← Making It with Jon Davids
Making It with Jon Davids
206 - "We sold for $800M. Here's what happened next." | Mike Lazerow, tech entrepreneur & investor
00:14:41
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A
This episode is brought to you by my AI Growth Cheat Sheet, available now at johndavids.com AI if you're a business owner and you're wondering how to use AI to actually grow your business, this is the answer. It's a fully custom AI growth cheat sheet that'll give you the tools you need to grow your business today. Available right now@johndavids.com AI just answer a few questions, wait a few seconds, and you'll have your list of tools and. And it's free. Get it right now@johndavids.com AI how much did you sell your last company for?
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800 million.
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A
And what did you guys do?
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B
We provided software to let brands manage their social media presences.
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A
And who did you sell to?
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B
We sold to Salesforce.
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A
When did you start that company?
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B
2007.
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A
That's Mike Lazzaro. He built and sold a whole bunch of companies, and he's made a silly amount of money doing it. He's also an investor in companies like Liquid Death and Scopely, probably one of the most respected guys in tech over the last 20 years. So I thought I'd pepper him with questions and you guys can listen in. If you're a fan of the podcast, let me know by leaving a rating or review wherever you're listening and share this episode with a friend. Get my best stuff to your inbox@johndavids.com now let's get to the show.
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B
You'Re listening to, Making it with John Davids.
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A
How did you figure out social media in 2007?
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We knew it was going to be big. We jumped in, we pivoted four times and eventually found our business model.
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A
When you started, did anyone tell you it was a dumb idea?
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B
Everyone told us it was a dumb idea because at the time, no one had heard of even Facebook. Imagine that.
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A
And what gave you the faith to keep going?
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B
We saw how fast it was growing. We knew the management team, they were the best in Silicon Valley. And we thought advertisers would switch away from TV into these new social networks which were attracting young people and especially young women. And wherever the young people go, everyone else follows.
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A
Who was your first big client?
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B
The first huge client we had was Unilever. And we really built the company for Unilever. Very close partnership. They had specific issues and challenges they were dealing with. And that was our North Star customer for many years.
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A
And how did you get Unilever on board?
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B
We got Unilever on board because they needed to figure out how to program content in a hundred countries. In a hundred different languages for over a hundred brands. And so they did an rfp. There were only three or four companies at the time. We came out ahead by offering them not only software, but very, very high touch service.
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A
Who was the first person you hired that changed everything?
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B
Hired Jeff Ragavan, best salesperson ever. So good that we made him a co founder year into the business.
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A
And what made him so special?
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B
He was special for a simple reason. He knew how to build relationships. Relationships are gold. Sales is what keeps people eating and companies alive. And he was the lifeblood of the business from a very early time in the business.
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A
How long into Buddy Media was it clear that this was going to be a huge success?
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B
A year into Buddy Media we pivoted into software. The reaction we got was tremendous. 0 to 50 million in ARR annual recurring revenue in three years. Record time for any company at the time.
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A
How many companies have you started in total?
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B
I've started eight companies with my wife Cass.
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A
And did it get easier each time?
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B
It never gets easier. You start out, no one wants to talk to you, Everyone says no and you just have to grind. What gets easier is you make fewer mistakes.
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A
Did you raise money for all of them?
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B
I raised money for all of them. Not all of them venture. My grandfather invested $5,000 in my first company, U Wire. I needed a computer. Didn't have the money for a computer. The other ones, Golf.com and Buddy Media, we raised venture rounds. Anywhere between 2 million up to 100 million.
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A
Do you like building companies with investors looking over your shoulder?
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B
I don't think it's critical to have investors if you want to build before you sell. If you want to build something big, oftentimes you need money. Money is the fuel for the business. Investors are the ones who provide the money. So in an ideal world, you get money from people who aren't investors. I've yet to figure out how to find money from people who aren't investors.
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A
Who's the most impressive business leader you've ever worked with?
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B
The most impressive leader I've ever worked with is Mike Cesario, Founder CEO of Liquid Death. Now why is he impressive? He has incredible superpowers, knows how to market, knows how to communicate. Most importantly, he knows what he doesn't know. Great leaders don't do what they don't know how to do. He doesn't do what he doesn't know how to do.
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A
How did you get involved with Mike?
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B
I met Mike through science at Incubator in la. I saw the brand, I said, that is awesome. And that was really it. But it was pre launch. He had an idea. He had a brand. He had no water. He had no customers. I just thought this needed to exist. Even though the world didn't need water in a can.
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A
What's the best investment you've ever made?
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B
There are two investments that stick out pre ipo. Early Facebook. I had no idea how big that company was going to be. And scopely, a company we seeded provided the first money, ended up building for 10 years, selling for $5 billion of cash to savvy games.
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A
You invested pre IPO in Facebook?
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B
Yeah, way pre IPO.
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A
Do you still hold those shares?
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B
I don't. I wish I did.
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A
Do you know how much money you made off the Facebook stock?
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B
I made millions off the Facebook stock. I would have made much more if I had held it. However, I'm a seller. You can't hold on to things forever. I had no idea it would be the trillion dollar company. If I knew, obviously I wouldn't sell. So it's a little painful, but also sweet because we made money.
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A
What's been your lowest point in business?
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B
My lowest point in business is running out of money. @golf.com we'd sold the business. We were supposed to go public as part of a merger with a company called chipshop.com company went bankrupt. We had to buy it back and then grow it. That was very painful. But it had a happy ending with a $25 million sale to Time Warner, a company that used to exist.
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A
If you're spending more than $50,000 a year on marketing, I've got something for you. It's a playbook I wrote called how to Build a Social Media Selling Machine. You can grab it now for free@johndavis.com playbook. This is the nine step formula we use for our clients at Influicity to turn their social media channels into reliable revenue engines. Grab it right now@johndavitz.com Playbook. What was your first side hustle as a kid?
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B
First side hustle was shoveling driveways. I would charge $20 for the driveway, $10 for the walkway. It's the walkway which you made money. So that would only take about five minutes. The driveway would take about 45 minutes.
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A
I shovel driveways too. That's a great kid side hustle. What book has taught you the most about business?
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It's Viktor Frankl's Man's Search for Meaning. It's about purpose. It's about finding your passion. He did it in a concentration camp during World War II. If he could find his purpose and become passionate to power him forward, anyone can in any situation. So I'm constantly going back to his mindset of find your purpose. People with purpose can do anything.
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A
What mistake has cost you the most money?
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The biggest mistake that I've made is starting a company with a co founder that I was not compatible with. It was a friend who we didn't have the hard conversations about where do we want this company to do? How hard do we want to work? And that ended up losing about $12 million of capital, which is very painful.
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A
Why do you think most companies fail?
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B
Number one reason companies fail isn't just because of money. Obviously, you run out of money, you're failing. But it's because of focus. They didn't focus on the right things, or they didn't focus at all. If you try to do too much, you won't accomplish anything in particular. Most companies have shiny object syndrome. They reach for the shiny object and end up out of business. We've seen it many, many times with companies, including our own portfolio companies.
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A
What's the luckiest thing that's ever happened to you?
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B
Oh, by far the luckiest thing is I met Cas, my wife, my business partner, my best friend, the mother of my children, my lover. She is someone who I couldn't imagine my life without. I'm a visionary salesperson. She's an operator. Together we have everything we need to start companies, to invest in companies. And without Cass, I would probably be homeless or at least maybe in jail. I don't know what I'd be doing, but she's really. It's all about operations. A lot of us have ideas, but it's how do you execute? How do you get it done? And the gift of my life has been marrying someone who's not only someone I love and still attracted to 26 years later, but someone who operates the business.
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A
So you're the vision, she's the ops.
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100%. I do sales, I do product. I mean, I do a lot more than vision. But I set the tone for, like, this is where we're going. Social is going to be big, or, you know, whatever the space is. The Internet's going to be big. She is the one who really minds the farm and makes sure the crops grow and we have the people to harvest them.
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A
Were you born rich?
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I was not born rich, but I was born on third base. My family had enough for education, for vacation, and we didn't need much. So I felt like I was rich because I had everything I needed. But looking back, nothing compared to the money that I've experienced today.
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A
What's the biggest shock to the system? Going from, let's say middle class to ultra wealthy?
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B
The biggest shock to us wasn't how we acted, but it's how other people react to you. It changes dynamics of relationships. For whatever reason, people treat you different when you make a lot of money. They assume you're brilliant. You, you're really just the same schmuck you were before you made the money. You just happen to have resources for healthcare and for experiences and for other stuff. But money just accelerates and amplifies whatever those traits are that you have.
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A
What's the most money you ever made in a day?
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Money Media sale, which is for $800 million, was transferred into our account. We for half an hour we were super excited and then I remember the conversation, what's for dinner? Who's taking the kids to the doctor? So our life went on. When you make a ton of money, you're happy for maybe an hour, two hours, but then you realize that your life is your life and you move on.
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A
What's the most money you ever had in your bank account?
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I have no idea. The most money we've ever had in our bank account. My wife does all the finances. She really manages and operates the company. But I know the day we sold Buddy Media when that money hit, right? You have nine figures hitting an account. That was the most money I had because then you start diversifying, then you start kind of buying bonds, you start buying stocks, you start kind of investing it in different ways. Never before have I had that much money in one bank account, which was kind of weird. Looking at that number, it felt like a glitch in the system. When you receive it, what's the best.
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A
Everyday investment that you've ever made?
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B
Real estate is the best investment that we've ever made because we've had both appreciation over the years we've been doing it. Think about 20 year growth in real estate, commercial, residential, you know, special real estate like self storage and other things and you get income. So we're a big believer in venture and in illiquid privates. But you have to have income. So set yourself up for passive income that is not based on your day to day life. If we hadn't done real estate, our portfolio would look much different and I think not as attractive.
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A
What's your split today between let's say high risk investments versus the everyday investments?
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B
So we're probably unlike a lot of people in the country, but maybe closer to some high net worth people. Where on one side is illiquid private deals and these could be operating companies, could be funds, but they're very illiquid. We don't control them and you can't just cash them in. So high risk, high reward growth, that type of stuff. On the other side of the barbell is income producing assets. So think about real estate and corporate debt and other debt instruments where you have blended cash flow from those. And so we like super exciting. That's what we know. That's where we've made our money. And super boring. The more boring, the better for us on that side. And we don't have much. In the middle, we don't have much. We're not gamblers, we don't take a ton of risk in the stock market and we like kind of cash flow and growth, especially since we're young. When you're young, let time help you out. Don't get in the way. Let time grow your money for you.
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A
If you lost everything today, how would you make it all back?
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I would launch a business and it would be a business that I could use my network to sell. Your net worth is your net worth. I now have a network that if I had no money, I'd tap into that network and refine the network to be able to produce cash. And so I would get into executive search. We own an executive search company now. I would get into consulting, I would get into AI consulting. I'd get into something that requires no capital but work. You know, if you work hard, you work right, you can grow your money and that's the only way to do it. If you don't have money, you're probably not going to raise money unless you're a known quantity.
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A
Thanks for listening. If you enjoyed this episode, make sure to leave a rating or review wherever you listen to podcasts, Apple or Spotify. Lets other folks know that you love the show. And it lets us know that we're doing something right. This episode is brought to you by my AI Growth Cheat Sheet, available now at johndavids.com AI if you're a business owner and you're wondering how to use AI to actually grow your business, this is the answer. It's a fully custom AI growth cheat sheet that'll give you the tools you need to grow your business today. Available right now at johndavids.com AI just answer a few questions, wait a few seconds and you'll have your list of tools and it's free. Get it right now at johndavids.com AI.