tail end of business apps specifically, I really started learning, like, the importance of building a bench, having, you know, real team to help you. So it looks like you're. You're light years ahead of me. If you're managing 500 people and you're barely. Yeah, go ahead.

Well, I've got CEOs on each company like they're doing it, but yeah, it's just about good people in the middle. There was an article I read a long time ago that was making a comment that the people who are most successful tend to have an internal feedback loop. They make mistakes, they kind of beat themselves up, dissect what happened and learn. Do you find you're having, like, an internal coaching conversation after you screw something up.

Trying to think about a recent mistake? Nothing I do. I wake up early. So I'll just go through, like, my routine with you. Maybe we can pull something out of here. I kind of live on your time zone. I go to bed at like 8, 9, and then I wake up like 4 or 5. So I have a lot of time to look at my calendar, look at my day, reflect on the past day, especially on the weekends, I'll do a calendar audit. I'm a big advocate of trying to work in your zone of genius as much as possible, just because, you know, to go the distance, like, you have to build the business around a life that you can endure for a decade. Otherwise you're just going to burn out or you're going to build a job and company that you hate working at. So I ruthlessly tried to, you know, just do fun podcasts like this, you know, figure out ways to, you know, hand off one of my team and empower them. Because also, like, you know, delegation is hard, but at the same time, you. You build a better company. Because when people join companies, they want to grow too. So it helps everybody. It helps you as the founder. And then you delegate to someone, now they feel empowered. So now they're probably going to. If you do your job right and you're not, you know, a rude person or something like that, you're helping them grow professionally in their career, their tenure is going to be longer. So in terms of an internal feedback loop, I don't have a formal one. I've done some anonymous 360 reviews with my whole team, like, where you just give me your honest feedback on how I'm doing. Cause that's. I think that's really important for me is just let me know my blind spots. Like, where it. Where am I weak? Where am I strong? I can tell you where I'm weak if you're, if you're curious.

Yeah, tell me, what are your blind spots?

Uh, I'm a, I'm a, I'm a ready and fire type guy. So literally good idea is going out today and then my team will kind of hold me by the shirt, like, whoa, wait, Classic entrepreneur.

Love it.

Yeah. And then also just like on the weekends, I'll have like the best ideas and I'll have them like pre. Scheduled to send like at a certain time on Monday. I'm kind of that type of person. I just, I love startups so much where, you know, and I love moving, I love momentum, I love, you know, I talk about speed of execution a lot because I believe that to be the biggest, if not, you know, the main driver of, or the biggest advantage startups have. So that's my biggest weakness. And then my biggest strength from my team would be culture building, just creating a fun environment that people trust and feel safe in. And I can forward you the email if you don't believe me. But my. I also have a. Yeah, I have a CEO coach that ran it for me and it was really enlightening. I recommend a lot of entrepreneurs do the same because you'll hear good feedback and that could be your feedback loop, you know, like, hey, you did this this one time. And you know, sometimes it could sting, but you know, I've always found that a players, let's go here. This is just kind of a random tangent, but you know the quote, like hire great people and leave them alone. I don't personally subscribe to that at all. I've always found that a players want to know. They want to know what they're doing wrong more than anything. They want constructive feedback. They want to know how to get better. They want to know where they stand with you. They do not want to be left alone. So when I get my feedback, I want to know where I suck. I want to know what I'm doing wrong. And it's nothing personal. It's just stuff that I need to work on. What are your thoughts on that?

I agree on it. I think there's a big difference between delegation and abdication. I think abdication isn't the way to build a high functioning organization. I think you need to give people the space to not only do but to think and to guide. But you do need to provide them with your input and bumper rails and support along the way. And then it goes both ways, right. I kind of view my job as one where I support my partners, I support the entrepreneurs we invest in. I kind of view myself as a person whose job is to help everyone else be successful in their jobs. And if everyone kind of goes up that chain eventually we've got a really high functioning organization. But the way I can get better the same as you is I ask for a lot of feedback from everyone I work with. I don't care what title there is they have or where they are in the organization. I feel like everyone's teaching everybody something and when you stop paying attention, you stop learning. And that's when you kind of start to get timed out in this game. I love when people on my team tell me, hey, I sucked at that. Hey, Mark, you know, like you really screw that up. Like, let's change this, this and that. Some people are more confident doing it than others. I know there's a power dynamic when someone's at the top of the organization, but I'm grateful for it. So I think not everyone is. But I think it's an important part of kind of being in this long term and getting better. No one's purpose.

Maybe I want to come work for you now, Mark.

Likewise.

I got a couple more questions, but what's. Maybe this is just a total question on top of my head. What's kind of a quote that like a similar sort of maybe common view that I think a lot of Entrepreneurs have that maybe you might disagree with. I know that's a hard one. So I'll give you.

Like you, I have many weaknesses. Mine is my worst of all. My things is my memory and recall. So I write everything down. I think I'll take a layup. I'll actually take the thing you said before. I think there is an ongoing debate and it's probably frivolous to have it about whether it's the idea or the team. And everyone will say one of the phrases is like ideas are a dime a dozen. It's all about execution. Well, I agree with the execution part, but there are a lot of really smart, competent operators executing against really stupid ideas and they're running into a brick wall. And the team thing holds, presuming that the team will figure out a bad idea. An idea is bad and innovate and get to a good one. But I do believe ideas have a lot of value. And so when I'm looking at companies to start and everything else, I think you got to have it all. You got to have everything. And that's why there's such a low success rate in startups is because it's not. You can't will it to be with one dimension of what makes a company great. You will it to be. You have a shot of willing it to be when you have every dimension lined up. So otherwise it would be a lot easier.

What do you think? I completely agree with that and I think it comes in interesting cases and just from pulling up my past business apps, I didn't have any experience at all. Like I literally had no sales experience, marketing experience. But it worked out because this is my next question. What would you say the most important factor is in terms of a startup succeeding? And there's actually a scientific like research that's been done around this. So I'd love to get your take and I'll share you.

Yeah, I'm sure someone has a better answer. I'll answer a couple ways and these would be my guts. I think you need all of the ingredients of real idea, business model, everything else in a market, you need all of that. The team is the number one thing that you can kind of. That's the fixed item typically that you don't want to be readjusting early on within a team. The characteristics that I think make people really successful as entrepreneurs. All three things that you have in spades and why you were probably successful despite having no experience in college. It's humility, organizational skills and work ethic grit. And if you have those three things, you'll keep pedaling and people will tell you to turn left and right and you'll learn and you'll figure it out. Any of those three can be a major weak link in the game. The one I'll add to this question, which is probably not in the study or commonly request or asked about or talked about is I also think in our venture backed world, how you finance your company is a big determinant of how much money the entrepreneur actually makes. Now that may not be the definition of success, it might be how big the company is. But a lot of entrepreneurs are out there trying to raise venture capital when they have businesses that should not raise venture capital. And I do think there is a framework for how to look at this. It's actually I feel like it's my greatest thought piece contribution to the ecosystem. It's like the first chapter in my book and there's a business school or two that teaches it now, but I create a little two by two. I've read it that gets into this. Wow, you read it? I'm sorry.

Yeah, no, it was great and I agree with you. Yeah. I think a lot of entrepreneurs tend to kind of focus on raise capital, get in these magazines, raise a bunch of people or hire a bunch of people, bloat their companies up, negative unit economics. And they're not really building a business. They're really just in kind of the business of raising venture capital. I think that can be lead to lead to some bad outcomes. So I agree with you there completely. But I'm going to go back to the first piece. What's the answer in terms of what it is? So there's a really good TED talk and it goes over analysis of all these different companies that succeeded and failed all the same business model, all well funded, stellar teams and it was market timing. So bringing back my original example, I would like to think I worked really hard, but it was also kind of right place, right time. IPhone just came out. So that's where you can kind of say like market timing with a great idea, with a media, obviously a great team will take it way farther. But market time, the best example would probably be like YouTube didn't take off until Flash allowed for, you know, smaller video sizes. But there's multiple attempts for that. There's a number of different businesses. I think you could probably go through your entire portfolio and look at businesses.

Before Facebook that ate it.

Yeah.

Because the bandwidth. Wasn't there some friends who are some of those founders?

Yeah. Are you talking about friendster even before.

Yeah, there's.

I read this great post on Friendster, the number one reason that they failed. Um, and, and I, and look this up if you're listening. But they had amassed so much technical debt and the founders were kind of seduced into the like they were just basically at every event talking about their business and they weren't really looking at, you know, they weren't really focused on the business per se. And this was a Quora post, I believe from someone deep in the company. But really fascinating posts in terms of, you know, their timing was a little early and that, you know, building things as you know, 10 years ago is way, it was way harder than it is today. And I think technical debt slowed it down. Friends are down to a point where it was almost unusable. And Everybody moves to MySpace and then everybody moves to Facebook. Total tangent, but that's okay.

But I want to come back to the main point. I'm going to make an academic argument so it's not worth too much discussion.

Probably don't look at me.

But no, look, market timing isn't that part of the idea. It's not just what you're building, it's when you're building and how it fits into the ecosystem, whether the technology can support it. Isn't that part like isn't microacquire happening at the right time?

Yeah. So one thing I've always like, if I ever get a quote, this is the quote I want.

Here we go.

As an entrepreneur, you should make a non obvious bet to everybody else that's obvious to you, that will become obvious over time. So what you're doing, and this was part of Microquire, I thought, you know, there's going to be a lot more businesses being created. Just starters are being democratized. Entrepreneurship through acquisition seems to be a trend that's rising. Started reading about a lot of people building 100 million billion dollar plus portfolios of companies that weren't Google, Apple, Facebook, the typical people or companies you think of acquiring. And I said this is going to be a thing. People are, instead of just starting businesses, you can buy one. And then people are creating more online businesses than ever and they're going to need a place to sell them. So that was obvious to me. Obviously you can always get it wrong, but you're making a bet. I made that bet. And sometimes you get it right, sometimes you get it wrong.

Right. But part of the idea there was the timing. I mean if you had tried to start this company in 2001 when the market's falling apart. There's not tons of Internet adoption. People are worried about privacy at a different level. Right. They're not going to share company information. No shot. No shot.

Yeah.

Right. So you're writing a macro wave. So I think the idea is this is not the common viewpoint in the startup community, but I think ideas are super valuable and super important, and I think they can really unlock the potential of a great operator.

I agree with that. Well, Mark, I know we're getting to the end of our time here. Anything else you wanted to add to this conversation? This has been super fun. Just off the cuff. Always love chatting with you.

I'd love to be in here. I appreciate it. For anyone listening, if you're not using Micro Acquire yet, you should be telling all of your friends about it.

No, you gotta plug yourself, man.

You tell me, I'll sell you. For.

For everybody listening, if they want to learn more about Interplay or yourself, where can they find you?

Okay. Interplay vc, you can find pretty much everything. My podcast is there, which I've been grateful to have Andrew on. We've got information about the incubator. The entire program is completely transparent on the website. Our foundry, if you want to run a company, don't have an idea, don't know what to do, but think you got the chops, Please apply. If you're looking to raise capital for your company, that's the front door. Reach out to us. There's. You can literally click through the website and it will get to us and we will review it, but that's kind of the inbound hub. And if you're looking for a job, you want to join a portfolio company or you like what we're doing at Interplay? Everything we've hubbed through Interplay vc so you can kind of access all of it. It's very open. It's very accessible.

Right on. Mark, you're awesome. Thanks so much for joining me on this podcast and congrats on all your success, man. It truly is inspiring and it comes from such an authentic place.

So appreciate you saying that.

All right, man. Cheers.

Thank you.