This content was created by Tim Draper. This content was uploaded by Tim Draper. This is a YouTube talk titled "Do You Believe | Doug Mellinger" (published 2017-02-08). It is a first-person presentation by Doug Mellinger recounting his entrepreneurial and venture-catalyst experience during the dot-com era, founding and exiting multiple companies (e.g., freesamples.com, MoreBenefits, Nuvis, Map Network, Foundation Source), the challenges of fundraising and scaling Foundation Source, and lessons about stewardship, belief, monetization, philanthropy, and his move into private equity.
Chapters
I'm— I was its steward. And as a steward, the reality is that none of us will own a company forever. One simple reason: we're all going to die. So at a minimum, we're going to pass the company on to somebody else at some point, whether it's to your heirs, to your employees, or you're going to sell it to somebody. Whether you're going to sell it to a financial buyer, or you're going to sell it to a strategic, or you're going to take it public, one of those outcomes is going to happen. The moment you realize that, that you're really no more than a steward, therefore there's a whole bunch of things that I think people should be doing differently, and that's what I'm going to drill into a little bit later in this talk. But that also leads to the whole idea that selling is not a bad outcome, because monetization is a really good thing to happen. So after I did Foundation Source— after I did Inherent, I left that and I started doing what a friend of mine called a venture catalyst. I just started launching new businesses, putting the teams together, getting the capital raised, and helping them to get off the ground. And I did 6 companies over a period of about 2 years. It was a great experience, very venture-oriented in the 1999 to 2001 time when the dot-com world was going crazy. All these companies had something to touch the internet, but they were more like tech-enabled companies. One was a company up in San Francisco, actually, called freesamples.com that was just a rocket ship in growth. We basically had a site that people can come shopping to get free stuff, and the issue— what they had to give us back was market research. So we got paid by companies to place their products into our site and get the market research. That company, unfortunately, it grew really fast. We had to raise money right when the dot-com crash happened and just couldn't raise the money around our investors that we had, and GE Capital basically, in my opinion, stole the company from us for virtually nothing. We had another company called MoreBenefits, which was the first company to do online benefits management. for employees to sign up and manage their health insurance, their 401, and all of that. Sold that company to a company called Aon, which is a big insurance company. Had another company which was a pure tech play called Nuvis, which was by far the coolest company that I was involved with that built a visual programming environment that you could then deploy against couple dozen different languages and databases, and it just generated all the code. Again, we were about a month away from filing our IPO for that one when the dot-com crash happened in April of 2000. We ended up having to sell it to a company called Rational, which then was bought by IBM largely for this technology. Then I had a company called You Are Here. Which was called the Map Network, which we sold to Nokia. It was a last-mile mapping solution before all the various map solutions came out today. And then the final company was a company called Foundation Source. Since I was 10, I did my first fundraiser and was always interested in philanthropy. And throughout my life, I've been active in starting charities and sitting on boards of charities and giving to charities. And I was sitting on a $2 billion foundation board called the Kauffman Foundation, which is based in Kansas City that's focused on entrepreneurship, and saw what it was like to have a large foundation with significant resources at your disposal. At the same time, when I took our software company public, created a small family foundation, and the juxtaposition was intense, even though structurally they were exactly the same entity, they just had more zeros. and 100 more staff people. The idea of Foundation Source was to bring the capabilities of a Gates Foundation or a Kauffman Foundation to the masses. Foundation Source today is the largest company that provides support and services to wealthy families when they create their private foundations to give their wealth away. We built a web-based technology that enabled all the family members to collaborate and coordinate. We built an outsourcing service to do all the work, all the accounting, the compliance, writing today of the 35,000+ checks that have to go out each year as grants or expenses, and do all the work and then provide the philanthropic advisory. Everything but managing the money. Second industry that basically I helped get off the ground. And it was just brutal because we'd go to banks and say, we're going to create a new financial product for you and you're going to basically outsource this to us. And they said, no, sell us the software. We want to do it all in-house, just sell us the software. And I said, no way. I'm doing the work, you need to give us your best clients. And it took us years. 6 or 7 times I was within minutes to hours of not making payroll. And it was one of those companies that I just had to will to survive, basically grovel to friends and family to put more money into the company to keep it alive long enough to actually succeed. Today, it touches over $10 billion of funds and touches over $100 billion worth of family wealth, and it's hugely successful. But incredible how hard it was to get the business to where it is today. One of the things that I learned during this is that there's a great saying that if you think you can or you think you can't, you're right. Somebody said when I asked about an entrepreneur, both the driven and that passion, And that really is true. It is going to be hard. It's like the one thing I can guarantee you that during your journey as an entrepreneur, you're gonna run into a lot of walls at miles per hour that's just gonna hurt. And so a lot of it is, do you believe? Because not only do you have to believe to keep yourself going, but all the people that you end up bringing around you. They're looking for you to be the leader, and they're going to key off everything you do. And so if you believe that that hill can be climbed, they will too. If you're questioning it, it's just never going to happen. And so having that belief— and I absolutely believed that we were going to succeed with Foundation Source, and I was going to do anything we had to, to be able to get that company to where it went to. During that time, the latter years, once the company was off the ground, I started working with the family to invest in education businesses and then started to get involved with some healthcare technology businesses. And then ultimately, a friend of mine recruited me to come into the private equity world, which is what I'm in today. And I've been there a little over 2 and a half years. And it's just been fascinating to see the differences about how all of that works. So what I want to do now is just give you a couple of the lessons learned that I've had just along the way from the entrepreneurial, and then I'm going to focus in on the lessons learned that I've had specifically with the lens of private equity.
