Global Am­bi­tion or Noth­ing. In­ter­view with Mark Tluszcz

Silicon Luxembourg - - FRONT PAGE -

MARK TLUSZSZ IS THE CEO OF MAN­GROVE CAP­I­TAL PART­NERS, THE LUX­EM­BOURG-BASED IN­VEST­MENT FUND THAT HAS MADE MORE THAN ONE STARTUP FOUNDER'S DREAMS COME TRUE. HIS WALL OF FAME IN­CLUDES SKYPE, WIX – WHERE HE IS CHAIR­MAN OF THE BOARD – OUTFITTERY, CHURCHDESK AND, MORE RE­CENTLY, JOB TO­DAY. WE MET UP WITH HIM AT HIS OF­FICE TO LEARN MORE ABOUT HOW HE AND HIS TEAM DE­CIDE WHETHER OR NOT TO IN­VEST IN A STARTUP.

CHANGE THE DAY TO DAY

What in­ter­ests us ini­tially when we look to fi­nance a startup is a per­son or team that wants to change the day to day. Take Skype, for ex­am­ple. Ev­ery­one was tired of pay­ing a lot to make a phone call. Now it is vir­tu­ally free, and peo­ple do not even re­al­ize that 10-15 years ago it was over­priced.

The same is true with Wix. Whether you are the founder of a startup or a butcher who wants to cre­ate a web­site, an ad­ver­tis­ing agency will charge you €20,000 to do so. That's why we de­cided to cre­ate Wix. We love peo­ple with un­re­strained am­bi­tions. Why? Be­cause the life of a startup is not a long, peace­ful river. It is quite the op­po­site. You start with noth­ing – only an idea – and then you have to take own­er­ship of your project. To do this, you need am­bi­tion.

SHARE YOUR AM­BI­TION

That leads us to our se­cond and main re­quire­ment: am­bi­tion.

To tell you the truth, I pre­fer to spend my time with am­bi­tious peo­ple.

As an en­tre­pre­neur, are you able to ar­tic­u­late this am­bi­tion? De­vel­op­ing a startup is all about telling a story. It takes a be­gin­ning, a mid­dle and an end. You have to cap­ti­vate in­vestors like us right from the start. We reg­u­larly re­ceive en­trepreneurs in our of­fices. When they come here, they have 10 min­utes to con­vince us. It's the same thing when you watch a movie. You pretty much de­cide if you're go­ing to watch the whole movie af­ter 10 min­utes. If it sucks, you turn it off! These en­trepreneurs, these men and women, must have the abil­ity to en­gage us right away.

We live in a hy­per­ac­tive, noisy world where there is plenty to do. We see 2,000 pro­pos­als per year and make be­tween five and seven in­vest­ments. En­trepreneurs do not al­ways take enough time to tell their sto­ries. I al­ways say, "You have five min­utes. What are you go­ing to tell me? Get me ex­cited. Awaken my cu­rios­ity." Un­for­tu­nately, not ev­ery­one is good at that. There are peo­ple who are nat­u­rally gifted, who speak well, who know how to ar­tic­u­late ideas quite eas­ily. But 80 per­cent of peo­ple do not know how to do it, and I al­ways won­der why they do not train more. It's ul­ti­mately quite sim­ple: You write your speech, you stand in front of your mir­ror and you train for hours and hours. For some founders, par­tic­u­larly en­gi­neers, all of this is sec­ondary. They fo­cus too much on the prod­uct. The ceme­tery is full of good prod­ucts. Out of 2,000 cases there are count­less great prod­ucts, so you have to know how to mar­ket and sell yours.

Com­pa­nies like Skype or Face­book that do not need to do mar­ket­ing are rare. At Skype we never in­vested $1 in ad­ver­tis­ing. Why not? Be­cause in or­der for the ser­vice to work, you have to in­vite friends to down­load it. Face­book is the same. There are a hand­ful of com­pa­nies that have this abil­ity to grow with­out mar­ket­ing. For 99 per­cent of com­pa­nies this is not the case. You need a good prod­uct, but you also have to be able to sell it well and tell the story. Wix is the per­fect ex­am­ple. The prod­uct is ab­so­lutely fan­tas­tic but does not sell with­out help. If I want to make a web­site, I do a search on Google and I have to come across the Wix link. Why am I go­ing to be at­tracted to Wix? Be­cause Wix man­ages to ar­tic­u­late its story… and spends $150 mil­lion on mar­ket­ing!

We al­ways rec­om­mend en­trepreneurs to prep well when they come to see us, be­cause they will only have one chance. It is a harsh re­al­ity, but it is very im­por­tant to be aware of it.

At Wix we now have 100 mil­lion users. Ten years ago we had zero. I be­lieved in the founders of Wix when they told me that one day we would have 10 mil­lion users. En­trepreneurs sab­o­tage them­selves by not ad­mit­ting their am­bi­tions. Do not be overly con­ser­va­tive with us. Make us dream. Our com­pany slo­gan says it all: Dare to dream.

CHANGE THE WORLD

Is the en­tre­pre­neur able to carry out his project? If he has enough am­bi­tion then yes.

I'm not in­ter­ested in fi­nan­cial fore­casts at all. I think it's only a con­se­quence. Money is never a con­se­quence and is not the ul­ti­mate goal. Many in­vestors get caught up in fi­nan­cial fore­casts and spread­sheets. Not me. Not us.

We need a vi­sion to get ex­cited about. If you do not man­age to give us that, you will leave dis­ap­pointed, and we will be dis­ap­pointed for you be­cause we want all en­trepreneurs to suc­ceed. When we say that your project does not have enough am­bi­tion and to come back to us in three months, six months, one year, of­ten what we see is that these en­trepreneurs did not dream big enough and just cre­ated a startup be­cause it seemed like a cool thing to do.

Ask your­self what prob­lem you are try­ing to solve. What are you re­ally try­ing to change? Want to sell cheaper clothes? Okay, it al­ready ex­ists and it works rather well. You will have a mar­ket to sell cheap t-shirts, so why not. If high turnover is your am­bi­tion, great. But if so, then I don't think you are solv­ing a se­ri­ous prob­lem. You need to be so ex­cited by your own project that you are will­ing to do any­thing to suc­ceed. There are ups and downs on the en­tre­pre­neur­ial ad­ven­ture. If at the first ‘down' you lower your arms and want to go back to work as an em­ployee, you are not in­vested enough. We need peo­ple who are try­ing to solve some­thing.

MAR­RIED FOR 8 TO 10 YEARS

Per­son­ally, sell­ing clothes on­line does not in­ter­est me at all. Find­ing jobs for peo­ple – now that's a project that hooked me. Eu­gene Mizin, co­founder and CEO of Job To­day came to see me and told me he wanted to cre­ate his own startup. I told him, "Be­fore you tell me why and what com­pany you are go­ing to cre­ate, be aware that I'm go­ing to fund you be­cause you're a good guy and you have am­bi­tion.” When he ex­plained his idea to me, we could see that he had pas­sion, and that his fo­cus was un­der­qual­i­fied peo­ple who can­not find jobs eas­ily. He wanted to solve this prob­lem. In 2016, 200,000 peo­ple have found jobs in Spain and in the United King­dom thanks to Job To­day. Com­pared to Face­book, 200,000 does not seem like much, but these are 200,000 im­por­tant jobs that will feed fam­i­lies, not 200,000 ‘Likes.' I have noth­ing against ‘Likes,' but there are more worth­while causes.

En­trepreneurs should be so ex­cited and mo­ti­vated by what they do that the ups and downs don't mat­ter. They need that con­stant de­sire to solve a prob­lem. These are the projects that in­ter­est me. It was the same with Skype. It's the same with Wix.

From time to time we have com­pa­nies where the busi­ness seems in­ter­est­ing and the founders are tal­ented, but they don't ex­cite me. I like when my as­so­ciates tell me that a project looks promis­ing and that we will make money, but in the end, what in­ter­ests me is pas­sion. I tell en­trepreneurs, "If I in­vest in you, we're look­ing at be­ing mar­ried for 8-10 years." On av­er­age, star­tups are sold af­ter eight years. I want to be with pas­sion­ate peo­ple dur­ing this pe­riod.

The Job To­day team cur­rently spends a lot of time re­cruit­ing be­cause the startup is get­ting big­ger and bosses strive to sur­round them­selves with good peo­ple. You can have the best idea and the great­est pas­sion in the world, but in the end you need a good team to make it hap­pen. Ini­tially, they did it all them­selves, so one of the big chal­lenges for these en­trepreneurs is to take it up a notch. With ten em­ploy­ees or 50 your ob­jec­tives are quite dif­fer­ent.

COM­PANY CRE­ATION AT THE CORE

At Man­grove we only in­vest in in­ter­net and soft­ware. These are two sec­tors that we know well, are in­ter­ested in and in which we think we can have a dis­pro­por­tion­ate im­pact com­pared to our size. We be­lieve we can cre­ate com­pa­nies of global scale and with global am­bi­tion.

Do all in­vestors have the am­bi­tion to set up busi­nesses? No, we are in­ter­ested in cre­ation. If we ask our­selves how to make money, I am ab­so­lutely con­vinced that in­vest­ing as soon as pos­si­ble at a very early stage has a bet­ter fi­nan­cial re­turn than in­vest­ing later. To do this, you also have to be pas­sion­ate your­self and be in­ter­ested in in­vest­ing at the be­gin­ning in or­der to find en­trepreneurs like Eu­gene and Polina.

We do not have a par­tic­u­lar mar­ket. We in­vest about 30 per­cent in Is­rael and 70 per­cent in Europe. We are look­ing for the best en­trepreneurs. We usu­ally in­vest be­tween €1 mil­lion and €10-15 mil­lion de­pend­ing on how the com­pany evolves. The start­ing point is €1 mil­lion, be­cause you have to con­vince us fur­ther with your pas­sion and vi­sion.

The en­tre­pre­neur will have to im­press us within a year in or­der for us to rein­vest. En­trepreneurs some­times ask me for the cri­te­ria, but I know noth­ing about the cri­te­ria! En­gi­neer en­trepreneurs of­ten ask us to give them their ob­jec­tives. I tell them that these goals are theirs, and I won't de­fine them. I'm just an in­vestor. For some com­pa­nies, it means reach­ing a cer­tain num­ber of users, for oth­ers it means some­thing else. If we were to give them very clear ob­jec­tives, that would ul­ti­mately af­fect the di­rec­tion of com­pany, which is not our goal.

AL­WAYS SCOUT­ING

One-third of our 2,000 rec­om­men­da­tions come to us be­cause of Man­grove's es­tab­lished rep­u­ta­tion. An­other third are rec­om­men­da­tions from friends, in­cu­ba­tors and part­ners. That last third falls within a par­tic­u­lar sec­tor in which we are in­ter­ested. To­day, one of the ar­eas we are in­ter­ested in is health. So it's one-third, onethird, one-third.

The chal­lenge is to go from 2,000 files to seven in­vest­ments. It takes a mix­ture of art and sci­ence to achieve this, es­pe­cially since ev­ery­one on the team is dif­fer­ent. For ex­am­ple, I make de­ci­sions ex­tremely quickly. The other ex­treme is my co­founder Hans-jür­gen, who takes a long time to make a de­ci­sion. We have two dif­fer­ent but equally ef­fec­tive ap­proaches

PRAC­TICE AGAIN & AGAIN

Ev­ery year we gather our top 10 CEOS and founders. We take them on a re­treat for two days to ex­change ideas and meet the most in­ter­est­ing ex­ter­nal speak­ers. In 2016, one of the speak­ers ex­plained how he had sold his com­pany. An­other, who was one of the most well-known golf coaches in the world work­ing with the top-20 play­ers, de­liv­ered the fol­low­ing mes­sage: "Top play­ers are great be­cause they train all the time." It's the same for the CEO of a startup. You must ap­proach your startup as a pro ap­proaches his ca­reer. It is not a nine-tofive job. Take the great golfer Phil Mick­el­son. He still trains eight hours a day to be the best.

We also in­vited an ac­tor who has made sev­eral films with Quentin Tar­entino, and he gave us tips on how to tell a story. His goal is to make peo­ple un­der­stand that even though he is a rec­og­nized, award-win­ning ac­tor, he would never stand in front of a group like this with­out hav­ing trained for hours. This a big thing that en­trepreneurs can for­get: Telling a story re­quires train­ing. Peo­ple are rarely born with this tal­ent. Train­ing is manda­tory, even if you are an ac­tor speak­ing at a small event like ours.

With the in­ter­net we have the prob­lem of speed. Ev­ery­thing goes faster. It is said that an in­ter­net year is like seven nor­mal years. The startup must do in one year what a nor­mal com­pany has to do in seven. When an en­tre­pre­neur calls me and tells me he's fed up, I al­ways re­mind him that he has cho­sen this life. These startup founders have a time limit, phys­i­cally and emo­tion­ally. When we meet with en­trepreneurs, we pay close at­ten­tion to all these sig­nals.

Charles-louis Machuron Serge Afanou

Newspapers in English

Newspapers from Belgium

© PressReader. All rights reserved.