March 27, 2023

10 Concepts You and I Can Learn About What VC's Want From How2Exit's Interview With Mark Achler - Venture Capitalist

10 Concepts You and I Can Learn About What VC's Want From How2Exit's Interview With Mark Achler - Venture Capitalist

10 Concepts You and I Can Learn About What VC's Want From How2Exit's Interview With Mark Achler - Venture Capitalist E107: Watch Here

 

Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron

 

Concept 1: Invest in Real entrepreneurs

Investing in real entrepreneurs is an important part of any successful venture capitalist's strategy. Mark Ackler, the founding partner at Math Venture Partners, knows this better than anyone. After starting one of the first computer retail stores in the country in 1980, Ackler was recruited to help introduce the Apple IIc in 1983. After moving back to Chicago, he started his own software development company in 1986 and took in venture capital. He then sold the company to Symantec and went on to start another company that failed. His third venture, however, was a success. With a bidding war between Intel, Sega, and IBM, Ackler sold the company to SoftBank in 1995.

After achieving success, Ackler decided to use his experience and capital to help other entrepreneurs. He started his first venture capital fund in the late 1990s and had some companies go public. However, when the dot-com crash happened in 2000, Ackler and his team realized that they needed to make a change. They released their investors of half of their commitments and stopped taking fees. Ackler then went on to sit on boards for another 11-12 years without any compensation.

Ackler's story is a testament to the importance of investing in real entrepreneurs. In order to survive the dot-com crash, entrepreneurs had to be able to do more with less and have a long-term vision. Ackler recognized this and chose to use his experience and capital to help them succeed. By investing in real entrepreneurs, Ackler was able to help many companies survive and thrive.

In today's business world, investing in real entrepreneurs is still essential for success. By investing in entrepreneurs who have a long-term vision and the ability to do more with less, venture capitalists can ensure that their investments will pay off in the long run. Ackler's story is a great example of how investing in real entrepreneurs can pay off and help create a successful venture capital portfolio.

Concept 2: Do Your Research

Ackler's story begins with the sale of his third company, which he sold "because it was the right thing to do for our investors, for our LPs." After that, Ackler co-founded a healthcare company that ended up doing very well. After taking a job with Redbox, Ackler helped the company grow from a startup to a company with over 2.5 billion in revenue in just five years. After that, Ackler started his own venture capital fund, Math Venture Partners.

 Ackler's story illustrates the importance of doing your research when investing in entrepreneurs. Ackler's experience in the healthcare industry, his experience in scaling up a startup, and his experience in venture capital all gave him the knowledge and experience to make the right investments. He was also able to draw on his experience and the experiences of his colleagues to help guide Mert Deshery, his co-author of the book Exit Right, through the exit process. 

By doing his research and understanding the nuances of the exit process, Ackler was able to help Deshery have a successful transaction. Ackler also took the time to talk to all the stakeholders involved in the transaction, from bankers to M&A attorneys to the heads of Corp Dev. This allowed Ackler to gain insight into what made a good client and why some transactions fail post-transaction.

Ackler's story is a great example of the importance of doing your research when investing in entrepreneurs. By taking the time to understand the nuances of the exit process, Ackler was able to help his co-author have a successful transaction. By talking to all the stakeholders involved in the transaction, Ackler was able to gain insight into what makes a good client and why some transactions fail. By doing his research and understanding the nuances of the exit process, Ackler was able to make the right investments and help create a successful venture capital portfolio.

Concept 4 Integration is Key

Integration is key when it comes to a successful transaction. As Ackler explains, integration is the “ugly stepchild” of the transaction process. It is often overlooked or ignored, but it is a crucial part of the process. Integration is the process of bringing together the various stakeholders involved in the transaction and ensuring that everyone is on the same page. This includes the board of directors, investors, partners, key managers, and the acquiring company. All of these stakeholders must be aligned in terms of their goals and motivations for the transaction to be successful. 

Integration also involves understanding the cultural fit between the stakeholders. As Ackler explains, every company has a different value system and way of treating customers. It is important to understand the decision-making process of the company and how decisions are made. Is it top-down authoritarian or is it a more collaborative approach? It is important to ensure that the stakeholders are on the same page and that everyone understands their role in the transaction. 

Finally, alignment also involves understanding the rationale behind the transaction. It is important to be able to explain why the transaction makes sense and why it is beneficial for all parties involved. This can be done by creating a “FAIR” framework, which stands for fit, alignment, integration, and rationale. By understanding the rationale behind the transaction, it is easier to ensure that everyone involved is on the same page and that the transaction is beneficial for all parties involved. 

In conclusion, integration is key when it comes to a successful transaction. It is important to understand the cultural fit between the stakeholders, ensure alignment among all the stakeholders, and understand the rationale behind the transaction. Taking the time to understand the nuances of the transaction process can help ensure a successful transaction.

Concept 5: Legacy, Rationale, and Servant Leadership

Legacy, rationale, and servant leadership are three important elements to consider when it comes to a successful transaction. Legacy is the idea of having a lasting impact on the organization and its stakeholders. It is important to consider how the transaction will affect the employees, customers, and investors of the company. Rationale is understanding why the transaction is taking place and what the benefits are for the stakeholders. This includes understanding the potential financial gains, product improvements, and customer retention. Lastly, servant leadership is about having a greater calling in life and making sure that everyone involved in the transaction is taken care of. This includes ensuring that employees, customers, and investors are all taken care of and that the integration process is well-planned and executed. 

In order to ensure a successful transaction, it is important to consider the legacy, rationale, and servant leadership aspects of the transaction. Taking the time to understand the nuances of the transaction process can help ensure a successful transaction. By understanding the legacy, rationale, and servant leadership elements of the transaction, it can help set the company up for success in the long run.

Concept 6: Work Hard, Play Hard

One example that demonstrates the importance of understanding the legacy, rationale, and servant leadership aspects of a transaction is the purchase of Instagram by Mark Zuckerberg in 2012. At the time, many people thought Zuckerberg was insane for spending almost a billion dollars on a company with almost no revenue. However, Zuckerberg understood the potential of Instagram and the strategic importance of combining the user base of Instagram with the sales force of Facebook to create a powerful mobile platform. 

The legacy of the transaction was that it helped propel Facebook into the mobile market. The rationale behind the transaction was that the combination of the user base and sales force of Instagram and Facebook would create an incredibly powerful mobile platform. The servant leadership aspect of the transaction was that Zuckerberg was willing to take a risk and invest in a company that had potential, even though it had no revenue. 

This example shows the importance of understanding the legacy, rationale, and servant leadership aspects of a transaction. By understanding these elements, it can help ensure a successful transaction. This is an important lesson for anyone looking to invest in a company or make a major purchase. It is important to take the time to understand the legacy, rationale, and servant leadership aspects of the transaction to ensure a successful transaction. 

The phrase "work hard, play hard" is often used to describe a successful transaction. This phrase conveys the idea that hard work is necessary to be successful, but it is also important to take the time to enjoy the fruits of one's labor. The example of the purchase of Instagram by Mark Zuckerberg demonstrates this concept. Zuckerberg worked hard to understand the legacy, rationale, and servant leadership aspects of the transaction, which allowed him to make an informed and successful decision. He then was able to enjoy the success of the transaction and the success of Facebook in the mobile market. 

In conclusion, it is important to understand the legacy, rationale, and servant leadership aspects of a transaction to ensure a successful transaction. The example of the purchase of Instagram by Mark Zuckerberg demonstrates this concept. This example also shows the importance of the phrase "work hard, play hard" as it conveys the idea that hard work is necessary to be successful, but it is also important to take the time to enjoy the fruits of one's labor. By understanding the legacy, rationale, and servant leadership aspects of a transaction, it can help ensure a successful transaction and help set the company up for success in the long run.

Concept 7: Understand Customer Acquisition

When it comes to running a successful technology company, understanding customer acquisition is essential. Customer acquisition is the process of bringing in new customers and converting them into paying customers. It is a critical part of any business, especially when it comes to technology companies, as the technology industry is constantly evolving and improving. 

One of the most important aspects of customer acquisition is understanding the target market. Knowing who the target market is and what their needs are can help a company create a product or service that is tailored to their needs. It can also help a company understand how to market their product or service to the target market. Additionally, understanding the target market can help a company create a pricing structure that works for both the company and the customer.

Another important aspect of customer acquisition is understanding the competition. Knowing who the competition is and what they are offering can help a company create a product or service that stands out from the competition. It can also help a company understand how to market their product or service to the target market in order to stand out from the competition. Additionally, understanding the competition can help a company create a pricing structure that works for both the company and the customer.

Finally, it is important to understand the legacy, rationale, and servant leadership aspects of a transaction. Legacy refers to the history of a company and how it has evolved over time. Rationale refers to the reasons behind a company's decision to enter into a transaction. Servant leadership is a concept that focuses on the importance of putting the customer first and understanding their needs. By understanding the legacy, rationale, and servant leadership aspects of a transaction, it can help ensure a successful transaction and help set the company up for success in the long run. 

In conclusion, it is important to understand the legacy, rationale, and servant leadership aspects of a transaction to ensure a successful transaction. The example of the purchase of Instagram by Mark Zuckerberg demonstrates this concept. This example also shows the importance of the phrase "work hard, play hard" as it conveys the idea that hard work is necessary to be successful, but it is also important to take the time to enjoy the fruits of one's labor. By understanding the legacy, rationale, and servant leadership aspects of a transaction, it can help ensure a successful transaction and help set the company up for success in the long run.

Concept 8: Business Model Matters

Business model matters. It is the foundation of a successful business transaction and can make or break a business. The business model is the way in which a company makes money and provides value to its customers. It is the blueprint for how a company will generate revenue, acquire customers, and provide a product or service. It is important to understand the business model of a company in order to make a successful transaction.

The example of Blockbuster and Redbox is a great example of how business models can change over time. Blockbuster was a traditional movie rental store that charged a fee to rent a movie as well as a late fee. Redbox, on the other hand, had a different business model. They charged a flat fee of one dollar a day for movie rentals with no late fees. This business model was more customer friendly and allowed Redbox to make the same amount of money that Blockbuster made, but in a different way.

Another example of business model matters is the purchase of Instagram by Mark Zuckerberg. Mark Zuckerberg was able to recognize the potential of Instagram and its business model and saw an opportunity to acquire a company that had a unique business model. By understanding the business model of Instagram, he was able to make a successful transaction and set the company up for success in the long run.

Business model matters and it is important to understand the legacy, rationale, and servant leadership aspects of a transaction to ensure a successful transaction. Understanding the business model of a company can help to ensure a successful transaction and help set the company up for success in the long run.

 

Concept 9: Raise Money from Customers

Raising money from customers is a great option for businesses. It is an effective way to get the capital needed to grow and expand without relying on venture capital or other forms of external financing. Customers are more likely to invest in a business they know and love, and they are more likely to be loyal customers if they are invested in the success of the business. This loyalty can lead to increased sales and revenue, which can help businesses grow and become more successful.

 Additionally, raising money from customers can be a more cost-effective option than other forms of financing. Customers can provide capital in exchange for equity or debt, and this can help businesses avoid high interest rates and costly fees associated with other forms of financing. Furthermore, customers can provide insight and advice to the business, which can be invaluable in helping the business make sound decisions.

 Of course, there are some risks associated with raising money from customers. Customers may not be willing to invest in a business they do not know or trust, and they may not be as loyal to the business if they are not invested. Additionally, customers may lack the knowledge and expertise to provide sound advice to the business. However, with proper research and due diligence, businesses can make informed decisions and find the right customer to invest in their business.

 Raising money from customers is a great option for businesses that are looking to grow and expand without relying on outside financing. Customers can provide the capital needed to grow, as well as advice and insight that can be invaluable in making sound decisions. While there are some risks associated with this option, businesses can make informed decisions and find the right customer to invest in their business.

Concept 10: Relationships Matter Over Time

However, when it comes to venture capital, the situation is a bit different. In the past, venture capitalists were investing in businesses with little regard for the fundamentals of the business or the potential for long-term success. This was known as the “greater fool theory”, where the idea was that someone else would come along and pay a higher price for the business and the venture capitalist would make a profit. This approach was a house of cards, and it was ultimately doomed to fail. 

Mark Achler, the author of “Exit Right”, is a firm believer that relationships matter over time. He stresses the importance of legacy, long-term relationships, and integrity in business. He also encourages entrepreneurs to have an annual exit talk with their investors and board of directors. This conversation is important because it helps build alignment among the parties involved and allows everyone to understand what the company is trying to optimize for. 

In conclusion, relationships matter over time when it comes to venture capital. It is important to focus on the fundamentals of the business and to build strong, long-term relationships with investors. Having an annual exit talk is also beneficial because it helps build alignment and understanding between the parties. By taking the time to build relationships and focus on the fundamentals, businesses can ensure that they are making the right decisions for their future.

 

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