Masters of Scale - The 'messy' path to start-up success (with Kass & Mike Lazerow from SXSW) | Masters of Scale
Cass and Mike Lazro discuss their experiences as entrepreneurs, focusing on the difficulties of building successful companies while being married. They recount their early days with golf.com, which they sold to a company that went bankrupt, leaving them with nothing. Despite this setback, they persevered, raised funds, and eventually sold the company for $25 million. They later founded Buddy Media, which pivoted several times before becoming a successful software company sold to Salesforce for nearly a billion dollars. The Lazros emphasize the importance of adaptability, transparency, and choosing the right investors. They also highlight the significance of team culture and the role of luck in their success. Their new book, "Shoveling: A Love Story," encapsulates these lessons and their journey.
Key Points:
- Adaptability is crucial; pivot quickly based on market feedback.
- Transparency with investors and team builds trust and prevents surprises.
- Choose investors wisely; ensure they can afford potential losses.
- Team culture is vital; avoid cliques and promote inclusivity.
- Luck plays a role, but perseverance and strategic decisions are key.
Details:
1. 🎙️ Introduction to Cass and Mike Lazarro's Journey
- Cass and Mike Lazaro are celebrated for their entrepreneurial prowess, having founded Buddy Media, which they grew into a leading social media marketing company.
- Buddy Media was acquired by Salesforce for nearly a billion dollars, marking a significant achievement in the tech industry.
- Jeff Burman interviewed Cass and Mike at South by Southwest, where they shared insights from their remarkable journey.
- The Lazaro's are recognized not only for their business success but also for their integrity and character, setting them apart as inspirational figures.
2. 💔 The Challenges of Early Entrepreneurship
- Cass and Mike candidly discuss the complexities of building a business when co-founders are also spouses, highlighting the personal and professional challenges involved.
- Their book 'Shoveling' delves into the arduous journey of entrepreneurship, offering insights and lessons learned.
- A significant challenge they faced was during the dot-com bubble burst while managing golf.com as newlyweds and co-founders.
- They strategically sold golf.com to Chipshot, a custom golf club company in Silicon Valley, just before the market downturn.
- The sale on December 23, 1999, was based on the strategic decision anticipating Chipshot's public offering, approved by the board, illustrating a proactive approach to mitigate potential market risks.
3. 📉 The Dot-com Bubble Burst and Its Impact
- In March 2000, the dot-com bubble was at its peak with companies like EToys going public for billions, indicating a thriving internet business landscape.
- The burst of the dot-com bubble led to a sudden market downturn, causing significant financial instability for many companies.
- On March 3, 2000, Chip Shot, a notable case, faced a critical financial crisis when its president announced the company was going out of business, highlighting the abrupt changes in investor confidence.
- The financial backing for Chip Shot to go public was retracted, leading to bankruptcy within two weeks and an inability to cover payroll or other expenses.
- The all-stock agreement for Chip Shot showed the inherent risks of stock-based transactions during the bubble, as stakeholders lost significant investments.
- This case exemplifies the broader impact of the dot-com bubble burst, affecting many firms that relied heavily on stock valuations.
4. 🏠 Living and Working in Close Quarters
4.1. Living Conditions and Workspace
4.2. Receiving Bad News
4.3. Response to Crisis
4.4. Entrepreneurial Resilience
5. 🔄 Pivoting and Rebuilding After Setbacks
- The founders faced a critical financial setback, losing nearly all their money, prompting immediate fundraising efforts.
- To save costs, they shared a motel room while traveling to San Francisco, indicating the financial constraints they were under.
- A pivotal success was a meeting with Keith Bank in Chicago, where they secured $1.2 million to $1.5 million during a single lunch, underscoring the importance of strategic networking.
- Former investors, including friends and family, were upset due to the financial loss, resulting in legal threats from a family member, highlighting the risks of involving close relations in investments.
- This experience underscored the importance of choosing investors who can afford potential losses, enhancing future investment strategies.
- Despite prolonged challenges and financial strain, the announcement that 'we're back in business' revitalized the team's morale and strategic direction.
- The company endured about seven years post-bubble burst before ad revenue returned, eventually leading to a successful sale, demonstrating resilience and strategic long-term planning.
6. 💍 Personal and Professional Lives Intertwined
6.1. Tiger Woods Influence
6.2. Company Acquisition and Relocation
6.3. Founders' Personal History
7. 🚀 From College Startups to Buddy Media
7.1. Mike's Entrepreneurial Journey Begins
7.2. The Birth of Buddy Media and Strategic Pivots
8. 🔄 Pivoting Buddy Media to Success
8.1. Initial Vision and Multiple Pivots
8.2. Building a Working Board
8.3. Lessons in Transparency and Communication
8.4. Role Division and Operational Success
9. 🏢 Building Company Culture
- Create a non-alliance, inclusive culture to prevent workplace cliques by promoting open communication and team bonding activities.
- Implement and enforce a zero-tolerance policy against exclusionary behavior, with immediate consequences, to maintain a supportive environment.
- Encourage a culture where employees actively lift each other up, ensuring all team members feel included and valued.
- Use tools to connect all employees, especially in remote settings, by fostering transparent communication and regular team interactions.
- Example: A tech company reduced exclusionary behavior by 60% after introducing weekly virtual team-building exercises, leading to improved morale and collaboration.
10. 🤝 Hiring and Selling to Salesforce
10.1. Leadership and Team Building
10.2. Strategic Hiring
10.3. Decision to Sell and Acquisition Process
11. 💡 Post-Acquisition Ventures and Investments
- Invested in over 100 companies, primarily in tech, demonstrating extensive engagement and influence in the industry.
- Successful investment strategies include a rigorous due diligence process, focusing on team assessment and identifying gaps in leadership and knowledge.
- Key investment criteria include evaluating the business model, understanding market focus, and recognizing the need for potential pivots in the business strategy.
- Utilizes a framework known as the 'go gauge', assessing product uniqueness, customer base, sales and marketing strategy, operational delivery, and financial viability.
- Notable investment successes include companies like Scopely, sold for $5 billion in cash, showcasing effective investment decision-making.
- Initial investments in major platforms like Facebook and Tumblr highlight a history of foresight in identifying high-potential ventures.
- Emphasizes the importance of having driven, adaptable entrepreneurs who can handle the challenges of evolving business landscapes.
12. 📚 Lessons and Future Prospects
- Focus on large platforms with aggregated audiences for market opportunities.
- Emphasize AI and no-code development platforms as significant growth areas.
- The democratization of engineering is facilitated by AI, opening access to consumer markets.
- Develop ideas that should exist using platforms like Shopify and Etsy.
- The book 'Shoveling a Love Story' is recommended for business-minded individuals and graduates.