Transcript | PULSE Episode 08
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R. Adam Smith:
Today, we're joined by Mark Davis, founder of Interplay Ventures in New York, an old friend of mine and a serial entrepreneur, venture capitalist as well, and Columbia veteran along with myself. Mark, it's great to have you here today in the podcast.
Mark Peter Davis:
Thanks for having me on.
R. Adam Smith:
Absolutely. It's been a while. You've been very busy. Tell us how life's treating you. And what do you focus on these days?
Mark Peter Davis:
Yeah. Busy at home, working in a Groundhog's Day like everybody else. We are actively working on all three dimensions of our business. I don't know if folks are familiar, but Interplay has three parts. We are a venture capital firm focused on early-stage technologies. So we're actively investing. We made 10 investments in 2020 despite the pandemic and are continuing at that pace. We also have an incubation business where we help really early companies get on the rails in material operational hands-on way. We think of it like private tutoring for new founders.
Mark Peter Davis:
And then we have built nine companies, eight of which provide services to startups. They're companies like Founder Shield, nWise, Chelsea Capital, Spoke, [Hourly 00:01:11] Legal, Firon Marketing, and Spark Digital. The companies collectively service about 15% of all venture-backed companies in America. We employ about 450 people across those companies and they cover all the main things that every startup needs from insurance to software development to marketing. If you looking to find out more, detail about those on our website. So between all of those, we've been busy. We've been adding new investments, about one a month, and also actively incubating more companies.
R. Adam Smith:
That's great. You've been very active in building communities to help other founders and entrepreneurs as well at Duke and Columbia where you and I are from. And it takes a while to build those communities. What do you find to be the most helpful to those entrepreneurs when you interact with them in the communities as well as the venture capital boards?
Mark Peter Davis:
Yeah. When I started the communities, really the goal was to create a gateway. So many of the folks at Columbia where I started the first community were following the herd to consulting, banking, and other professions. And there's nothing wrong with those professions, but they weren't really the first choice for a lot of folks. They just didn't see another path.
Mark Peter Davis:
So the goal of these communities has been to shed a light and make it less scary on the path towards entrepreneurship by bringing other people together who are alums, fellow students, talking about issues, meeting each other. It's more or less a support group that provides a lot of resources, access to capital, introductions, et cetera. So they've been running these communities. The oldest is probably 16 years at this point. The Columbia group is in 12 cities, 50 events a year, 6,000 members, very active. The Duke group is growing rapidly. But it's something I'm just personally passionate about. I believe deeply that innovation is kind of... I say this in my Twitter... I believe innovation is hope. And while that sounds a little cheesy, I think we have to build our way out of most of our problems. And so the more people we enable, the better.
R. Adam Smith:
Absolutely. At Wisdom Board, were focused on that as well to provide knowledge and continuous learning to the directors of boards, many of which are entrepreneurs and many of which comes from venture capital or they're investing in venture capital themselves. So let's talk more about innovation. I mean, there are so many different ways that founders of venture capital or even private equity create their brands and their mission around investing. What is it about innovation that really drives you and how do you help bring that into your affiliates and your clients?
Mark Peter Davis:
I think everything we do is centered around the idea of making innovation a little bit easier, right? Everything from the communities where we're trying to help people be less afraid and more naturally find resources. Like you, I also run a podcast, Innovation with Mark Peter Davis, where interview people typically in the VC community or CEOs of companies. And that's about knowledge-sharing and helping bring out real truth and insights, soundbites you can't get from the 24-hour news cycle. The companies we've built, the service businesses are designed to make existing entrepreneurs more effective, take friction out and risk out with the core functions. Capital, same thing.
Mark Peter Davis:
Everything we're doing is about streamlining this machine. What the innovation economy is doing by definition is building the future of our society layer by layer. It changes the way we eat, the way we get medicine, everything beyond. And so the more or less way I think about our industry is really a broader platform for advancing mankind. And if we get to play a small part in that in Interplay, it's very inspiring to me. So it's very easy to get out of bed every day, working on this.
R. Adam Smith:
That's great. And as part of that, we see an explosion of the B Corp from B Lab. We see an explosion of the conversation around stakeholder capitalism, conscious capitalism, and mindfulness at the corporate level. What are your thoughts on how CEOs can find the bandwidth to think about the software issues and supporting them at the board as an investor, as a mentor around these areas of stakeholder capitalism, conscious capitalism, and innovation being part of that so that their companies work better and their people are managed better or have better data, better cultural structures?
Mark Peter Davis:
I think it's critical, but I think the real gap in this space at the board level is really around education. There are other ways in which boards are motivated or constructed in other countries that we have more or less dismissed in the states as being too socialist. And we can debate the merits of everything, but I think doing some self-reflection and looking at the pros and cons of different models is always a good idea. The second one of our companies stops innovating, it starts dying. So we don't upgrade our methods, what does that mean for our approach to society?
Mark Peter Davis:
So I would say more broadly, it's very important for people to be thinking about the broader impact of their actions. And the challenge I think a lot of people face is people get on their boards when the boards have very dissenting views around what the pole star is and how the machine is supposed to operate. It can lead to a lot of friction in an already political sometimes dynamic. So the more people are educated, hopefully the more they'll be aligned around what the objectives are, primary, secondary, and tertiary as a board.
R. Adam Smith:
That's interesting. As we founded Wisdom Board this summer, and thinking about how boards are constructed, how their staff, how they're managed, what their mission is, the research that we did, and having been on 10 boards myself, it seemed like there's very little consistency or guides or framework for boards to operate, sort of like starting to drive without any driving courses or taking an SAT without coaching. No one's training you. Right?
Mark Peter Davis:
Yeah. No one is trained.
R. Adam Smith:
You and I are lucky to have the training that we've had, that we actually know what we're doing. But if you're a talented operator or a co-investor or a family member or a friend, and you're tapped into a board, I mean, there's a lot of responsibility there, right? So in the venture capital or the family office or the super entrepreneur world, maybe what situations have you seen that could be improved in terms of board construction or what piece of the puzzle tend to be missing in some of those board dynamics?
Mark Peter Davis:
Yeah. I'm going to say something even a little bit more extreme. I don't think most VCs have been trained on how to be on board. There is very little in the way of training and infrastructure and venture capital in general or dynamics, the nuance of navigating them. More or less, VCs are generally spread too thin and they're just thrown into the fire and they figure it out. And if they've got the right types of operating and social skills, they may find their way. Some do. Some don't. Some learn from each other. There's a lot of ongoing apprenticeship and mentorship, but no formal training. I think even in my business school program... I mean, we both did Columbia... I took one class on governance, and I was grateful I had the opportunity to take a class on it, but it was an elective and I don't think many people took it.
Mark Peter Davis:
So I think there's a lot of people who end up later in their career on boards have no formal training, no context, and no systematic approach. I would say most boards are dysfunctional by and large either because there is a lack of trust in the boardroom where people are not sharing transparently the information they need to, or there's a lack of understanding of the approach and process. And I wouldn't say I have it all figured out. I'm not the expert of all things boards, but I have found that board meetings that are run from a dashboard of real, targeted KPIs are far more efficient than the traditional data dump where you show up and there's a 50-slide deck, and you're trying to figure out what to make of it and find the narrative.
R. Adam Smith:
Yeah. We've killed some trees in our days.
Mark Peter Davis:
Yes. And when you have a dashboard where everyone's agreed on the KPIs that you're steering the business with, you can dive in and have productive conversations. Frankly, I prefer board meetings are not updates, but are brainstorming sessions in tenor and tone. And I think that's very uncommon in the way they're actually constructed. I think that's the goal is to get people updated, but then to figure out solutions. And it doesn't seem to be the case that that happens as often as one would like. So frankly, I think they're just generally very dysfunctional and there's a real need for training in the market.
R. Adam Smith:
Maybe we should start an award series for functional board awards and give some grants out, some carrots, right?
Mark Peter Davis:
Yeah. I think it'd be great. No, I think if there was just an emphasis within the broader communities to do something that you're alluding to what you're doing, just to focus on the quality of these dynamics, I think that would be worthwhile. It's something that people just assume folks will figure it out. In no job is there no training except for maybe boards and a few others.
R. Adam Smith:
Right. Right. It's the Wild West. Right? The intellectual Wild West. But one thing that was interesting that was suggested along these lines of what you're saying is maybe it would be helpful to have mock sessions or sort of trial sessions for coaching either before a board or for a board to walk through the software issues, or like you're saying, more of a mentoring brainstorming session. There could be a way to evolve the board environment to one that's more creative. Even Bezos is really maniacal about having efficient board meetings or meetings. Right? So that's one approach to it. It's just efficiency. But I think what you're alluding to is more creativity and the creativity is related to innovation because if you don't allow for creativity and allowing emotional intelligence to flow, then you're not going to get to the innovation. And having a peer environment where you can bounce ideas off each other real-time is still... The old school is still the most effective way to get those ideas sticking on a whiteboard as opposed to just text on Slack.
Mark Peter Davis:
Yeah. And there's no time for it if you spend the entire time just drinking from a firehose of useless information. I think at the very least there's room for a set of best practices, a uniform set that people kind of sign up and say, "Okay, this is how you should run a board meeting. This is what the goal of the board meeting is. This is what we should aim to accomplish. Here's a basic methodology." I think people don't have that. That's the level I think most boards are at. Now it still works and the world is functioning, and maybe it's not a big enough problem where no one set out to solve it. But do I think it's an important one? I do actually think it's an important one. I think it's worth focusing on. And I don't think it would be very complicated to get people from where they are to where they need to be.
R. Adam Smith:
Yeah. It's kind of a lost art, but not really an art that's been made yet. So it's an interesting point. What are some of the most inspiring opportunities and sectors or themes that you're seeing right now in this world? What gets you excited at Interplay? Some people are SaaS. Some people are FinTech. Some people are brands. You have a unique range of skills back from your accounting days through to Draper and now to your own platform. So what's on your mind these days?
Mark Peter Davis:
Yeah. My focus is a little bit broader. We are looking for the underlying fundamentals of businesses that are positioned at scale. So while we target traditional sectors and spaces and have a traditional sector focus for a tech-focused firm. What I like to really focus on is where the innovation can be disruptive. That sounds quite trite, but the concept that VCs are going to go out, come up with the best ideas in the country and invest in those companies, it's not a great business model, in my opinion. I call that active sourcing. I believe in passive sourcing. I believe that if you have 330 million people dealing with problems in their life and some percentage of them are capable of solving them, they will raise their hand and say, "Hey, there's an opportunity over here," in a space you've never experienced, a problem you've never felt.
Mark Peter Davis:
I mean, just give you an example. Some of these can be the most mundane. We're involved in a hardwood flooring company, and it's not something anyone's thinking about. It's a fantastic company. They've brought technology to that space. It's not something I would've come up with on my own. So we're seeing fantastic opportunities all over the place. Again, it's the story of technology upgrading many existing industries. I think at this phase, in this part of the cycle where the internet has been around now for 20 years, we're seeing the internet bleed into little edge case markets where there isn't a lot of entrepreneurs focusing. And so I would have said 10 years ago, I think we've disrupted everything and everything's going to be a social media company or a new version of e-commerce company going forward. It's not the case. There's still untapped green space where technology has not played its appropriate role. And it's always fascinating watching that unravel.
R. Adam Smith:
It's amazing that there's still room to grow. I think of Murphy's Law and Moore's Law, that is, and it just keeps going. And it's incredible, especially when guys like you and I we, we were happy to start on a Blackberry, even a PalmPilot. And I see you have your multi-gene avatar in the back, which I'm really jealous about. Also, Mark has a better podcast than I do. In terms of innovation, I like to think about quotes, and have one here that Thomas Edison said, which is very simple, which is that the value of an idea lies in the using of it. So it's great to have lots of ideas, right? And that's great for creativity, but you actually have to use it to have the USP be activated and then be able to scale that. So it's useful for our society. What is the one kind of takeaway that people should think about if they're a founder or if they're working with you or co-investment with you? What is that takeaway you think about every day that gets you going at Interplay?
Mark Peter Davis:
We're in service of the community, right? We are helpers. Interplay is here to help people, right? We help entrepreneurs get on the rails for incubation. We help entrepreneurs scale through funding. We help entrepreneurs avoid operational pitfalls through our service platform. We are here to help folks. We're inspired by it. We're doing a whole bunch of things that probably aren't completely economically rational because we love them. We're actively building dozens of communities just to support people. And it'll all come around. But I believe the more you give, the more you get. And at this point really focused on giving. So I think we can play a role in accelerating the innovation in all geographies, not just limited to Silicon Valley, around the world, which is not necessarily the role of our firm. I think that's inspiring. So hopefully we can play a small part in a bigger story, but this story is not venture capital. It's not a bunch of people getting rich. It's not angels and it's not what's written in TechCrunch. The story is the progress of mankind.
R. Adam Smith:
That's great. Well, you're building a legacy and just keep driving ahead every day, building on that. It's really been a pleasure to have you today as a guest on the PULSE podcast series by Wisdom Board. I've really enjoyed hearing more about your career and your experiences and interest and success at Interplay and prior to that.
Mark Peter Davis:
Thanks for having me.