CEOInterviews.AI#186 with Marc Lore - Brainstorming with Billionaire Marc Lore on What He Would Build Today and t...

S

Sam0:00

I want to create a company and I want to sell it for 100 million plus to Walmart or Amazon in three years. What opportunities exist in the ecom world or in the commerce world that Amazon or Walmart would buy my company because they desperately need something that I'm selling or some type of solution that I've created.

H

Host0:17

Would you like him to do anything else for you, Sam? The most specific question.

S

Sam0:22

No, that's actually not that specific. Yeah, I feel like I could rule the world. I know I could be what I want to. I put my all in it like days off.

H

Host0:36

All right. Today we have Mark Lori on the podcast. This guy is an OG of e-commerce. He sold diapers.com to Amazon for like I don't know $600 million. He created Jet.com and sold it to Walmart for $3.5 billion. Good guy. He came on and me and Sam were pretty blown away. We kind of little fanboys of his right now. So we enjoyed the episode. He had a bunch of good ideas. He talked about how to go raise a bunch of money to go after a big vision. He had some ideas in healthcare. Sam asked him a great question like if I wanted to start a company today that I could sell for $100 million to Amazon or Walmart, what product would you recommend I start? And he had a fantastic answer. So, he had ideas at the end and at the beginning he talked a little bit about his kind of approach to why he bought the Minnesota Timberwolves and how he's going to run the team, how he builds his team, how he hires people, stuff like that. So, the beginning is more philosophy, the end is ideas.

And he also had a great answer. I asked him, 'When you bought the basketball team, did you just like send a huge wire?' Just hearing those details are really interesting. But we do a whole long debrief at the end of this episode which you might even find more interesting than the actual episode because it's always fun to discuss. I always find the recap to be one of the most exciting. So give it a listen.

Yeah. But he was great. I think you're going to love it. And we liked him so much we want him to come back on. One hour was not enough. And here's what we ask you to do. Listen to the episode if you're liking it. He said he's big on LinkedIn. So go to his LinkedIn. His name is Mark Lori. Last name is L O R E. And just go comment on one of his LinkedIn posts and just say, 'Hey, if you like the episode, just tell him love the episode. Come back on and I think if he gets enough messages, we will be able to bring him back on and go deeper on a bunch of ideas that we didn't get to do today.' All right, here's the episode. Enjoy. Okay, cool. So, we have a guest here, Sam. Do you want to tee him up? Who's on the line?

S

Sam2:32

Yes. So, e-commerce tycoon, successful billionaire, and as of 2017, is exceptionally jacked and bald. Mark, I have to ask you, which of these is your favorite part of Jeff Bezos?

M

Marc Lore2:49

Sam's been polishing that one up for the last hour, I bet.

S

Sam2:53

No. Uh, Mark, we have Mark, you've done a lot of stuff. You've started four different things, right? Four different startups that have successfully exited. The most popular one is probably

M

Marc Lore3:04

A few more that are in stealth that I'm really excited about. Maybe I can share a little bit about, but

S

Sam3:10

Yeah, we want to learn all about it. But the biggest one was Jet.com. That's one probably everyone knows. Before that, you did diapers.com, which you sold to Amazon for 550 million bucksish.

M

Marc Lore3:22

That one might have been bigger because that was sold to Amazon very early and Amazon appreciated a lot since then. So maybe that one. I don't know. You tell us which one ends up bigger? Is it the early one or Jet?

S

Sam3:33

I think. No, Jet. Definitely. I mean, Walmart stock doubled over the last four and a half years. So, that was a good one.

I got to thank you for that. When they bought you, I bought the stock because I was like, 'Yeah, there's plenty of room to run here for Walmart e-commerce.' And yeah, I feel like I was a part of the company. I won a little bit as well just off the news. And you also sold a company called the pit which you sold to TOPS for 5.7, right?

M

Marc Lore3:59

Back in the day.

H

Host4:00

Back in the day.

And you prior to that you worked in banking but then before that you were a runner. I was a runner. I ran the 200 meter and 400 meter. What was your time? I ran high 21s in the 200 and 48s for the 400.

M

Marc Lore4:16

Yeah. Same with me. Almost exactly the same. High 21s, high 48s. Exactly. The same.

H

Host4:23

I got slower as the distance went longer and 400 was sort of long. I was better at the 60 yard and 100 and 200. But yeah.

What was your 100 meter PR?

M

Marc Lore4:36

10.74.

H

Host4:38

Wow. And was that FAT? Did they do?

M

Marc Lore4:41

10.74? Yeah.

H

Host4:43

Wow. Well, that's pretty. You're moving.

M

Marc Lore4:44

I slowed down. I didn't have the endurance to keep it up in the two and the four, but

H

Host4:49

So you've done a lot of stuff. You've done a ton of stuff in the past, but even the stuff you're doing now is also interesting. You just made a bid for the Timberwolves, right?

M

Marc Lore4:59

Yeah, we actually it went through. So we signed the agreement. So yeah, we're just going through the NBA approval process now and then hope to close probably in like six weeks.

H

Host5:10

And was that a dream? Like, I've had this dream as a kid to own an NBA team. That's the point of doing business. As a really small kid, it was like play professional sports.

M

Marc Lore5:21

Of course, that's where you start.

H

Host5:22

Every kid, you eventually realize, okay, it's not going to be that sport. And then I was like, oh, maybe it would be decathlete and go to the Olympics and I was like, okay, that's not going to happen. I'm like, all right, forget it. You know what? I'm just going to one day own a team. That's what I'll do.

M

Marc Lore5:41

That's amazing.

That was the dream. I was a huge sports fan growing up, followed every sport, watched every game, was a huge Knicks fan. And then I had two kids and life happens and you sort of get a little bit detached from sports. But I love it. I'm excited to dive back in. You have a reason to.

H

Host5:59

It seems like back in, I don't know, 10, 15 years ago, the sports team thing was like, you've made it. This is your toy. It's like buying a car. It's like I buy my toy. I always wanted this toy. This is kind of a lifelong dream. I mean, I think it's obviously still kind of a passion thing, but also the business merits of buying a team as an investment has actually become a pretty big deal because these franchises have appreciated like crazy because there's only 30 of them and there's more billionaires than there are teams. So give me a pie chart. Is this what percentage of this was just I just want to have it? It's like art versus this is actually a good business decision. How do you think about that?

M

Marc Lore6:40

Yeah, it's probably 80% the former, 20% good investment. It's not so much about being a great investment, just not going to lose money. I'm gonna have a lot of fun. Anytime you can have a lot of fun and not lose money, like I love going to the horse track. You have a lot of fun, but you lose a lot of money. I kind of like this, where it's have a lot of fun and maybe make a little bit of money, too. It's like perfect.

But I'm excited about just innovating. I think there's a lack of real innovation in sports in general, like applying a technology mindset. How do you bring augmented reality to the entertainment experience? How do you move to dynamic announcing so you can choose your announcer? Dynamic real-time ticketing. I want people to be able to move to any open seat in the stadium at any time. I've got all these tech ideas on how to augment the experience. And it's just fun to have a platform to be able to buy these things and try and even you know what's the moneyball version of in basketball too. As a mid-market team, how do you win? What's the strategy? Thinking that through, how do you apply the same techniques of vision capital people? What's the mission? What are the values? What do you stand for? How do you show up every day? How do you live those values? Treat it like a real startup. And to date, I've talked to a lot of people. It doesn't really seem like anybody's gone down that path yet.

H

Host8:14

And are you just going to run this like a company? Because you're incredibly successful at running companies, but you don't, I mean, you know a bit about sports, I imagine, but this is totally outside of everything that you've done.

M

Marc Lore8:25

The thing is I love the challenge because every business that I get into I don't know anything about it when I start. I didn't know anything about retail when I did diapers.com. I didn't know anything about the pit when I started that. I've started a bunch of startups recently. I don't know anything about that. I'm starting and building the city, I'm doing a reality TV show, I'm doing these things. And it comes down to vision, capital, people. You have to have the vision and you just think about it, share it with people like a piece of clay to keep molding the vision. Everyone agrees this is freaking huge. Okay, great. How are we going to capitalize it? That's what I do. Raise money. I have lots of connections with investors. I've raised over a billion dollars. So, okay, we're going to capitalize it.

And then the third part is the most important and the hardest to get right is people. The P part. And it's finding a great CEO and a great executive leadership team. Setting the values, setting the mission, the corporate culture, getting the org structure right, getting the right people in the right spots and creating a culture where you get the very best out of each person that you bring in. Then you kind of just sit back. Then you're there as a strategic adviser. I think if you try and micromanage and make decisions when you don't have the experience, that's where you get in trouble. So if I were to come into the team and say, I think you should draft so and so, why are we doing this, that's not going to work. I think who is the very best person in the world to run this part of the business, to run that part of the business, to be the chief people officer, to bring in the very best talent and create a great culture. Who are the best people in the world? Get them in the right spots, in the right positions. If the vision is right and everybody's clear exactly where you're going, what the north star is, and you got great people and they're happy and they're empowered, great things will happen. And that allows me to do multiple things at the same time now because I'm not getting into the weeds of it.

H

Host10:25

A lot of your companies, how much did you raise at diapers.com?

M

Marc Lore10:30

Diapers raised 55 million.

H

Host10:33

Okay. So that's a lot but not close to Jet. Jet was what, like a billion? I mean you guys

M

Marc Lore10:38

Raised yeah, like 800 million.

H

Host10:42

So substantially larger, although both are quite large. This idea of being able to hire the best in the world and hire people to do a lot of the work that they specialize in. Could you have done that if you were bootstrapping your companies?

M

Marc Lore10:57

No. That's why we started Alex and I, A-Rod just started a venture fund called VCP, vision, capital, people. We believe that there's a really big hole in the market for people with big visionary ideas to get a big infusion of capital early, like when they have nothing, so they can go out and hire the very best team in the world. I think a lot of startups it's a little bit of chicken and egg. How do you get the capital unless you have the team? You can't hire the team until you have the capital. But you don't get enough capital until you prove it. And so you get a million bucks, then you get five million bucks, then you get 10 million bucks. And each step of the way, you're sort of on a tight wire. You're basically like one little thing goes wrong, suddenly investors lose confidence, you overpromise and under deliver. Lots of things go wrong.

We basically say, 'No, vision capital people, you have a big vision. We know this could be a really big idea. We know somebody's going to do this at the right time to do it. Let's not under capitalize it. Here's 10 million seed. Go out and hire the best team in the world. That puts you in a position to have the best shot of a really successful business. And if you got the best people, you got the capital, and you have the vision right, you're a player now. You're kind of like worst case, you're going to exit this. Somebody's going to pick it up because you've got great people, and it's the right time, and it's a big vision.'

H

Host12:17

What do you think when there's the case where Jet clearly worked and then you see like Quibby or something like that raised a bunch of money, big vision, rethink Netflix for mobile, and didn't quite hit it. They're burning a lot of money. Even though they raised a lot, their burn still left them with the same sort of time, two years of runway. So how do you think about that? Do you think it's just a numbers game, it doesn't always work out, or do you think there's something different in the strategy that maybe they could have done or you've done differently that leads to better results?

M

Marc Lore12:59

Yeah. I don't know that intimately. Do you know the story? I do think that's probably more the exception than the rule. Startups don't all work. Some of them don't work. Do I think it had a higher probability of working because it was a big vision, a lot of capital and great people? Yeah, I think it does. Specifically why it didn't work, the only thing from the outside looking in was whether the most talented people in the organization were fully committed and all in to it. That's the only thing I wonder. I don't know.

H

Host13:30

Obviously you had really talented people, but were they dedicating their life to it? You need somebody in these businesses that's sort of like I'm running this business and dedicating my life to it. It doesn't have to be the person doing the VCP at the top, but who is that person and do you have the right team to support? So, I don't know the answer to that. That's where I'd probably wonder.

And so, me and Sam talk about this a lot because we think about what's next for us. We got some money in the bank. We got time. We got all these dreams about what we might want to do. And one of the paths is similar to you where you as an entrepreneur, you can see these opportunities and you can be the spark that helps start them, but you're not necessarily going to be the day-to-day operator in the weeds maybe like you were with your first startup, right?

M

Marc Lore14:16

On the people part, take us into a job interview with you. I've honed over the years. I spend an incredible amount of time upfront on resume read. I'm looking for a demonstrable level of success. I start at the beginning when they graduate school. I'm looking for step changes. Any kind of deviation to that I won't even interview. So a lateral move out, I just don't. There's a chance I get honeypotted. I've been honeypotted many times in the past.

And I unless that resume screams superstar, which again it's only five out of a hundred resumes if you say top 5% or one out of ten and be really like say no no no. It's hard because you're tempted like oh they have good experience. No. So when I interview someone I know that they're a superstar on the resume and so I can focus primarily on core values and their spotic traits. So spotic is an acronym I come up with for traits I look for in people I hire. Smart, passionate, optimistic, tenacious, adaptable, kind, and empathetic. And the last two are really important. Kind and kindness and empathy I found over the years. And you can get somebody that's super tenacious, they'll run through a brick wall, but also run through people. You find somebody that has the passion, they're optimistic and tenacious and adaptable because you need that in startup, but at the same time they're very kind and empathetic and you get that person that's able to balance that. That's magic. And so those are the things and the interview questions have nothing to do, I won't ask one traditional interview question. They'll all be questions to open them up to try to get at what makes them tick and do they exhibit these traits.

And you know, I have this theory. If you work in tech, you meet so many smart people that smart becomes kind of like table stakes. Great. Everybody's super intelligent. Well, now what? And clearly smart isn't the only thing that leads to success. You need a whole bunch of other things. And I sort of found what's in rare supply. So which of those traits is in most rare supply? I'll give you my opinion. I found that two really simple ones tend to be the lowest in supply and have a pretty outsized impact in startups. Those two are energy or enthusiasm. I think bringing energy to the table every day is quite contagious and you need it at the beginning when you're starting something from scratch. It seems like one of these duh anyone can do it, but most people don't. And the other one is courage. The courage to either build something new, say something that's on your mind, to not let something that's below our standards go. Courage I feel is in extremely short supply. You take risk too.

H

Host20:16

Right. I call it boldness. We call it bold at our company. But yeah.

Do you feel like when you meet people, is there something you're just like, 'Ah, I wish more people had X.' What is X for you that you feel is in short supply?

M

Marc Lore20:28

Yeah. I mean what you said there. So when I say passionate and optimism, I think optimism is the sort of optimism that allows you to be bold and take risk. It's that optimism that you believe not only great things can happen, but also believe that people are good. Your starting place is that it's just an optimistic view of the world. I think that's really important and it allows you to trust, which is one of the core values. In all my companies, I think trust is really important. If you want to create a culture where the company trusts the employees and the employees trust the company, that's really important to create an environment where people are happy and feel empowered and they feel a sense of ownership. I have this idea that a lot of people say trust but verify, and I don't believe in the 'but verify'. I think you start out trusting people until they prove otherwise. It's very risky because you can get burned, but I've seen the power of the upside of trusting somebody before they've necessarily proven that they deserve it. It's incredibly powerful motivator. I've seen it in my personal life and in business. People want to run through a wall for you when you trust them. That is an incredible value that I've learned.

It's trust, transparency, being really open with your employees, not hiding, not secretive. Here's the cap table. Here's the rounds of financing. Here's the numbers. Here's all the information you need. I'm an open book. What do you want to know? There's no secrets here. You work at this company. You're an owner. You have stock options. Trust transparency. The other one is fairness. It's really important that people feel in order to create an inclusive, diverse workforce, you have to create a safe work environment where people feel safe coming to work. They have to feel like it's fair. There should never be this feeling of 'that's not fair'. That's why I have an open comp system where everybody knows what everybody else is making and everybody at the same level makes the same amount of money. So women, minorities, everybody makes the same. There's no idea that maybe it's not fair, my colleague is making more money than me. That sort of thing is usually a big reason why people lose trust and they don't feel like giving you everything they've got. So I kind of take that off the table. So those are the three primary values: the values of the organization, how they live them, and then the traits that you look for in people you hire. When you kind of get that right, I think it's magical.

H

Host23:20

Where did this confidence come from? Because having the confidence to hire the top 5% is a pretty big deal.

His high school track days, Sam.

Second place, your confidence comes from.

M

Marc Lore23:31

No, no, it's actually just trial and error. Failing a lot early on. It's just somebody I want to have a beer with. It's making those mistakes. It's getting honeypotted. It's hiring a person and having to go through the pain of letting them go and replace them. It's so many lessons. I make so many less mistakes now than I did earlier in my career because I see everyone makes the same mistakes. That's why I like to talk about it. People say, 'Yeah, I guess you're right.' The resume kind of did, but I was like, 'Well, the person said they were good. I liked them and so I hired them.' You have to be really focused and selective. The other thing, it does help with unconscious bias too. When you go through the resume and you bring them in, it's not about whether I like the person. They've already proven they're rock solid and you can focus on spotic and help there. So I want to ask you about ideas. But before we get to that, I wanted to ask one quick question. So you left banking in 96 right?

Uh no, it was 99.

H

Host24:51

Okay. What? And then I'm looking at some information here on your timeline. You started this thing called the pit. The pit was in internet marketing.

M

Marc Lore25:02

Yeah, it's basically a sports stock market. We used to avoid gambling, we used the baseball card as a proxy for the athlete, but it essentially was meant to be a sort of sports stock market where you buy and sell players like stock.

H

Host25:15

And you sold that for like $6 million.

M

Marc Lore25:18

Yeah, that was right after the NASDAQ crashed in 2000. I don't know if you guys remember, it went down like 80% or something. There was no way to raise any venture money. We only started it maybe 10 months earlier and we raised 5 million and sold it for 5.7. Everybody was like, 'Yeah, do it, this is a great exit.' And we were like, 'Okay, then we'll do it again. That's great. We'll sell this, get the next idea.'

H

Host25:45

That's what I was going to ask you, how you could sell for six million bucks after such a short amount of time. But I guess the answer is because you raised a fair bit.

At least for $6 million.

M

Marc Lore25:56

Yeah, it was just I think the TOPS at the time was interested in the people that we had hired. We hired a great team. We had a vision for what we wanted. And they were there to provide some capital. So yeah.

H

Host26:09

So let's talk about some ideas that you would need optimism about now. I think we could talk about Jet for example, take some courage and optimism to go after that prize and basically compete with the empire of Amazon. But we'll come back to that. I want to start with where do you need to be optimistic today? What are you optimistic about? I know you talked about startup cities. I don't know if that's the one you want to talk about or if you have some others, but shoot us some ideas of what you think is exciting that you're optimistic about that maybe the whole world isn't, it's not proven yet.

M

Marc Lore26:42

I gravitate more towards B2C businesses, business to consumer. I just like consumer businesses and I think it's easier to understand some of those businesses than a biomed company. Most of the ideas and thinking I do is in the B2C world across lots of different industries. I've made a number of investments and I'm involved with a few companies that I'm really excited about. One is Archer, which is basically passenger drones. Think of it as an autonomous electric helicopter that flies passengers around. It's safer than a helicopter.

H

Host27:27

This is a SPAC that you did?

M

Marc Lore27:29

Yeah. Did a SPAC a couple months ago and going through the SEC process now.

H

Host27:35

That's crazy.

M

Marc Lore27:36

Super excited. That was a great VCP. So the two founders came over and sat on a couch right here and they said, 'We got this vision for these flying cars, these drones that carry passengers. It's the right time. This is why it's the right time. This is how big the industry is going to be. This is why it's going to work. This is why the technology is right.' I was really taken by the vision. I thought they had it nailed. And they said, 'We need five million now. We're going to hire the best engineers in the world. We're going to take them from the best companies. We're going to go raise 50 million and build the state-of-the-art aircraft.' I thought the two founders were exceptional. So I gave them the five million and I helped them hire the team and raise the 50. And that was two years ago.

And then they just raised a billion through the SPAC and now it's a 4 billion, 3.7 billion market cap or something. It was really an idea on this couch two years ago. But it shows you what I was saying before about rather than going through this process of seed can't hire the great team, the chicken and egg thing, it's like here's five and then let's get the team and simultaneously go and raise 50. So very short order. They had $55 million and they had the best team and I do think they've built the very best aircraft in the industry right now and they're on their way. It's a massive TAM. And so I'm looking at opportunities like that. And I can tell you some other ones too.

H

Host29:18

Yeah. Go.

M

Marc Lore29:19

Yeah.

Well, another one that was in the news is basically mobile kitchens. Looking at the trends in food delivery, millennials and Gen Z not wanting to cook, want food delivered. It takes a long time to get it delivered. It's inconsistent. The quality suffers in transit and it's expensive. I thought, if you can solve those three things, how do you do it? What if you cooked in a mobile kitchen, the restaurant came to you and cooked in your driveway, hot, much faster because the truck's already on the road. So I made a pretty big bet on that company. It's still in stealth mode but I'm really excited about it.

H

Host30:07

How's that different than a food truck? So it's a mobile kitchen, but it's for multiple types of food?

M

Marc Lore30:15

Each mobile kitchen is a different restaurant, different cuisine.

H

Host30:16

Okay.

M

Marc Lore30:17

The idea is to get the best restaurant of that cuisine in the country and bring it to a central place. High quality food that's piping hot delivered to your door fast. That's exciting. Big TAM, big market. That's where the puck's going. I think there's lots happening now with laws changing in sports gambling. I think there's really big opportunities there to maybe bring back some of what I did before.

H

Host30:50

And what was that exactly?

M

Marc Lore30:53

What?

H

Host30:54

You said he's talking about the pit.

Yeah, you said bringing it back before.

M

Marc Lore30:58

No, just in a new way. With the gambling laws changing, I think there's an opportunity to create a true sports stock market and do it right where it really feels like you're buying and selling players like stock by leveraging some of the changes in gambling laws.

H

Host31:13

Have you seen something? I mean, Sean was really into this BitCloud. Did you see that?

M

Marc Lore31:18

No, I didn't.

H

Host31:19

You don't know what BitCloud is? Oh my gosh. Sean, you want to explain? I mean, it's pretty much what you're describing. So what they did was they basically took Twitter and turned it into a social network where you don't just follow the person, you can invest in them. The cool thing was they took the top 10,000 Twitter accounts and raised $150 million from VCs to pre-buy and invest in all those accounts. So on day one when I walked in, I said, 'Hey, if you sign up for BitCloud, if you claim your account and verify it, you tweet out that this is my BitClout.' I walked into like 75K worth of my own coin. Others were already buying it because they thought if Sean joins, he might continue to grow his following. So the idea is we've all had this experience where you discover a band early or an athlete early or a content creator, and if you see them before they're huge, you can buy their coin. It's like every person gets their own little bitcoin. As more people buy it, yours appreciates. So as a curator, as a fan, you get to go along for the ride with the star. Pretty cool. But ultimately, I think that's the key. A lot of these things fall down in the end because they don't have a ton of intrinsic value.

M

Marc Lore33:53

I think there's something interesting. Yeah, it certainly sounds interesting. I tend to shy away from things where I don't see the 20 year, 30 year intrinsic value, how it ultimately could be a great exit. I think with gambling laws changing, there's a way to give players intrinsic value. So you basically say at the end of somebody's career, I'm going to pay you based on their career stats. So a rookie comes up, it has real value because the exchange is giving it intrinsic value by giving you a predetermined amount of money based on certain stats over the career.

H

Host34:34

That's interesting. So you could say the house basically sets the line. Let's say Zion comes into the league and we say, 'Okay, the house believes that Zion is going to be a Hall of Fame player and maybe that means X, Y, and Z stats, this many MVPs, this many points, whatever it is.'

Do you think it's better than that? You buy?

M

Marc Lore34:55

You buy. If you think that's not going to happen, you don't buy. Are you short? Basically the careers, you get to predict the player's journey. Then it's like a super fan, as they perform you feel vindicated and you economically benefit from having identified somebody who's going to perform higher than what the market thinks. That's cool.

Yeah. Exactly. Exactly.

H

Host35:18

What um I think I read somewhere that you like to look at Google trends a lot. Because you're a serial entrepreneur, you invest in a lot of stuff. You're always looking for trends. What signals do you use to figure out where to go? And also what signal told you that Jet was interesting, because a lot of people probably said don't even think about doing this, Amazon or Walmart already owns this space. What are you crazy? This is an impossible feat.

M

Marc Lore35:54

Yeah. No, it's two different things. I think with Jet, I had been intimately involved in retail with Diapers.com and WAG and selling into Amazon and working inside Amazon. I just felt like huge market, huge tailwind. Ecom is going to continue to grow at double digit for the next 5 to 10 years. I believe it wasn't a winner take all, that there was room for another player. I thought we can raise a significant amount of capital and hire a great team. So we had this really big vision with this tailwind, raise a ton of capital, and have a great team. I thought if you do those three things right, good things will happen. I don't know what's going to happen. Either it works, you exit, a strategic wants it. If you're in the right market at the right time, you have a great team, and you've invested the capital wisely, you've got an asset that in worst case is going to be worth more than the capital you raised. That's my mentality.

It's like there's the worst place to be is in that no man's land where you spent not a ton of money. You don't have the best people, but you spend enough money that it's expensive for somebody to buy it as a strategic. People tend to buy the barbell strategy. They'll buy the aqua hire. You raise a million bucks and you bootstrapped it and you have three good people and somebody will say, 'Oh, this is great. Here's 10 million.' That's a good exit. And then there's you can be big enough to matter to a really big company that has the capital to put down hundreds of millions or billions in an acquisition. There's a lot of people in the middle and that's what VCP is. That's why it's like no 10 million, 50 million. Let's hire the very best.

best team. If it's the right market, there's going to be a buyer for it,

H

Host37:41

right?

M

Marc Lore37:42

And that's kind of the strategy. What's interesting is so when I sold my company, we never revealed the price, but let's just say hypothetically it was like 30 or $40 million. I noticed that

H

Host37:55

a deal I just for sake of argument, a deal in that size, it seemed like it was as hard of work as if I sold it for $400 billion.

No, it's harder. That's I think it's harder. Actually,

M

Marc Lore38:08

it was harder because I was doing a lot of the work. I actually didn't hire a banker, so I was doing most all the work and it was hell.

H

Host38:15

But it's not just the work on your side. I think what he's pointing out is that the price tag is significant where the company can't just cut the check real quick, right? Like you could with a small aqua hire. But you don't have enough of an asset that they can say this is a big strategic bet that they're making. You're in the middle. And I think that's forget the entrepreneur side. It's always hard as an entrepreneur.

A really tough place. Yeah.

M

Marc Lore38:35

Yeah. Well, I'm saying that that's just one of the reasons why it was hard. It's really hard. You must be a really good entrepreneur because it's really hard I think to exit in that middle ground. Like it's hard to exit. Most companies in that middle ground, they don't exit successfully. You know, it's easy to do the aqua hire and I think it's easy to do the big acquisition of a big company. It's tough. That's sort of like 10 to 100 million. And the entrepreneurs I know that have exited in that space, they're strong and they're really strong.

H

Host39:11

Well, so that's kind of an interesting thing because I think that me well younger like even just a few months younger than me as well as most people would think that if I could sell something for 20 to 30 that's like bite-sizeish, that's like some company would buy us without having to get board approval, it'd be a no-brainer for them to do it. And what you're kind of saying and what I experience a little bit is it's actually probably easier to be a little bit more audacious.

M

Marc Lore39:38

Yeah. And raise money and go after it. Or I would actually say the other way around, it's easier to do that. Or if your goal is to build wealth and have a good life, it's probably best maybe not to raise any money and never sell and just try to build a company over a long period of time. But

H

Host39:55

um

let's say you were you but you don't have your brand name, right? So let's bring you back. We give you youth, but we take away your reputation. So we're going to take you back. You're 21, but you don't have the reputation. But you do have the same sort of mindset that you have today. You have the same knowledge, let's say. What spaces would you be going into? And would you also be trying to do the same type of bet? Do you think you could raise the large amount of money just through charisma and hustle and vision without having the reputation? Take us through a scenario. What do you think you would be interested in working on or building if you were 21 again today without the reputation?

M

Marc Lore40:29

Yeah. No, it's a great point. And I think, you know, early on, and a lot of people share this, you feel like it needs to be something really original or something nobody's thinking about and nobody's doing or something niche. And that's kind of what it is. It's niche and the venture capitalists are like, it's not that interesting. And I've learned that it doesn't need to be something niche or super inventive. It could be just find a really big TAM like say something like okay healthcare. What's a really big idea like where's the puck going in healthcare? I would study where the venture capitalists are investing, what types of companies, do the research, follow the money because that'll give you some idea of where the trends are right now. With artificial intelligence and telemedicine, there's a lot of money pouring into that. So I would look at the landscape, study the different companies, who's getting funded, who's doing well, and think about is there another angle? Is there something not inventive or super original, just a little hook of something different that's not being done and put together a big vision that requires ultimately hundreds of millions of capital and work backwards from that. Say we think this is going to be a multibillion-dollar opportunity. We're going to start with 10 million, hire this great team. Here's the vision. Here's how we're going to get there. Work on that plan and pitch deck. I'd spend hundreds of hours on that deck and on the vision and mapping it out. Somebody will bite because it's the right time. It's the right space. If you're really good and they feel like you've got something and you got this big plan, there's a good chance you'll get that $10 million C check to go hire a great team. And you talked about where's the puck going. Give us more. So you talked about food delivery and how the next evolution of that might be. Restaurants on wheels solves a bunch of problems. You talked about transportation, huge TAM flying cars. That might be where the puck is going. We see Google funded Kittyhawk. Uber was working on it. A bunch of people working on this. Maybe there's something there.

H

Host42:48

yeah, I'll give you a couple more. Yeah, give us some more.

M

Marc Lore42:52

So one, I think conversational commerce. So in retail, I think the next big step change is the idea that you would use text and voice to order anything you want in a very conversational way. Imagine talking to someone that is as knowledgeable as the most knowledgeable person in that area on the showroom of a specialty retailer. You want to buy a TV. It's like you're there at Best Buy talking to the TV expert, and you're just conversing and somebody at the same time who knows you as well as your best friend. Hyper-personalized, this idea of getting one best answer. The search engine 20 years from now is going to be laughably like the cassette tape. It's like, wait, so dad, you used to type in toaster and you had 10,000 responses and you had to read reviews and look at all this. That's not the way it's going to be done. You're just going to say, I need a toaster. How much? I don't know, 200 bucks. You get a great toaster. Okay, great. Make a recommendation. Boom. Buy it. It ships. It's going to be very conversational. We talk a lot about personalization in retail, but nobody's even close to doing it in a way that it's going to be done in the future. Voice requires one best answer, otherwise voice doesn't work. You can't give 100 things. It's got to be like you were asking your best friend, hey, what should I get?

H

Host44:28

very much on point

who's doing this now? That's exciting. I like that one a lot. What companies are doing this now?

M

Marc Lore44:35

I mean, there's a lot of companies that are early stages of it, but there's nobody with the world-class team who's raised significant capital.

H

Host44:47

But is there a product I can go look at and be like, oh, I get it, I understand what he's getting at? I understand why Mark is obsessed with this.

M

Marc Lore44:56

Yeah. I mean, we had something called Jet Black when I was at Walmart. It was basically this for New York City, primarily parents, and it was gangbusters. People stopped using Amazon Prime. They dropped it. All the shopping, the entire wallet share was given to Jet Black. It was multiples of what they were spending on Amazon. It was deep into the tail. It was everything. People loved it. It was a great test. It was very expensive because in order to get the conversations to automate, you need to see a lot of conversations. So in the beginning, you have humans in the loop to bridge the time.

H

Host45:38

there's the AI

learn past tense? Did it go away or does it still exist?

M

Marc Lore45:42

No, it went away but

H

Host45:44

got it. It was expensive and it just wasn't the right time for Walmart, right?

M

Marc Lore45:49

But I think in a startup world, it's totally different because Walmart maybe doesn't want to invest hundreds of millions or billions, but a startup is different. It doesn't hit your income statement, everyone gets the gate, you put capital to work, and you build something great. So there's that. I think in healthcare too, things are coming together. The idea of people taking control of their health with home diagnostics. There should be a dashboard. I put in my name, Mark Lore, here's my dashboard. I've got a number of gadgets in the home that I do on a weekly and monthly basis. You brush your teeth twice a day to take care of your teeth. What are you doing every day to take care of the rest of your health? You don't do anything. There's all kinds of devices to monitor blood sugar, do a blood test once a month, get all your things, look at trends. Through machine learning and data, you see if you should see a doctor, the probability of dying at this age, your heart attack risk. Your cholesterol is too high. If you get it down, your probability of heart attack comes down. Make it more transparent. Right now, it's a black box. Go to the doctor once a year, do tests. It's a black box. Here's some medicine for your cholesterol. You don't know what or why. No doctor will give you probabilities. No diagnostics. You have to go to the professional. No home stuff. That's going to change. People are going to take control of their health in a completely different way, doing things other than brushing their teeth to take care of themselves daily.

H

Host47:50

I just had a daughter and I feel like when she's my age, she's going to be like, Dad, how are you even alive back then? You didn't know what was going on inside your body. Now we have this thing we wear that tells me everything. I know when I take a bite, my blood sugar goes up. I know how stressed I am. It's going to seem like cavemen how we operate today.

M

Marc Lore48:13

I agree. There's got to be certain things you get tested at certain times. My daughter had celiac disease. We didn't figure it out until she was nine. It's not that rare. Some doctors should have said, here are the things you do, here are the probabilities, these are the tests you need.

H

Host48:30

I was asking my mom. My mom has celiac as well. She found out when she was 50. She said as a kid everyone thought she just had an upset stomach. She's a kid in India. Never knew. She never gained any weight. It took till 50 to find out.

M

Marc Lore48:52

Exactly. Everyone should have a genetic profile that changes your probabilities based on genetics. Everyone should have that. There should be tests at certain times that influence your odds and ways to structure everything. Right now, it's not organized. I don't know if you guys feel that. I feel like it's not organized at all.

H

Host49:10

Yeah. Well, you got like a Whoop and an Oura ring and a smart scale. I've got continuous glucose monitoring. I've got a smart bed. I've got like 18 different smart things, but they are quite siloed and they don't actually tell me the answer. They don't say what this all means.

M

Marc Lore49:35

Yeah, maybe they'll say you're extra stressed this morning, sleep more or don't work out as hard, or your body fat is too high. But it's limited to pretty high level stuff.

H

Host49:47

Yeah, it should be way more structured. You should be much more in touch with it. Sleep apnea is another thing. So many people struggle with it. The doctor doesn't say, you should do a sleep apnea study or something.

M

Marc Lore50:07

totally

H

Host50:08

There are things you could have devices that are listening near your bed that can know.

M

Marc Lore50:12

Well, I always thought it was weird like this. A lot of cancers are curable if you can catch them early enough. It's outlandish and archaic that you can have cancer and not know for many months or a year.

H

Host50:29

Years. Many years.

M

Marc Lore50:31

Yeah. You could have known this instantly. That's crazy to me.

H

Host50:36

Well, MRI, by the way, there are whole body scans. You do a detailed look for cancer and stitch it together every year. You can see micro changes. It exists now but is not made available to people because of cost. Nobody even has the option of knowing that's available. You could imagine a system that says, here's the probability of cancer. You can take this test, it's a couple grand. At least you know. Maybe you spend the two grand because it increases the probability of catching it years in advance. No, we just wait until we're sick.

I like asking these questions because I like knowing what meets your standards. Who in this space are you looking at where you're saying that's kind of promising? Is there any one or two companies?

M

Marc Lore51:32

I don't. Maybe I should more, but I really spend a lot of time just thinking about a complete slate. Sometimes if you know too much about a space, it's hard to clean slate and invent because you get too tied into what people are doing. I like thinking through the lens of a consumer. These trends are happening, telemedicine, AI. How do you stitch it all together? Just sitting and thinking every day, what's the big idea? When it's really big and nobody's doing it, you can reverse engineer. You've got to go so big that nobody's playing there. That's where the opportunity lies. It's going to need billions of dollars to pull off. You prove it in a small area. It's expensive, but when you prove it, it extrapolates to a trillion-dollar market cap opportunity.

H

Host52:44

Yes.

I couldn't tell you all the different little components that exist right now. Something you said earlier was you would reverse engineer a little bit. You'd find where the money's going, build a deck, raise money, go build the thing. What's something that I said, Mark, I want to create a company and sell it for $100 million plus to Walmart or Amazon in three years. What opportunities exist in the e-commerce world that Amazon or Walmart would buy my company because they desperately need a solution?

Would you like him to do anything else for you, Sam? The most specific question.

No, that's actually not that specific. A lot, I mean a lot. I don't work at Amazon.

Give to you. $100 million in three years.

M

Marc Lore53:38

Well, you said one personalized shopping, conversational. That's not likely $100 million. That's way bigger or it's not exit. I don't think $100 million necessarily.

H

Host53:53

Sorry. $100 million was just some goal. No, it's good to have a goal.

M

Marc Lore54:00

Three years. I think it needs to be a niche technology that's where the puck's going. It's going to be helpful to differentiate. Three years is fast, so it's going to have to be tech more than market traction. It has to be a technology that's hard to build, involving AI. Fit analytics comes to mind. This idea that you go online to buy a dress and see it fit on you without getting it delivered. Return rates on apparel are 40%. It's expensive for retailers and a pain for people. The idea that you know my body dimensions and use AI to know the inside dimensions of the garment to see how it lays on me without trying it on, cutting return rates. Billions of dollars saved for retailers. Apparel is an area with a lot of focus. I love that.

H

Host55:12

That's a great answer.

That's a great answer. There's a guy in Japan, a billionaire entrepreneur, his third or fourth swing. He created a suit with dots on it. He would send you a bodysuit for $20 and these white dots on black would allow motion capture. The camera could tell differently. He used it to upsell proper fitting clothing. It never went anywhere. I thought that was kind of insane.

M

Marc Lore55:50

Listen, for every idea out there, there's hundreds trying. That's why it's never about the idea. It's about execution, VCP. Were they undercapitalized? Did they have the best team in the world? I know you said that in the beginning. Are there examples of big vision, right time, massive TAM, raise a lot of capital, world-class team, that all-in? There are not that many examples. When I think of those examples, they usually are examples of things that worked. I don't experience that many times where you have a world-class team, ton of capital, big vision at the right time. Those companies get acquired. DeepMind was a good example. DeepMind got acquired by Google for $500 million with no usage yet. It was just vision and team. Once plugged into Google AdWords machine learning, it generated incremental billions. On the other side, Magic Leap raised a billion bucks, huge idea, looks awesome in demo, but they haven't executed well enough.

H

Host57:20

Yeah. Or you could argue also a little early.

M

Marc Lore57:23

Yeah. That same exact company today going forward could be totally different game. It would be great to map out VCP against companies that worked and didn't to see the hit rate.

H

Host57:36

Sorry guys, I'm realizing I have a four o'clock.

Yeah, you got to run. Okay. Where should people find you if they want more? How can people follow you, find you, contact you?

M

Marc Lore57:47

Yeah, LinkedIn is my primary where I'm putting out a lot of business advice. I recently launched Instagram and I'm becoming more active there. LinkedIn is probably the best place right now.

H

Host58:02

All right, Mark. This was great. Thank you for coming on.

M

Marc Lore58:05

All right. Thanks, guys.

H

Host58:06

Thank you. It went way too fast.

Yeah, it was good. It ended quickly. I wanted so much more we could have talked about.

S

Sam58:14

I had so much.

H

Host58:15

I think we should hit him up and be like, dude, after this episode goes out and he gets some love, we should ask him to come back because I need a part two. I had like five other things.

S

Sam58:26

I had so many questions. He seems like a great guy. He's really charismatic. I get why he's successful.

H

Host58:38

He would describe an idea off the cuff and I'd be like, you know what, this makes so much sense. I would back you to the hills. I could see why he's been able to raise so much money.

S

Sam58:50

Yeah, he oozes with charisma and confidence. So, let's talk about Okay, so first, I really love that conversation. I thought it was great. I thought he was a great guest. Especially the second half.

H

Host59:07

His setup was bad. I cannot stand when people like him are on a phone or laptop. When someone so successful, why do they not have awesome Zoom setups?

S

Sam59:17

Yeah, it's crazy to me. I think they're just on the go all the time. I don't even hold my phone. This woman holds my phone for me. I just sort of speak out loud. I don't even type anymore. That's my that's my

H

Host59:30

Wait, Abrau just said he doesn't own a computer. Is that true or you just bullshitting in the chat?

S

Sam59:36

That's what I was told. He doesn't own a computer.

H

Host59:39

See, that's what I was saying, dude. I knew it. He's in that ultra rich. The most rich don't own a computer. Their emails get printed out and they write or say things out loud. I think he's one notch below that or he just does off his phone.

S

Sam59:59

That's weird to me. If you're a baller, go ahead, ball out. But what if you want to type a long essay?

H

Host1:00:10

Like us, can't understand the feeling where you don't need to type nothing ever.

S

Sam1:00:14

Or you just want to search the web and go on Reddit. It seems like easy to have.

H

Host1:00:20

Dude, if you took my computer away, forget the work. I would be so bored. I need to browse the internet.

S

Sam1:00:26

Yeah, that's crazy. So he doesn't own a computer. That's pretty cool. The guy's awesome. He had a few really good ideas. He sent us notes ahead of time and said this thing about million, the difference between a million and a billion. I was like, oh come on, I'm done. We got to save it.

H

Host1:00:43

I wanted to know what he was going to say.

S

Sam1:00:45

I think we overplayed it a little too much at the beginning. It's my fault. I should have gone into one of these. So, a couple of things. Here's my takeaways. I don't usually do takeaways because I don't know, I just don't bother. Usually it's not like I really learned so much that I want to do takeaways. I was just entertained. But in this I actually did have a few takeaways. Insight number one, the barbell of selling your company. It's very easy to sell at the small end and even at the high end. The hardest path is that middle ground where both of us actually sold our companies. That feels true from my experience and I've never heard anybody say it out loud. So I thought that was a good insight.

H

Host1:01:30

And basically what he said I don't think you summarized it. He said it's easier to sell a company for $10 million or under or for hundreds of millions.

S

Sam1:01:42

Right. Exactly. The reason why is the small one you can cut the check just on talent. The big one you're buying a more fleshed-out asset of technology or traction. In the middle, you've raised enough money where your asking price is too high for them to just do it without blinking, but you don't have enough proof to justify a big strategic purchase. That's the hardest one. The entrepreneur who's done that is the most dangerous because they have enough money to go bigger but not enough to be satisfied. They've been through it but they're not done. Those entrepreneurs are the ones you want to bet on. When I invest, that's a great signal.

H

Host1:02:44

Yeah. I had Andrew Chen, very successful a16z partner, said the most dangerous entrepreneur is someone who's somewhat wealthy enough that they're set but have a huge chip on their shoulder.

S

Sam1:03:00

Exactly. Travis before Uber had Red Swoosh, a tens of millions win. Ev Williams before Twitter had Blogger, a good win, went for more. There are examples.

H

Host1:03:15

Mark Cuban did the same thing, right?

S

Sam1:03:17

Okay. Some other things. His model is basically moonshots. He's anti the traditional Silicon Valley playbook of raising in small steps. He finds the biggest market, raises a bunch of money, makes the boldest bet. What he did with Jet. He was saying you don't need a brand new novel invention. The bet is on execution. You want a new hook, 10-20% innovative, 80% the same. Do that, raise a big chunk, recruit the best people, make great product, go for the home run shot. Most people don't use that playbook. That's his lane.

H

Host1:04:33

He also answered a question I asked. You laughed at it, but it was a great question. He had a great answer.

S

Sam1:04:38

The reason I laughed was it was a great question and a great answer. You asked what's a company I could start and in three years sell for $100 million to Amazon or Walmart. It was so specific. It was like, hey Mark, tell me what to do.

H

Host1:04:56

Well, it was my orthogonal way of asking what problems big e-commerce businesses have that need to be solved.

S

Sam1:05:13

He gave a great answer. He gave a previous answer about conversational commerce. For that question, he gave virtual fitting.

H

Host1:05:34

Virtual fitting. He gave a ton of really cool answers. Mark Lore started Jet.com, sold for $3.5 billion, was president of Walmart e-commerce, before that sold a company for $600 million to Amazon. His perspective is about as great as it can be.

S

Sam1:05:59

Yes, exactly. I thought that was really strong. I liked some of his stuff on the job interview side. I don't know how much people will love that content because it's not as fun as ideas. But as someone who actually has to do that, there were good insights. Even though it was a little safe, the things he said were good. I didn't feel like it was cookie-cutter. I think he genuinely believes it. That came through. It's cool because you wonder how he does it all. It's always great people underneath. How do you find those great people? That's the difference. So I thought that was pretty good.

H

Host1:06:59

Yeah, I wanted to ask him more about it. It sounds like he's not totally in the weeds of his businesses, which is the way to go.

S

Sam1:07:10

I don't want to be in the weeds of anything. I don't want to be in the weeds of my marriage. I don't want to be in the weeds of parenting. The weeds are the weeds, bro.

H

Host1:07:18

I only want to be in the weeds of things I want to be in. When you start a company, there's so much stuff you think you have to do. I wanted to hear his perspective. He said look, I have the vision, hire initial people, raise a ton of money, deploy it, let others specialize. But we didn't get to ask him about it. One thing he did show was when you asked how to figure out the vision. He looked at where the trends are, where the puck is going. He sees where investors pour in money. That tells him these spaces are big or technologies are breakthrough. He applies that. He doesn't get bogged down in details. He just thinks about how it should be. With healthcare, he said I should wake up to a dashboard that tells me what's going on. He thinks from the customer's perspective instead of industry research. That's a big Amazonian thing.

S

Sam1:09:09

I wanted to ask him about Amazon and working with Bezos. I wonder what his opinion will be.

H

Host1:09:15

Or buying the Timberwolves. There's more there. There's a crazy story I'll share. Ben found this when researching. When Jet was early, they had a contest for who could acquire the most customers. You become a marketer. Whoever gets the most customers gets 100,000 shares of Jet. Some guy invested $18,000 into paid marketing, won the contest, and his shares became worth $20 million when sold. He turned $18,000 into $20 million as a fan outside the company. Probably made more than anyone else besides Mark. I remember that story. I was trying to do that too.

S

Sam1:10:19

You participated in this? Definitely. Robin Hood did a good job with that. Clubhouse did too. Robin Hood's pre-launch waiting list, refer five people. Jet was first. It went incredibly viral. They had billboards.

H

Host1:10:49

Yeah. Dude, we should have asked him about this. Save it for next time. Amazing story.

S

Sam1:10:55

Yeah, I could spend two more hours with him. Hope he comes back. Let us know in the reviews. Oh, and quick update. We're going to Miami in eight days, June 4th. Sold 300 tickets. We have a few left. Releasing maybe 80-100 more.

H

Host1:11:17

We moved it to 400. We'll see what happens.

S

Sam1:11:22

If you want to come see us, bring your dollar bills for autographs. June 4th. Go to mfmppod.com. Put in your email.

H

Host1:11:39

And there'll be a link. Also follow one of us on Twitter.

S

Sam1:11:49

Do us a favor. If you liked this episode with Mark, when we post it, go on LinkedIn and shower him with love. Tell him it was great, come back. We need to game LinkedIn. I might have to dust off my password. Because when guests come on, they get way more messages from this podcast than any other. I don't know why. And when they get those messages, they're down to come back.

H

Host1:12:35

You only need 10, 20, 30. You don't need a significant amount.

S

Sam1:12:39

20 emails in one day being like I love you is a lot. Mark's name is M-A-R-C space L-O-R-E. Look him up on LinkedIn. Whatever his recent post is, click like and comment, just saw you on the podcast, so good.

H

Host1:12:57

Saw you on My First Million. Amazing. Go hammer his LinkedIn.

#186 with Marc Lore - Brainstorming with Billionaire Marc Lore on What He Would Build Today and t...

About Marc Lore