Tzakhi (00:01.518)
Hi Mark.
Mark Achler (00:04.11)
Hey, hi. It's so good to talk with you.
Tzakhi (00:06.062)
Yes. You know, first of all, I'll just say where we are. We're at the Meet Capital Startup Podcast with Mark Achlew. Mark, I'm just going to tell people that I've been having conversations with you over the last few years and you've been an amazing mentor and an amazing person to follow and learn from in person and also from
your latest book and from the content on the Math Ventures website. But I should first tell our audience who you are. So you're a partner at Math Ventures in Chicago, where you're investing in early stage startups and you teach at Northwestern, right?
Mark Achler (00:58.798)
Yep, at the Kellogg School of Business, yep.
Tzakhi (01:01.358)
Yeah, and you mentor a lot of startups and you're an author and a lecturer around your book and other topics. So, and you have a wealth of experience and also you have a very interesting personal story of how you came into entrepreneurship, but we're not going to get into that. But I'll just say that the people listening should look you up and should learn a bit about your personal story. There's, I think there's a YouTube somewhere where you've been interviewed about it.
And you have a very interesting personal story also about how you evolved as an entrepreneur. So yeah, anything to add?
Mark Achler (01:42.286)
No, I just, I'm excited for the conversation and grateful for our friendship. And, you know, I'm just always glad to help. And, you know, it's true. I've had a, an eclectic and interesting career. My joke is I think I've had a fun career. My wife thinks I can't hold a job, but along the way I have a lot of scar tissue too, and a lot of.
experience to share. So many people have helped me along the way. I'm always glad to help and give back if I can.
Tzakhi (02:15.406)
Okay, good. So we spoke a bit about, there are lots of topics that we could have spoken about. Something that you've been thinking about a lot lately is personal accountability. And of course, we're talking about this in the context of the world of entrepreneurship and the world of startup founders. So can you get us started with a few preliminary thoughts on personal accountability?
Mark Achler (02:45.294)
Yeah, so apologies for saying the obvious. 2023 was a difficult year for our entrepreneurs. It won't be any easier in 2024. Access to capital is going to be challenging. And you know, in my background, we didn't go through all of it, but I was a CEO four times. I started four different companies. And as a VC,
I've invested in over 100 companies over the years and I sit on a lot of boards. And through my own personal experience as being a CEO, as well as all the boards that I've sat on and coach and mentor other CEOs, I've had a front seat to look at life's ups and downs and the challenges of being an entrepreneur. And boy, we know it's hard. It's really.
really hard. But in difficult moments, when difficult decisions are having to be made, I think it's really important to start looking yourself in the mirror and just start from a place of ownership. Ownership of what decisions that you made, what actions you did or did not take.
Nobody forced you to do anything. Nobody forced you to make the decisions you did. And if you find yourself as a startup CEO in a difficult or uncomfortable place, here's a couple of things that I've learned. The first is,
Don't wait. The longer you wait to make a decision, you know, the elephant in the room, the big, difficult decision that you have to make, it's very rare that a white knight will come along, that a miracle will happen, that the giant customer will sign the deal. It happens.
Mark Achler (04:55.63)
But boy, it's pretty irresponsible to put your employees' lives on the line to hope that a miracle happens. So the first is, if you have a difficult decision to make, the sooner the better.
Tzakhi (05:14.254)
Okay.
Mark Achler (05:14.926)
The second is when your partners, you know, I always think of a CEO as a servant leader. So who do you serve? You serve your customers, you serve your employees, you serve your investors, your shareholders, sometimes your strategic partners, and the decisions you have to make.
aren't always in alignment with difficult decisions, aren't always in alignment with all your different various stakeholders. So let me give you an example. In a world where capital is tight and companies are running out of money and hard decisions are gonna have to be made. And let's say companies go out, I see this all the time. Right now in these funding conditions,
Tzakhi (05:54.286)
Okay.
Mark Achler (06:13.454)
Great companies will always get funded in difficult times. But good companies may struggle with getting funding and average companies for sure are not going to get funding. So if you're a good company, let's say, let's say you have that, you can see the light at the end of the tunnel. It's not necessarily a train and you see, like you can see you have a good company, but you're struggling to raise money.
So either you're going to have to make some significant cuts because reality is reality and you have to hunker down and live another day or you're going to have to get your internal investors to support you and what if they're tired and they're out of money or they're zombie funds and that means you only like your sources of capital might be
debt maybe like venture debt, but that comes with some very significant challenges. If you don't, if you start tripping your covenants, like to me, if you have a, like venture debt is a great tool if there's predictability, but if there's not predictability, if it's a last resort, then you're putting everything in question. That's pushing all your chips in.
Tzakhi (07:41.422)
Yeah. Right. You're doubling down on the risk.
Mark Achler (07:44.206)
So what happens if you're doubling down on the risk? So then what happens if you are able to, maybe you get lucky and you're able to get a term sheet from somebody, but it's really onerous. The valuations bad, the terms are bad. Maybe it's a pay to play and you're crushing down your previous investors. How do you deal with that?
How do you, like, I have known CEOs who in that situation and many facing that situation today who just throw up their hands and they go, well, that's the only alternative. I guess that's all we could do.
Mark Achler (08:30.414)
And that may be true. Maybe. But here's what I have found.
Relationships matter, relationships matter over time. And how you treat your investors and the reputation you build will follow you, not only in this company, but hopefully yours and next company and a company after that in your career. And what I say to entrepreneurs is one, make the hard call soon, sooner the better, now.
The second is be open and transparent with your investors. Tell the investors where you're at, what happened, why, here's your alternatives, and do it as a partnership and just say, here's where we're at.
I'm accountable, I'm responsible. Here's the decisions we made for whatever reason. You know, it just has taken us longer than we thought. And it always takes longer than you think. And here's our choices. We're partners. What do you want to do? And one of the things that I have found is that when entrepreneurs go back to opportunistic investors and say,
Hey, I'd love to be partners with you, but push back on the deal terms like this is what will work. This won't work and why. And when they go to bat and they fight for the rights of their earlier shareholders, two things happen. One, I've seen many times where the investors will go, okay, and they renegotiate the term sheet because they know that they're setting precedent.
Mark Achler (10:17.326)
and whatever was good for this round is gonna be good for the subsequent rounds, the following rounds. And they like when the entrepreneur has the personal integrity to stand by and fight for on behalf of their current shareholders. Or they say, sorry, that's it, that's our terms. And I used to think that those types of predatory,
investors were bad people. And I've changed my mind. I don't think that anymore. What I think is they have an investment thesis. Their investment thesis is in down markets, cash is king. We're going to take advantage of down markets, of zombie funds, of good companies that are in a momentary cash crunch.
And we're going to like, that's our business model. That's our investment thesis. We're going to offer predatory, not predatory, really aggressive terms. But the CEO, the entrepreneur, they don't have to accept that. And they can push back. Or if they do, if that's their only choice and they feel that there's no other alternative, they can.
Tzakhi (11:20.619)
Yeah.
Mark Achler (11:36.4)
do it in partnership with their existing investors and say, here's our options, here's our choices, you know, choice A, choice B, choice C, these are the consequences. What do you want to do? We're partners. Here's my recommendation, but we're partners. So I'm a big believer. I'm sorry. I rambled a bit, but I'm a big believer in CEOs being accountable, taking ownership.
They're the ones that made the decisions and put the company where it's at and that they should look, be open and transparent and true partners and be a servant leader.
Tzakhi (12:19.305)
Okay, a few things that I wanna get back to in what you've said and look into a little deeper. So one, I think you described a kind of situation where the company is going into a tough place and there's a tough decision to make, which is gonna be painful for either.
the employees, maybe some employees will lose their jobs, maybe some people have to take a salary cut, or the investors by bringing in new investment that will hurt them and take away from their future exit and returns. And you're saying, okay, there's a decision that has to be made and you know it needs to be made, not to delay it.
But what about the situation where, I mean, what about the genuine doubt that a CEO might have at this moment and he or she really don't know what to do? And I mean, sometimes, you know, when you look inside or you look at yourself in the mirror, you know that something needs to be done, but it's not always the case. And sometimes it's a really hard decision to make.
Genuinely, not because you're afraid but because you really are too passive. You don't know Which which one of them is the right one? What to do in a situation like that?
Mark Achler (13:52.368)
Well, yeah, and that happens every day. That's really a valid question. Look, at the end of the day, this goes back to personal accountability and responsibility. If you're the CEO, you gotta make the tough decisions. If you're struggling to make a tough decision, then hopefully you have surrounded yourself with some good advisors. If you have a board of directors.
working, well actually let's start with co -founders. If you have a co -founder or senior executives in your management team, if you worked, you want to solicit their advice, get their feedback. If you have a board of directors,
You know, a lot of CEOs make the mistake that they think that their board should be reported to as opposed to be partners with making difficult decisions. And like the best board meetings are when there are difficult decisions to be made and we're talking strategically. Like just reporting is looking backwards.
Looking backwards doesn't help you make any decisions. Going forwards is strategic thought and planning. And hopefully you have a good board where there's people that you trust and you respect their opinion and that together collectively you can deal with hard decisions. And not every CEO has a great board or a functional board. So then maybe you have a mentor.
You know, maybe there's people that you have business experience that you trust, who you can share a difficult decision to be made. And you hope, like, I like to be the dumbest guy in the room and surround myself with really smart people and solicit opinions. But at the end of the day, if you're the CEO, you're the CEO. It's your call.
Mark Achler (16:00.88)
And you just have to gather as much information as you can and make the best decision you can with the information you have.
Tzakhi (16:10.025)
It sounds like there are a lot of situations where I'd say there's a fine line between trying to get everyone on board on a decision by bringing them in and letting them be part of the decision process and letting them understand the dilemma and the things that are at stake. And between having to be a politician.
in a sense that there are different alignments within a company. Like you said, there could be contradicting interests between different players within the company, the employees and the investors, for instance, or investors that came in at different stages with different terms, or the founding team and investors. And then there's a fine line between getting everyone on board and between just...
Mark Achler (16:59.024)
for sure.
Tzakhi (17:07.593)
trying to hold it all together by making the right kind of alliances. What would you say about that?
Mark Achler (17:17.04)
You know, I think in terms of guiding principles and values. So when I have a difficult decision to make, before I get down to the exact decision, I actually pull back a little bit and I look at what are our values as a company? What are the guiding principles? What are we trying to accomplish? So I'll give you a classic example, especially in down markets.
The VC business model is we want you to grow as fast as you can and have an exit, you know, a 10X exit in a certain timeframe, a certain time horizon. Well, when markets slow down and capital becomes scarce, what's more important? Is it more important to have growth at any cost, even if you're losing money, or is it more important to conserve your cash?
grow slower, take your time, but live another day. So some VCs are like, no, keep your foot down on the pedal, grow as fast as you can. But the CEO might know in their heart of hearts that look, if I keep on growing as fast as I can, I'm gonna run out of money and I may not have access to capital in the future.
I need, or maybe I don't have product market fit figured out yet and I'm wasting money needlessly. And so going slower while the VC may not particularly like that. I know I need the time to figure out the product market fit to figure out the business model, customer acquisition strategy, and I need to conserve cash.
because I may not, no matter what the VCs say, there may not be capital available next year or the year after. So, like, that's where CEOs have to make the hard call.
Tzakhi (19:25.545)
Is there a way to build a culture with your board and with your investors to prepare you for the day where the tough decisions come?
Mark Achler (19:43.154)
Yeah, from day one. So first of all, think of this as relationships.
When you have board members, investors who are board members, they're your partners. And there's a phillis, I've seen many CEOs who don't think of their investors as partners, who think of them as maybe they're reporting to them or giving them information, but they're not really engaging them deeply in the future of the business.
Um, and then I've seen other CEOs who've been really open and transparent, who view their rel - who really cherish and value and respect the opinion of their investors. And they create a, an openness and a dialogue about dealing with, uh, and sort of a cadence of how -
and building trust and openness of how we work through difficult issues together. And it starts on day one of the investment. It doesn't start when you are confronted with a big issue, a big, huge challenge. Like that muscle, building muscle, building the relationship muscle, because trust,
is the lubrication that makes all relationships work, especially not in the good times, but especially in the bad times. And it takes years to build that trust and that working relationship of when we have difficult decisions, difficult moments, how do we communicate? When do we communicate? How do we make decisions? What is the process? It's the trust.
Mark Achler (21:49.298)
that gets you through it. And so...
Tzakhi (21:52.041)
Yeah, and I think that connects directly, sorry to barge in, but that connects directly to the idea of personal accountability because that is what is needed for trust, meaning the people around you need to know that you're going to be accountable, you're going to show up and take responsibility.
Mark Achler (21:56.69)
No, no, no.
Mark Achler (22:11.538)
Yeah. And not try to hide bad, like bad things happen. Bad things happen. You know, you know, you miss a quarter or a big customer leaves or, you know, a key employee leaves or whatever it's life. Bad things happen. And, you know, I've seen many CEOs sort of diminish or don't want to share bad news. And you know, like,
Think of trust as a reservoir and every little interaction either fills the reservoir or diminishes the reservoir. And everything you do should be in the spirit of filling that reservoir of trust because you're gonna need it someday. And...
You want that reservoir to be filled to capacity when it's time.
Tzakhi (23:16.969)
So it's really an internal state of being accountable that projects outwards. It's not just like empty declarations that you're making or the way, it's not a way of presenting yourself, it's a way of being.
Mark Achler (23:37.97)
It is, and the nuance here, you know, Steve Jobs famously had his reality distortion field, you know, just like, you know, entrepreneurs are imagining the future and then willing itself, willing that future to exist. And you need a little bit of crazy, I can do it. Like, when nobody believes you, just walking through walls, you have to have that.
but you also have to be honest with yourself. And you have to, when things aren't working or when real problems happen, there's a fine line, I used to say, there's a fine line between persistence and mental illness. And I'll amend that to also add persistence.
and trust and accountability.
Mark Achler (24:42.962)
And you know, it's a balancing act.
Tzakhi (24:47.305)
Yeah, and I think it's there, it's really, at every step, there's always this kind of tension between the reality check and what you believe that you can do, which is beyond what the reality is. I think you encountered that from day one. I mean, when I started on my business journey, I had that.
So many times I spoke to people, some people said, well, what you're doing now is a bad idea. And do I listen to them? Or do I say, no, you think it's a bad idea, but I'm going to prove that this is a great idea because I believe it's a great idea. And.
Tzakhi (25:37.833)
Well, looking backwards, a lot of them were right. Some of those ideas were really bad, but some of them weren't.
Mark Achler (25:47.666)
Right. Everybody assumes entrepreneurs are going to fail because most do. So how do you know that you're the one that's going to succeed? But it goes back to, you know, I have this saying of the PBCs. So everybody knows the ABCs. The PBCs are product business model, customer acquisition. And where most entrepreneurs focus is on the product. And I have a saying, which is the greatest product in the world.
without customers is a great product, but it's not a business. And so you might be right, you the entrepreneur, you might see an issue, you might see a problem, you might solve it. You could build the most elegant solution.
Tzakhi (26:23.273)
Yeah.
Mark Achler (26:34.834)
But if you don't have the right business model.
and you don't know how to sell it, they have the right customer acquisition strategy, you might be right about the problem you've identified. That doesn't mean you have a business. It takes all three to actually build a business.
Tzakhi (26:50.857)
Yeah.
Tzakhi (26:56.02)
Yeah.
Yeah, I think a lot of these things really come back to a place of a lot of internal work and knowing to kind of...
knowing to really not only listen, of course, to the people around you, but also to discern between the voices in your head and kind of find the right one to listen to and to go with at every given moment. And really deep work of standing in front of the people that you're accountable to in the company and knowing that you're making the right decision with them.
but that has to come also from a place of inner resolve that takes a lot of inner work.
Mark Achler (27:50.412)
Yeah. Yeah, it's not easy. It's definitely not easy. And by the way, it's when I talked about all the different stakeholders in the equation, you know, I talked about the employees and the customers and the investors and partners. I left one out, which is your family. So if you're your significant other or spouse, whatever decision you make as an entrepreneur, not only in
impacts you, it impacts your family as well. And so that's also another place. I've seen entrepreneurs who have great relationships with their spouses who can share these difficult moments and difficult decisions. And I've seen other entrepreneurs where the spouses have been...
don't share their values around risk, for example, and are really afraid or are not offering good advice. And that's also an incredible stress when if you don't have a supportive, significant other who legitimately are going through everything that you're going through without the control of having to make that decision. That's also a challenge as well.
Tzakhi (29:10.693)
All right.
Tzakhi (29:16.293)
Well, that's a whole topic that we could talk about because I think this is a whole issue that lots of people have of how to handle risk and the decisions that you need to take along with your significant other. And like you said, when you're taking risk, your significant other is taking that risk too, but without the control. And then that creates a lot of difficult...
situations, a lot of misunderstandings and a lot of places where it's very hard. It's always a question, for instance, how much do you share? How much do I share with my wife about what's happening in the decision process? She deserves to know, but she also deserves to be free of the tension which I'm taking on myself and not to kind of have her
Mark Achler (29:48.066)
Yeah.
Tzakhi (30:13.013)
suffered attention without the ability to really make the decision and really know what's going on in a deeper sense because she's not in the day -to -day of it.
Mark Achler (30:22.25)
That's right. Absolutely. I have a lot of sympathy. I used to joke, you know, I, my first, I started four companies. It wasn't until my third company where I had a significant exit, the first 10 years of my marriage, I put my wife through hell. Like I was way more comfortable with risk. She wasn't, but you know, I was making decisions for us that really had a deep financial impact on.
her and us together, but boy, it was hard.
Tzakhi (30:58.282)
Yeah, and it had a happy ending. I mean, it ended well. It doesn't always end well.
Mark Achler (31:04.188)
Oh, God. It doesn't. Well, yeah, I mean, my first company, you know, did okay -ish. My second company failed. It wasn't until my third company where it really, you eventually it worked out.
Tzakhi (31:21.29)
Yeah.
Mark Achler (31:21.916)
but it's not easy.
Tzakhi (31:25.642)
Mark, we got into a lot of places where entrepreneurs deal with challenges and personal challenges. Maybe as we wrap it up, maybe just a word of what are the places where you think founders can help themselves or empower themselves to deal with these situations with a kind of bright.
outlook on the future so that they can take and make decisions with confidence.
Mark Achler (32:02.204)
Yeah, one, if you can be in control of your own destiny, do it. Like figure out a way, do not be reliant on outside capital, on, you know, bluebird customers. Put yourself in control of your own destiny. Be open and transparent with your key stakeholders and...
You know, the framework I use in my life is joyful innovation, building communities and teaching empathy. And the one thing we didn't talk about is joy. Like, find those moments of joy as difficult as it is to be an entrepreneur, especially in down markets. You know, you find those nuggets of joy. Otherwise it's why do it? It's just the pain is too much.
Tzakhi (33:02.57)
All right. All right. Mark, thanks so much. This was a very deep and interesting talk and I really appreciate it. And who should reach out to you and how should they find you?
Mark Achler (33:19.004)
Yeah, so I'm always glad to help any entrepreneur. And I'm on LinkedIn. So my name is Mark Ackler, A -C -H -L -E -R. And my email, you're always welcome to email me too, which is it's my name, markackler at gmail .com.
Tzakhi (33:38.506)
Okay, Mark, thanks so much. We'll talk soon.
Mark Achler (33:41.084)
All right, Zachy, thank you so much. Thanks for the conversation.
