In this episode of Executive Connect, host Melissa Aarskaug sits down with Mark Elliott, CEO and Co-Founder of Summit Ventures and General Partner at Gauntlet Ventures, to discuss the systems, mindset, and leadership habits that allow companies to grow sustainably. Mark shares lessons from 25+ years of scaling and investing in high-growth ventures including SpaceX, Epic Games, and Flexport, revealing how balance, culture, and clarity drive lasting success.

Chapters
00:00 Intro: The myth of fast growth
01:10 Mark Elliott’s entrepreneurial journey
05:00 The “Pie Philosophy” of balanced growth
08:40 Building culture that scales
11:20 Spotting and stopping toxic behaviors
14:54 Sustainable growth: metrics that matter
20:07 Lessons from billion-dollar companies
27:20 What great founders have in common
32:30 Managing risk while scaling
37:40 People, process, and performance
43:40 How to build a company that lasts
44:15 Final lessons and where to connect

Mark

(0:00) Balance for me isn’t like work-life balance that I’m speaking of. (0:03) When you look at balance of compensation and deal structure, have you ever heard somebody say that you can slaughter a sheep once or you can shear it for a lifetime? (0:13) That’s balance and all that’s controlled by executives and how compensation is done.

(0:19) What deals that you allow to come through your door? (0:22) Have you ever seen a deal that wasn’t priced fairly for the customer because they paid 2x what other people had paid for it?

Melissa

(0:29) What if the secret to lasting success wasn’t growth or profit, but balance? (0:36) Today’s guest Mark Elliott knows exactly what that means. (0:40) As CEO and co-founder of Summit Ventures and general partner of Gauntlet Ventures, Mark has spent 25 years turning bold ideas into thriving ventures.

(0:54) He’s led startups to have tens of millions of dollars in revenue, authored a best-selling book on cybersecurity, and built an investment portfolio that includes names like SpaceX, Epic Games, and Flexport. (1:10) But his philosophy isn’t refreshingly simple like a pie, but should be shared equally among companies and shareholders. (1:21) Today on the Executive Connect podcast, we’re diving into the art of building sustainable success through balance strategy and a whole lot of insight, served of course by The Slice.

(1:35) Welcome today, Mark.

Mark

(1:38) Glad to be here. (1:39) Thank you for having me, Melissa.

Melissa

(1:42) Now, I want to start at the very top. (1:45) In a world where so many leaders chase profit and growth, you’ve built a philosophy around something very different called balance. (1:55) Before we dig into the details, tell us why you believe in balance is the real foundation to lasting success.

Mark

(2:04) You know, Melissa, I’ve learned so much from leaders over time that were willing to be vulnerable with me. (2:12) And what I learned, right, sometimes people want to take shortcuts. (2:17) Young leaders want to take shortcuts.

(2:19) And what I was taught early on through other people’s mistakes is that the long way is the short way. (2:25) And balance is part of that. (2:28) And when I speak of balance, I’m not talking about work-life balance.

(2:33) In the career that I’ve had, I’m not sure that that exists for serial entrepreneurs. (2:38) What I’m speaking about is equality or being equally yoked. (2:44) And so, here’s really the essence.

(2:47) When a deal’s done in your company, is it good for the company? (2:51) Is it good for the client? (2:52) And is it good for the sales rep?

(2:54) Because if any one of them is shorted, well, then that decision, that opportunity is going to be short term and it’s not going to be sustainable. (3:03) And in my opinion, it’s not worth the investment of time unless it’s going to be something that’s long term. (3:09) And that’s really the core philosophy that’s behind PI.

Melissa

(3:15) I love it. (3:16) Now, why do you think balance is so overlooked in the pursuit of success?

Mark

(3:24) Short-term decisions, short cycles, people fighting for cash flow, fighting for profitability. (3:31) And sometimes making wrong turns. (3:34) Things that aren’t equally weighted.

(3:36) And it blows organizations up. (3:38) It blows sales teams up. (3:40) It has the ability to damage client relationships if it’s not structured right.

(3:46) And we’ve all seen this in our careers. (3:49) And I think it’s focused. (3:56) So many companies start and they want to get quick to revenue.

(4:00) But some of the foundational things that are so important, like core values, like the culture of an organization, get passed over to get right to work in revenue. (4:11) But these are the foundational building blocks that make everything work long term. (4:16) And I think it’s people that are just being bulled.

(4:18) I remember in my companies early on, when I did my first investment into a business, I took shortcuts and I learned from them. (4:31) And when I sold that company and I sat back, the one thing that was in my mind is that before I start my next one, all these things that I had to build and figure out along the way, I’m going to go lock myself in a closet for six months and get them done on the front end. (4:45) And that investment in time is not something that’s available to all of us.

(4:52) When I started my first company, I surely didn’t have that time to be able to invest in really figuring out core values and philosophies. (5:02) Man, I had to make a mortgage payment. (5:04) I had wife and kids to pay for.

(5:06) And I think that’s the reason that it gets skipped. (5:09) It’s not because people don’t have great intentions, but that’s the old joke out there is that the pathway to hell is paved with great intentions. (5:16) And we want to get to it, but it’s how do we get that to the top of our stack?

Melissa

(5:22) Yeah, I love it. (5:24) Now you use this incredible analogy, success is like a pie. (5:30) Clients, companies, shareholders, each get an equal slice.

(5:35) Where did this idea come from? (5:37) And how is this philosophy shaped the way you lead and invest?

Mark

(5:43) So, I think I learned this early on because I got really, really lucky, right? (5:50) My career had such a humble beginning. (5:53) It started in a little $10 million tech company.

(5:57) And within about 18 months of going to work there, we got acquired by a $400 million company. (6:02) And it was such a wild ride for me from $400 million to $3.1 billion. (6:08) And this really became my PhD in business.

(6:12) And here’s where the blessing started in this. (6:15) This company promoted people based on sales results and not management experience. (6:20) So, I went through management school with this company.

(6:23) And by the age of 23, I was managing 40 people in a sales department. (6:27) Most of them were twice my age. (6:29) I migrated from there onto a mergers and acquisition team.

(6:32) And I eventually became a turnaround guy for new acquisitions. (6:37) And I really had an apprenticeship under many great leaders. (6:41) And this practice was adopted from a great leader, a guy named Rick Lott.

(6:45) And truly, when you peel back the onion on this, Melissa, it’s about failure, right? (6:52) And failure is a gift. (6:54) And it never feels like that in the moment.

(6:56) It hurts, right? (6:58) But it builds success. (7:00) And there’s a little saying that I love out there.

(7:02) I always constantly say this to my children, right? (7:05) The block of granite in the path that stops the weak is the stepping stone for the strong, right? (7:12) But when you look at these lessons that were taught to me by men and women who were vulnerable enough to be able to share their failures, it allowed me to save a lot of bumps and bruises.

(7:24) And that’s truly how I learned the art of pie. (7:28) And trust me, it works. (7:29) You know, I had a gentleman that I studied under for a long time, just an absolute marketing genius.

(7:36) His name is Jay Abrams. (7:38) And Jay taught me something. (7:40) He said, Mark, he goes, in Fortune 500, they have R&D.

(7:43) You know what that means? (7:44) I said, yes, sir. (7:45) That’s research and development.

(7:46) He goes, well, let me tell you, in the entrepreneurial life, it’s not research and development. (7:50) It’s rip off and duplicate. (7:52) And pie was one of the things that I’ve duplicated.

(7:55) I hold it dear. (7:57) And I use it not only in business relationships, but in personal relationships. (8:01) It’ll go far and definitely something to investigate there.

(8:09) And I’ve really taken this, and I’ve also applied it to investment philosophies, Melissa. (8:14) And from an investment perspective, I always look for like-minded opportunities with pie where I’m treated fairly. (8:24) And you know this, the people that are on, you know, listening to this know this, but most deals that are out there are by the banker, for the banker, and it’s a fee machine.

(8:36) And I avoid opportunities that aren’t equally yoked. (8:40) And the bottom line is, is that there’s more opportunities out there than anybody has cash. (8:44) So it’s all about hunting for that right fit and saying no a lot because you have predetermined qualifications, predetermined deal points.

(8:56) And when that starts to fall apart, you know, it’s not a right fit for your family or your future.

Melissa

(9:01) Ready to lead smarter and invest wiser? (9:05) On the Executive Connect podcast, we unpack executive strategies for wealth and influence. (9:12) Hit the subscribe button now.

(9:14) Don’t just watch, act. (9:17) Yeah, and it’s interesting point, like in today’s economy, speed and disruption often really rule, but how does your pie philosophy help leaders slow down, make smarter, more sustainable decisions?

Mark

(9:34) I think from a sustainability standpoint, right, this pie is a part to make sure that people are equally yoked, equally paid, compensated, that it’s fair, that it’s a place that people want to be, right? (9:52) But I think what you’re starting to touch on, right, what’s going to make that difference, right? (10:00) And I think that there’s a lot of ways to the top of the mountain, three or four of them are the best, but on this topic that you’re touching on, I think which really drives this is one thing, right?

(10:12) And it’s purpose, and it’s core focuses that are greater than money. (10:17) And you have to know who you are and what you believe in, and not stray from that, right? (10:23) Think about what we teach our kids, Melissa, right?

(10:26) We teach our kids that they’re the product of their five closest friends, right? (10:31) But this is also true for your executive team, as they make up the core values of an organization, regardless of what’s written on your website, or some marketing brochure. (10:41) You know, and at Summit, we have four core values, and we hire, we reward, we coach, and we fire based on these core values, right?

(10:52) When you understand that, and you’re in business, right, you’ve got to be quick with the trigger, right? (10:57) Because cash is king. (10:59) And sometimes it’s easier to give birth than to raise the dead.

(11:02) But if you don’t have a roadmap to do that, right, you don’t understand that, and you get pulled into the emotional daily ebb and flows of people and all the psychology that goes with that, right? (11:14) It’s easy to get lost without that roadmap. (11:17) And core values are foundational to culture.

(11:22) And culture eats strategy for breakfast every time it does, right? (11:26) So it’s about building that. (11:28) And, you know, this is really funny, Melissa, recently, I was rereading Second John, and we had just been through this in a Bible study that I was in.

(11:37) And towards the end of Second John, it really talks about if we start letting something, you know, into our circle, right, into our home, whether it’s evil, or it’s something that’s substandard to our family core values, right? (11:52) Silence is consent. (11:54) And when you look at the way that core values drive our business, right, with core values, it’s easy to move, remove toxicity from a company.

(12:05) And I know that everybody knows what I’m talking about. (12:08) Melissa, have you ever been on a sales team with a toxic salesperson? (12:11) Right, that person that brought in more revenue than everybody else in the company, and they had poor behavior, right?

(12:17) And, but it was accepted, because they were making payroll, right? (12:22) And so core values help you to balance this. (12:26) So you’re not dependent on toxic employees, right?

(12:29) And this is back to that shortcut. (12:31) The long way is the short way, because having toxic employees where it feels good, right? (12:36) In the beginning, it’s a little cash flow, and you’re going, gosh, I can reinvest and grow out of this.

(12:40) It stunts your growth long term. (12:42) And that becomes a big differentiator. (12:45) And this is getting back to that foundation and companies, right?

(12:48) And a lot of people that have even started, and they’ve got cash flow, and they’re in this predicament, right? (12:55) Because that’s what it becomes when your business gets driven, controlled by an employee, and not the owner of the core values of an organization. (13:03) And so I just think that that’s something that’s key for long term success and foundational to getting it right.

Melissa

(13:10) I love it. (13:11) And I want to unpack this pie philosophy, but it’s making me think, like, balance is so difficult, right, right now in this world. (13:19) I think there’s so many, I’m going to call it flashy, shiny things.

(13:23) But when I think of it from a pie perspective, you make me, you know, we all have 168 hours, and I might pack in, you know, more work on the front end, but it all equals out on the back end, once we kind of move into the weekend, and then there goes the balance. (13:40) So I love this pie philosophy with the balance. (13:44) I’ve not really thought of it together.

(13:47) I think there’s so much in that. (13:50) So talk to me a little bit about when they’re unbalanced, or when you are too much in one, like, how do you, let’s unpack it a little bit more, how you keep that so balanced on a regular basis, where everybody gets an equal slice, your business, you know, your faith, your family, all the buckets that you have?

Mark

(14:14) Yeah. (14:15) So, so, so again, balance for me isn’t like work life balance that I’m speaking of, right. (14:20) And, and that’s probably an area that I’m still working on, right.

(14:25) But, but, you know, when you look at balance of compensation and deal structure, and I’ll bring it home with this statement, have you ever heard somebody say that you can slaughter a sheep once, or you can share it for a lifetime? (14:40) Yeah, that’s balance. (14:41) That’s balance.

(14:43) And all that’s controlled by executives, right? (14:46) And how compensation is done? (14:48) What deals that you allow to come through your door?

(14:51) Have you ever seen a deal that wasn’t priced fairly for the for the customer because they paid two x what other people had paid for it? (14:58) Right? (14:59) And at executive level, how do you ensure long term sustainability and retention with customers without control of that?

(15:07) Right? (15:07) And so that’s balance, right? (15:09) You as the leader, are not only looking out for the company, you’re looking out for the rep, and you’re looking out for the customer, because that ecosystem can feed itself for a long time, or it can destroy itself in a minute.

Melissa

(15:23) I love it. (15:25) So let’s talk a little bit about scaling a business. (15:28) You scaled multiple companies with major, major revenue milestones from 88 million, 42 million, 11 million.

(15:36) That’s an incredible track record. (15:39) What separates the businesses that scale sustainably from those that burn out, fall down? (15:48) What’s the lesson leaders can take from kind of these experiences of scaling?

Mark

(15:54) You know, I think there’s a simple part of that, right? (15:58) I believe you believe I think everybody believes that every seat in a company should have a number that manages activity and results, right? (16:08) That’s easy to pick out in sales, right?

(16:10) How many calls did you make? (16:11) How many meetings did you have? (16:12) What were your, you know, conversions to sales and accounting, it may be managing day sales outstanding, or asset management, or inventory turns, right?

(16:22) Imagine that you’re on vacation with your husband, and the cocktail waiter comes up, and he’s got a silver tray on it. (16:29) And on that tray is your pina colada, and one piece of paper. (16:33) And on that piece of paper are the data that you need to manage your business, right?

(16:39) And that could be, you know, cash on hand, it could be revenue that’s in, right? (16:44) It could be expenses that are there, whatever those key performance indicators are that you want to be able to track to know that that business is working that week, we’re looking back on a P&L gives you that look back, but it’s not giving you that live data to make corrections, you know, so you’re not waiting 30 days to do that. (17:02) And, and so, so if that’s the first step, right, and that’s the easy part that most companies follow.

(17:08) The next step in our process, though, is consistently aligning people with core values, and determining whether they are above or below the bar. (17:17) So we can adhere to what’s most important in the company and how we engage to support our clients and our partners. (17:24) And, and so, we take our executive team, and we take our four value core values, which are partners first, alignment, accountability, and transparency.

(17:36) And we take everybody on the executive team, and we go, are you a plus, a plus minus, or a minus. (17:43) And so we come up with a standard of our executive team. (17:46) And we say, this is the bar, accountability on our executive team is four pluses.

(17:52) And then when we look at people, if they are out of alignment, we determined whether they Hey, do they want this job? (18:00) Did they get it? (18:02) And do they have the capacity to be able to do this job?

(18:05) And, you know, I’m a big fan of Patrick Lencioni. (18:09) Have you ever read any of Lencioni’s books? (18:12) There’s a bunch of great ones that are out there.

(18:15) You know, one of them’s five dysfunctions of a team, the one, right. (18:20) So you know, I have from good, from good to great. (18:23) You’ve heard of good to great.

Melissa

(18:24) I have.

Mark

(18:25) So so so that book is about getting the right people on the bus and getting the wrong people off the bus. (18:34) But let me tell you what I didn’t get out of that book. (18:36) How in the heck do you do it?

(18:40) This is how you do it. (18:42) Right? (18:43) By lining people up.

(18:44) And every time there’s an infraction or something that’s off, do you sweep it underneath the rug? (18:50) Or do you hold accountability in your organization and say, Hey, Melissa, what’s up? (18:54) This is our core value.

(18:56) This is what your behavior was, right? (18:59) Hey, knock it off. (19:01) That’s not how we operate, right?

(19:02) That’s not putting partners first or that’s not accountable, right? (19:05) These are the standards in this house. (19:08) Right?

(19:10) And it’s not silence is consent, right? (19:13) We say something about it, because that’s how you protect culture. (19:16) And when you get that culture, and you get people that are living and thriving on core values, and they’re equally yoked, because it’s good for them, and it’s good for the company, and it’s good for our clients, that everything works within that environment, right?

(19:30) That’s where real success and you start to get that momentum and things get easy. (19:34) And it’s because you’ve got everybody in what you have them in alignment, everybody’s in the same boat, rowing in the same direction. (19:42) And when toxicity rears its head, and it always will, right?

(19:46) It’s easy to remove, because you have that true north, you have that way to balance your business on, here’s who we are, here’s what we believe in. (19:55) And we don’t tolerate below the bar. (19:58) Come to our standards.

(19:59) This is our company and how we want to be able to deliver.

Melissa

(20:02) And I love that. (20:03) I’ve seen it in organizations, Mark, where people or executive leadership, let it festers, let it festers. (20:11) And over time, one person can take down, you know, one bad egg can take down the whole team.

(20:18) And so I love that you bring it to the forefront right away. (20:22) You don’t let it go. (20:24) So it’s really important.

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Mark

(21:29) Well, I wish I could listen to this podcast, right? (21:32) I think that there’s a lot of nuggets that are, that are, you know, from hard lessons, right? (21:40) You know, comes this easy delivery.

(21:42) Um, but I didn’t understand core values. (21:45) I didn’t, you know, it was marketing to me, right. (21:48) And, and, and, uh, I didn’t understand culture, right.

(21:53) And I hired plenty of toxic, you know, toxic salespeople. (21:57) As a matter of fact, I had a business around recruiting them. (22:00) And, and, and I didn’t understand the mess that I was getting myself into back then.

(22:05) Uh, but again, right. (22:07) It’s failure. (22:08) Failure hurts, but it breeds success, right.

(22:10) And, and, and then the ability to be able to share that with others so they can avoid it, right. (22:15) That becomes that, uh, a circle, right. (22:18) So in a lot of ways, failures, Melissa, are, are opportunities to share and give, to give back.

Melissa

(22:23) I never learned anything when things were going great. (22:26) I always learn the most when things are not going great or from one mistake.

Mark

(22:31) So absolutely.

Melissa

(22:32) And I love, you know, I love what you were saying about going back to the accountant. (22:37) Um, everybody does need a scorecard, whether it’s sales or an accountant or somebody in marketing. (22:45) I, I couldn’t agree with that more.

(22:47) I think everybody needs a metric to be measured on and, and really quantify what they’re doing to drive their business units. (22:56) I think it’s, it’s so important, but you know, going back to this balance thing, how do you measure balance when you’re in the middle of rapid expansion, everybody’s kind of crossing over into different departments? (23:10) Um, like, is there like a, a measure that on how you, you would figure that out for a scaling company?

(23:21) How would you measure it? (23:22) Like, how would you measure, like when I think startups, I think like everybody’s doing everything, whatever it takes to get things done.

Mark

(23:30) Yep. (23:31) Yep. (23:31) You know, that’s the entrepreneurial hustle, right?

(23:41) You know, those are the long hours, right. (23:43) And in the beginning, right. (23:45) Everybody is the chief cook and bottle washer.

(23:48) And, and, and it, it, again, I think it’s having focus to start adding right people. (23:53) So you can delegate and elevate right. (23:57) To eventually be able to remove yourself.

(23:58) Right. (23:59) And, and, and, you know, I think it’s a much like Michael Gerber talked about in the email, right. (24:05) You’ve either got people working in the business or working on the business.

(24:09) And it’s the difference between strategic and tactical. (24:13) And, and, and in the beginning, you’re going to be very tactical, but you’re fighting to rise above that business. (24:18) So you can work on it and not in it, right.

(24:21) Because that’s truly where freedom comes from. (24:23) And, and, and where duplication comes from and removing yourself, you know, from that. (24:29) But, but, but that’s about process, right.

(24:32) And building systems, because as you come into these companies, whether they’re startups or they’re established, you know, Melissa, you’ve got a tech background, I’ve got a tech background, and you and I both go to work at an organization. (24:45) And we bring the residue of our careers. (24:47) Here’s how I’ve done it.

(24:48) Here’s what made it successful. (24:50) So how do we go from the Mark and Melissa way to the new company way, right? (24:55) This is our standard.

(24:56) Here’s how we do it at this company. (24:57) This is the executive connect way. (25:00) And, and, and so, you know, searching through that to build teams and being able to write that this really, there’s so many things to be done, right.

(25:11) But here’s where that alignment comes when you’re dealing with that problem. (25:14) You can only fix so many things in the business at one time. (25:18) So what are the three to five, the three to seven, depending on the size of the team, most important things that need to get fixed in this business?

(25:27) Well, let’s look at that now on a quarterly basis. (25:29) And this quarter, we’re working on these three things, what three things, three things that after we build this process and document at one time, we don’t have to touch for a long time, it’ll be an easy refinement, not a build from scratch, right. (25:44) And so when you’re constantly going, okay, we knock out these rocks, right.

(25:48) And, and, and I think that’s how you divide in an early team, because you’re going to have things that that crossover and sales and marketing and operations and service delivery. (25:58) And, and, you know, that’s why a lot of people don’t do this, right. (26:03) If it was easy, everybody would be doing it.

(26:05) But for us entrepreneurs, it’s, you know, from lemons to lemonade, right.

Melissa

(26:09) I love it. (26:10) And since you mentioned tech, let’s just get right in your best selling book and cyber security. (26:17) Want to talk about that.

(26:19) I’m passionate about cyber security and tech, and you’ve built your entire career on that. (26:24) So how has that background and cyber security and tech really shaped the way that you invest and build different types of investment portfolios?

Mark

(26:36) You know, I don’t know if that book has really aligned how I’ve done investments. (26:45) I’m starting to pin out my second book right now. (26:48) And and if you haven’t read written a book before, it is such an exhilarating experience.

(26:55) And, and, you know, I think really the upside that I felt from that, from an entrepreneur, I get speaking engagements, little industry, you know, talking points, once I published, right, it was like the role reversed through the the angle of pursuit with these engagements to be able to speak changed. (27:14) And I started picking up all kinds of speaking engagements, right. (27:18) And not only did I pick them up, but people started to pay me for it.

(27:22) And and you know, at heart, right, I grew up as a sales and marketing guy. (27:26) That was lead gen for me. (27:27) So you’re going to pay me to do lead generation.

(27:30) This was just the best thing since the pocket on a shirt. (27:33) And and so what I found through this process from a leadership standpoint is is is from that book, that brought credibility to my expertise that put me on stage. (27:46) Now I was able to influence not only customers, right, but I was able to influence an industry, right to create change.

(27:54) And and you know, when you look at at the core of what’s important to me, it’s making a meaningful difference in the lives of others. (28:02) And and so it wasn’t just about how Mark Elliott and his companies could succeed. (28:07) But how can I teach others to do this, right?

(28:09) And and and create that uplift. (28:12) And and so that book, not only from a lead generation standpoint, what it did for our business was great. (28:19) But but the difference I was able to make in the lives of others from being able to share on stage and and help them grow their business and and so fun.

(28:29) I’ve got another one that’s coming out on on oil and gas investing for real estate investors. (28:34) And it’s really about this tax alpha that’s in there. (28:37) And so yeah, this is something that’s coming out that I can’t wait to share with the world.

Melissa

(28:42) Now you’ve backed some of the most innovative companies on the planet. (28:47) I’m curious, what do those founders have in common?

Mark

(28:54) You know, I, I had something really, really unique happened to me and my 20s. (29:02) You know, Melissa, I shared my whole story with you. (29:05) I’m self educated, right?

(29:08) I was raised in apprenticeships. (29:12) And and and so I got about three years through college, and I was working. (29:20) And that’s when I got into tech.

(29:21) And both of my parents were educators. (29:23) My mother was a second grade teacher, and my dad was a dean of a university. (29:27) And and my fourth month in the tech business, I brought home a paycheck that was twice as big as both my parents put together.

(29:35) And my mom has her master’s and my dad had a PhD. (29:38) And I’m going, gosh, something’s not lining up right for me. (29:42) I think I’m going to follow these other guys and take an entrepreneurial path.

(29:45) Not what I recommended for my children. (29:47) But that was the path that I took. (29:49) Right.

(29:50) And Melissa, I just lost my train of thought. (29:54) Give me your original question.

Melissa

(29:56) I was just wondering what the founders have in common for these companies. (30:00) Is there like a specific trait that they have in common?

Mark

(30:03) So so here’s why I was going with that. (30:05) So I’m just going to reverse and finish that point. (30:08) Then I’ll come back to that.

(30:09) So my dad had introduced me to an individual and and he had created a relationship with a student. (30:19) He’d created a relationship with his dad and his dad started to teach, you know, not teach at the university, but come in and speak. (30:28) And my dad’s like, hey, you got to you got to meet this guy.

(30:33) And I’m like, well, dad, you’re you’re a teacher. (30:35) You don’t know people like this. (30:37) He goes, no, Mark, this is really you need to meet him.

(30:39) And it turned out that this gentleman ran a twenty two billion dollar private client group and had a VC firm. (30:44) And and through this introduction, this guy became the most significant mentor in my life, not only financially, but spiritually. (30:52) Right.

(30:52) There was a lot of lessons that I got from him that were conversations that never happened at my dinner table, you know, at home. (30:59) And and with him, I was able to participate in over 40 IPOs, over a hundred secondaries. (31:05) I was in real estate transactions that were in China, things that that a guy that came from a family of educators should have never had access to.

(31:14) And through this process, I learned capital allocation discipline from a great, great capital allocator. (31:22) And and so. (31:24) I think to your question, like.

(31:29) What are these things that you’re looking for and a founder is a piece of this equation, but really what I’m looking for in a deal is what I refer to as a royal flush, right, so you can kind of see that right, that five card spread, that’s like, right. (31:42) So my five cards in that royal flush are the product or the innovation, uh, the team, right, which is going to include the founder, the traction, right? (31:53) The story.

(31:55) That’s where those core values, right? (31:57) That culture comes out. (31:58) What is that?

(31:59) That that first purpose, that mission that drives them beyond money? (32:04) What’s that meaningful difference or inflection point that it’s going to make within a market? (32:08) And then what’s that capital stack, right?

(32:11) That that founders track record and ability to lead is important. (32:15) But a founder that has a track record that knows how to lead and has a system to execute on, right, that becomes the next level. (32:25) And and, you know, when you start to look at any of these pieces are missing or they’re weak, uh, your risk goes up exponentially and an opportunity.

Melissa

(32:36) Yeah, absolutely. (32:37) Now, do you think leaders can apply this same kind of resilient mindset to their own teams and their own decisions? (32:47) You know, I feel like resilience is one of the, the number one things I’ve seen in the most successful entrepreneurs.

(32:54) Um, they’ve not let things get in the way of that happen, whether it’s a personnel thing and economy thing, they’ve been so resilient and quick to pivot with decisions. (33:04) And, you know, they’re, they’re very organized and how they make decisions. (33:09) So is there maybe the better question is, um, you know, is there a way to like assess risk?

(33:20) Like when you’re an entrepreneur, you know, you have to make a lot of not just technical risk decisions with the product, but you have to make a lot of leadership risk decisions with who you’re hiring, who you’re letting go, you know, what clients you take on. (33:36) So with your background in cybersecurity and tech, how do you, how do you look at risk as far as investing or personnel or starting a new business? (33:48) Is there a certain way you look at risk because you have that cybersecurity lens?

Mark

(33:55) You know, I, I think people looking from the outside in, um, thinks that I take a lot of risk. (34:04) And if you broke me down on a personality test, you would find out that I’m very risk adverse, right? (34:10) I like what I know.

(34:12) Right. (34:13) And, and said differently, I take calculated risk. (34:16) I take risk where I understand what’s going on that looks risky to somebody else, but I know that I can get through the other side of that opportunity and be able to do it with enough margin that makes everything go around for everybody.

(34:30) And, and so, you know, you start to look at, at, at, you know, buying companies, rolling companies up, right? (34:38) A lot of people look at that. (34:39) That’s risky.

(34:40) They’re going, gosh, everything’s on the line. (34:42) But when you’ve been, you know, as you have in technology and you know how to stand up teams, you know, how to stand up companies, you know how to buy those companies, um, you know, in, in total, 60 something acquisitions, right. (35:00) That, that, that I’ve been a part of, right.

(35:02) And, and, and that’s going back to that company that went from 400 million to 3.1. Mark Elliott hasn’t done that much on his own, right. (35:07) But being on teams with that, uh, you know, I touched a lot. (35:11) I saw a lot.

(35:13) I learned the ad backs. (35:14) I learned how to go in there and, and, and look at a, look at financials and, and, and see how to tear these things apart. (35:20) And, and, and how do we, we right size this company today based on what’s going on now, let’s go on roll on what we know how to do with growth.

(35:30) Right. (35:31) And, and, you know, if, if I saw any big risk and acquisitions, this is funny. (35:37) I’m going to go back to culture, right?

(35:39) When you buy a company that has a poor culture, it’s a loser, right? (35:44) And if you said I could go back to my earlier me, what I teach myself, don’t buy a company that has bad culture. (35:50) So you can fix service, right?

(35:52) If you’ve got a service delivery problem, that’s fixable. (35:55) If you’ve got bad culture and I can take you 10 years to fix, right. (35:59) That is turning over the environment.

(36:01) And, and as we talk about people process and technology, people is the core of this. (36:06) Every business is a people business, right? (36:10) And, and so, um, from a cybersecurity perspective, boy, this world is an evil place, man.

(36:18) There there’s, there’s some, some, some people that need to go in jail or spend the rest of their life in hell eventually, because they cause a lot of pain for people out there from a security standpoint, right? (36:29) And you really start to peel that back and see the companies or the countries that are trying to penetrate American businesses. (36:36) And it’s how they profit, uh, you know, from things that are very painful to families and businesses.

(36:43) Um, you know, the, the, the amount of companies that we’ve come into cleanup situations in my past life where people had had lost millions and millions of dollars, uh, you know, through wire fraud or, or, uh, through wire transfers. (36:58) And, um, you know, as, as, as we looked at this in our business, right, the summit that I’m building now is an upstream oil and gas company. (37:07) And, and, you know, when you look at oil and gas, you, you see this industry that’s made so much money.

(37:13) They’ve never had to innovate the way that we have in tech, right? (37:16) That they, they, if we in tech said, Hey, we have an inefficient business. (37:20) We have these thousand dollar bills slipping between our fingers and we need to clean up our process on oil and gas.

(37:26) Those are $10,000 bills, but these people have made so much money that they’re still on stone and chisels, right? (37:32) And, and you start to look at what happens with, with, with the documentation that you put together on a private equity deal. (37:39) It’s got EINs, it’s got social security numbers.

(37:42) It’s got all the PII you want to shake a stick at, right. (37:45) Or private information that, that, that you have on these forms, but yet they’re done in email and they’re done in FedEx envelopes. (37:52) And, and, and, and they, they, they sit in file cabinets that are not secured, right?

(37:57) All these challenges that you see within that space and, um, you know, a little bit expensive, but we, we, what we ended up standing up in our organization, right. (38:07) And this is from a security perspective is, is that we house a platform that is in a SOP 2, type 2 secure data center, 256 bit encryption. (38:17) So the same standards that are used by the department of defense and this system that we use is the same onslaught boarding system that’s used for the private client groups of JP Morgan Chase and Citigroup.

(38:28) But, but it, it becomes a communication tool that truly keeps data safe. (38:34) And, and I’ve just been on the other side of people with ruined lives and stolen social security numbers. (38:40) And, and, and, and it’s a mess out there.

(38:43) It’s something that I keep an eye on. (38:44) And, and if you start to look at our fiduciary responsibility as executives and leaders of companies, right. (38:52) And if you look at our core values, one of them’s partners first, right.

(38:56) That really wouldn’t be true if we weren’t keeping people’s data safe, because that’s part of the equation. (39:00) So I, it, it, my, my, my history and, and being birthed in, in security, it’s, it’s something that I still hold near and dear to my heart.

Melissa

(39:11) And I, I think it’s rare coming from cybersecurity and also an investor in oil and gas. (39:18) I, I see, I don’t see a lot of SOP 2, type 2, you know, audits being done for these kinds of companies. (39:26) And so you are a rare breed.

(39:28) Summit Ventures is a very rare breed and that, and that space from, from my lens. (39:33) And one of the things I love that you guys do is I’m just going to call it the three P’s. (39:38) I don’t know if that’s what you guys call it, but the people, the process and the performance.

(39:42) And, you know, we’ve talked a lot about culture and, you know, the philosophy that you teach your team and how you show up not only for your internal culture, but for your partners, your investors, the people you work with is super important because the brand that you’re building is, is what people are buying, right? (40:05) People trust you. (40:06) They know their information safe.

(40:08) They know that you’re being honest. (40:10) There’s balance as we talked about in the beginning. (40:13) So when you’re assessing an investment or advising a portfolio company, how do you spot imbalances early in these deals?

Mark

(40:25) You know, I, I think that’s like an any audit that you would do. (40:29) Right. (40:30) And, and you, you know, you, you have your company that’s growing and then you have companies that you acquire.

(40:35) And when you’re stepping into that, much like you would go into, to one of your technology clients that always started with an assessment, right. (40:45) And understanding of not only what they perceived that their needs were, but what their unknown needs were that, that you had to develop their blind spots that are there. (40:53) So you go into an organization and they think that they’re running well, right.

(40:58) But is there efficiency, your efficiency, right? (41:01) So that’s really an audit and an onboarding of what the culture of this company is that you’re absorbing there. (41:07) Right.

(41:08) And, and Melissa, really, when you’re looking at that from an acquisition standpoint, you truly have got to look at core values of companies before the acquisition. (41:17) Are these people going to fit together or is this oil and water?

Melissa

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(42:09) Yeah. (42:09) And I think the due diligence is so important to understanding, you know, due diligence as well. (42:15) I’m curious, as you’re talking, I’m thinking, do you think the future of investing will move more towards firms that emphasize value and the balance or just flat financial returns like the mortgage, you know, the different mortgage brokers that we’ve historically seen, you know, that work for Morgan Stanley and other larger banking organizations?

Mark

(42:42) You know, the machine’s never going to stop, right? (42:48) That money printer is always going to go burr. (42:51) And I think that you have a lot of stuff that’s out of Wall Street.

(42:56) It is for the banker and by the banker, right? (42:59) It’s a fee machine that’s in there. (43:04) Jessica Alba, right?

(43:06) She, she started the honest company, right? (43:08) And if you look at what happened there, um, they, she, she raised money from friends and family. (43:14) I think she raised like four or 5 million bucks.

(43:17) Then an investment firm came in and right. (43:21) You’ve always got to be careful who comes in the deal before you and after you. (43:24) And this investment firm came in and they put $50 million in her deal.

(43:28) But in the contract, they just wrote this little thing in here called right. (43:32) And they had a two X prep on their money. (43:34) So when you watch that company and it went public and its valuation was $104 million, but you got a private equity firm in there that put in 50 million with a two X perf, what a Jessica Alba and her friends really get, right?

(43:45) That deal was for the bankers by the bankers, right? (43:49) You look at Rivian when that deal got put together on, on, on the car company, there was $170 million in fees that were taken by JP Morgan Chase and about 20 other bankers that helped put that deal together, right? (44:02) That’s before $1 profit, one economic gain went to anybody on the other side of the equation for the banker by the banker.

(44:11) You know, this is a little bit of a side, but as you start to look at things in our, uh, in our country, and you start to look at that, the, the cap tables of all these publicly traded companies, you start seeing the three same names pop up on there, right? (44:24) BlackRock, State Street, Vanguard, right? (44:28) You see ESG being pushed through these organizations, uh, challenging outcomes and what needs to be done, right?

(44:36) Because it’s the narrative, right? (44:38) And they start to control these companies. (44:40) And, and I think that there’s a real need in this country for entrepreneurs to stand up, not only to stand up, but, but I think that entrepreneurs need to learn fund structures because there’s things that are going to wipe out the middle class because we’re going to lose all these mom and pop businesses, right?

(45:00) That, that are out there. (45:01) And for people to understand this and build quality American companies, right? (45:07) Because we have so many baby boomers that are leaving the market right now, and they’re leaving behind these businesses, right?

(45:13) They don’t have a good outlet, but we need people in America to stand up, generate revenue, create jobs, and, and the ability to scale from investments from people like me, from people like you into these opportunities that allow somebody to go roll up, I don’t know, lawn services, right? (45:32) We can go way past laundromats and, right? (45:34) So many businesses that can be scaled and put together.

(45:38) And, and, you know, you just see so much acquisition of these large companies that are going to wipe out middle-class business. (45:45) I think there is a real need for entrepreneurs to stand up and grow and thrive in America. (45:50) The opportunity is definitely there.

Melissa

(45:53) Yeah. (45:54) Well said. (45:54) So well said.

(45:56) Let’s go, right? (45:58) Let’s go build the right culture, understand the math, read the fine print. (46:02) So many good messages and nuggets in that.

(46:05) Mark, before we close up any final thoughts and anything that you want to leave with our listeners, and then please share what is the best way to connect with you, learn more about what you’re doing at Summit. (46:21) And let’s start with those two questions.

Mark

(46:25) Yeah, absolutely. (46:27) You know, if I were to encapsulate a lot of what we’ve talked about into a sentence, operate on your core values, hire, reward, coach, and fire around them, and protect your culture at all costs. (46:44) Culture eats strategy for breakfast, right?

(46:48) Makes a meaningful difference. (46:50) And have fun with it, right? (46:52) Don’t, don’t, don’t leave, live underneath the stress, right?

(46:55) Pick your head up and see where you have grown. (47:00) I got a really, a lot of great lessons in life from Zig Ziglar early on. (47:06) And I got one really bad piece of advice from Zig Ziglar.

(47:09) And Zig said, before you hit your goal, always reset it and raise the bar. (47:16) And I had a lot of success in my life. (47:18) But I woke up one morning at 45 years old, and I didn’t feel successful.

(47:23) And the reason that I didn’t wasn’t because of the trappings and the money and everything that was around me. (47:28) It’s because I kept resetting my goal. (47:30) I was 45 years old, and I’d never reached a goal.

(47:34) Celebrate, celebrate your wins, celebrate the little wins, the big wins, all the wins, because it’s what releases the endorphins. (47:41) It gives you what makes you happy, right? (47:44) And that’s part of the entrepreneurial dream.

(47:46) So man, you guys have a ball with it, go be super successful out there and make it happen.

Melissa

(47:52) Now, how can they learn more about Summit and connect with you?

Mark

(47:56) Absolutely. (47:57) So our website is summitven.com. (47:59) S-U-M-M-I-T-V-E-N.com.

(48:04) And then you can also feel free to reach out to me directly. (48:07) My email is M-E-L-L-I-O-T-T-M-Elliott at summitven.com.

Melissa

(48:14) Thank you so much for being here today, Mark, and sharing your knowledge and your passion with our listeners. (48:22) That’s the Executive Connect podcast.