Mark Mullen from Double M Partners | Bonfire Ventures

Welcome to the Puck, Venture Capital and Beyond, a show that explores the evolving landscape of the venture capital world. We'll have candid conversations with today's VCs and entrepreneurs who are shaping those changes. I'm Jim Beer, managing partner of Bier and Troff and president of CMG Advisors. This podcast brings change makers to the table to discover the inner workings behind decision making strategies and ultimately how they got to where they are today. On this episode of the Puck, I'll be talking with Mark Mullen, a veteran VC with an unconventional and diverse background.

After years of living around the world, Mark, now based in Los Angeles, is the founder and largest investor of Double M Partners and Mall Capital. I invest in people, but I have a very comfortable relationship with my own gut in terms of what I think about people, and that allows me to make, in my opinion, seed investments and bet on people much more comfortably than maybe others. We'll find out more about Mark's involvement in the growth and development of countless companies, and we'll get a sneak peek at an exciting new fund, Bonfire Ventures, that Mark is building with his team. Mark, let's go ahead and start with a recap of your background. I worked for a very famous entrepreneur for twenty years, Bill Daniels, who's known as the father of cable television.

So I really grew up in my business career at the knee of a incredible entrepreneur. And while I was an investment banker for him and other companies, we always backed and worked with entrepreneurs. And I understood the style and the cycles and the way that they treated people and the way that you try to build a company. So where when I say I was a 20 an investment banker for twenty two years, it wasn't from the context of, you know, a Goldman Sachs banker and just grinding deals away. We really were conciliaries to our companies.

And that gave me a very good perspective in terms of what we do today, which is seed investing. So I invest in people. Of course, I invest in companies' ideas, but I have a very comfortable relationship with my own gut in terms of what I think about people. And that allows me to make, in my opinion, seed investments and bet on people much more comfortably than maybe others. And so once we sold our firm, after Bill died, we sold the firm to RBC Capital Markets in 2007.

So we lucked out. We didn't know the world was gonna crash. We lucked out. You know, I stayed with the firm for three years, and then I went to work for the city of LA. So I was chief operating officer of the city of LA.

I worked for Austin Buettner, another well known entrepreneur business person in Los Angeles. And we were attempting to try and create more jobs in the city of LA by making it more of a business friendly environment. And in my catbird seat at that time, I could see a lot of the holes we had in Los Angeles in terms of capital, because I came from the capital world. So stepping back for a second, I didn't move to Los Angeles till 2005. I ran international for RBC Capital Markets.

I lived in Paris and London and New York. I didn't care about LA, not from the perspective of not a fun place to go, but I didn't do business here. I don't do entertainment. I don't do it now, which is interesting. Right?

Here, I'm in LA. My wife's born and raised here. So we moved here. And so I had been an investor in many companies since 1998 as an angel investor. And that portfolio has done very well, but it wasn't my full time focus.

When I decided to leave the government in the middle of two thousand eleven, I decided to make venture investing my full time focus because I thought there was a big hole in LA with capital. And I saw that there were a lot of companies. There's 10,000,000 people in LA alone. There's hundreds and hundreds and hundreds and thousands of businesses that we don't even know about. And I felt like there was gonna be an opportunity to invest in that wave of what's happening now.

I'm also an investor in various funds. So I was an investor in upfront with Libo and Brian McLaughlin and, of course, Steven Dietz and and Eve. So I've been an investor in upfront. I was an investor in the first fund of Crosscut. I'm an investor in various funds in San Francisco and various funds in New York.

So I do have a view on how these companies operate and what differentiates them. And so I just wanted to give you a little bit of perspective of, like, how I got here today and why I think the way I do. It It just wasn't like I wanna start a VC fund, and we'll see what happens. Mark, can you segue into the transition from your current fund into the new fund you're setting up? So when I came out and started the first fund in 2012, it was specifically to invest in Southern California focused seed companies, almost exclusively b to b.

I just feel more comfortable with understanding the b to b businesses, and I felt like there was a big hole for that as well. There's plenty of money chasing mobile apps and entertainment and media and the YouTubes of the world. That's great. They're fine. But I felt like there was very few people looking at b to b opportunities.

The first fund focused on that. We raised the second fund in 2014 to continue that focus. We raised more money, so we're starting to write bigger checks, and just continued to go through that process. Since I started the first fund, even in the first deck, it says, we're gonna build this platform. I think there's a huge opportunity.

I can't do it myself, and I want to bring on a partner at some point that makes sense. So fast forward to 2017, I've partnered with Jim Andleman, who himself has been running three funds called Rincon Venture Partners since 2006. He himself, interestingly, has always focused on b two b. And so because of his focus in mind, we started to see each other in deal flow. We see each other on cap tables.

We see each other in boardrooms, start to get to know each other. It's a very small community. And so Jim and I started talking in 2014 about partnering, and the timing didn't work for where my second fund was and his third fund. And so because we're friends, because he's a great individual, he's very well respected, by the community, certainly by other VCs, but also, more importantly, by the CEOs and founders. So So we stayed in touch quite a bit.

Again, we did several deals together. And this time, in 2017, we really had the chance, the right time for us to come together. So rather than call it double m or Rincon Venture Partners, Jim and I decided to rebrand the new entity, and it's called Bonfire Ventures. We're really excited. It's a $60,000,000 fund.

We have several new institutional investors who've joined us who believe in the future of Southern California, primarily, and b two b. Jim has an incredibly good network in San San Francisco, which is necessary both for deal flow, of course, but really for raising capital for our companies. The better relationships we have with the larger VCs in Northern California, the better it is for our companies here. So this fund will be approximately 70% focused on Southern California, about 20 to 25% NorCal. And then we'll do some one off unique situations where we either have a founder that we've known for a long time or a relationship that we have in a couple other places, so maybe in Colorado or in New York, for example.

So that's really gonna be the focus. Our objective is to become the b to b signal caller in LA. Mark, that's very smart. I mean, as I'm hearing you, it benefits the companies you invest in. Let's now discuss your particular areas or industries that you're focused on.

Well, we have areas of focus which primarily rely on software, integration, etcetera, growth, but also business services. So there are businesses we'll invest in that may not be software driven, but they're business services where they're taking advantage of a unique opportunity in the market. There's a unique management team. For example, we just backed the Edgecast team. It's just started their new company.

It's in stealth. I've known them since the nineties when I was a banker for them. Since we have had a long relationship, I joke that if they would have started a paperclip company, I would have invested in their paperclip company. So that's a great example and a segue to where you're starting to see more and more seasoned management teams in Southern California starting their next iteration of companies. In picking a company to invest in, we've spent time talking about the importance of having good management.

How have you been able to fund companies in in Los Angeles in terms of finding seasoned management teams? Well, first of all, a seasoned team is not the ultimate key to success. Right? It's not automatic success. Sometimes I get scared because the reality is the hit ratio.

You may start four companies. Two of them are wildly successful. Two may fail. So you gotta make sure you're in the ones that are the successful ones. The reality is thousands of companies have been started have been very successful.

Let's just take Facebook and Snapchat. Started by two young gentlemen who had no experience running a company like where we are today. So that's not a prerequisite to have that experienced team, and there's something inside of those individuals that has made it very successful. But that seasoned team does remove some of the risk for sure. And even in the context of having a conversation with the management team of Edgecast versus the conversation with the management team of, even a first or second time start up company.

Just their ability to understand what's gonna happen, that's really hard. Because I think when when you're an inexperienced CEO and you're grinding at this company and you've got the idea and you're super passionate and you've got grit and you're chasing it, you end up getting to a situation of a size of the company. You get to a certain level of success where you know, oh, jeez. I've got 47 employees. I've never managed people before.

Or my top engineer just left to go to San Francisco. How do I deal with that? Or, I'm also the lead salesperson, but I'm supposed to actually be managing the company and providing guidance and drive, but I really wanna close the sale. It's really hard to be a CEO, and it just takes experience. And I think the experienced teams understand those hurdles that are coming way before the inexperienced team.

Yeah. I agree. It is incredibly hard to keep all the balls in the air when you are starting a new company. Are you seeing experienced CEOs and executives who can execute a plan and carry the football in LA? Well, what's interesting about Southern California in general is that there are so many businesses here.

There's tons of software companies that don't need venture and didn't need venture, whether it was a family business or some sort of ideas. The venture world is a very small myopic place. It drives a lot of the press. We get excited. There is a lot of home runs that are hit, but you still you don't see a lot of the many, many businesses that are built that don't need venture.

So there's a ton of experience building companies here where we don't talk about them or hear about them because they didn't raise venture, and they're not talking about themselves. So those companies are there, and I think employees or executives are coming out of those companies as well to start companies, not just out of the successful companies that we hear about. But even if you wanna take it back a little bit from a historical perspective, let's take Gil Elbaz. As you know, Gil started a company that became Applied Semantics, which Google bought, and he now runs Factual. And he is a partner in a venture capital firm called Ten One Ten, which is a great firm here in LA, and just continues to be part of the community.

Bill Gross himself is also very involved in the venture community in Los Angeles. He's built and started tons and tons of companies. They continue to grow and seed the community here. When you're evaluating a pitch, it sounds like you rely on your gut. What is it you are really looking at?

Well, I actually spend as much time as we have and much time as without being uncomfortable. We do spend as much time talking about that person's background. And a lot of times you'll come into my office or I'll come meet you at that person's background. And a lot of times, you'll come into my office or I'll come meet you at your company, and I don't read the deck. I've read the deck enough to say that I'm interested in having a meeting, but I don't wanna read the deck, and I don't want you to open up your computer and go through the deck.

If you can't do that, it's a non starter. But we'll spend many times half hour plus before we've ever talked about the company. And we're talking about, where'd you go to high school? Do you have a brother or sister? What were they like?

Why were you trying to beat your sister at that math game or whatever it is? What did your mom do? I would literally ask these questions because I'm just trying to figure out, like, what type of person that and what drives that person. And you find out, like, I I invested in a woman's company who was the sixth child. She has five brothers.

Her brother her father was an entrepreneur, and she wants to win, as you can imagine. And so I love that grip. If she grew up with five brothers and a successful entrepreneurial father, I think she's got some motivation. And so we try to find those things out. You don't get that in a deck.

And a lot of times you don't get it because they're they're running around meeting with 19 venture capital firms, and they kinda have their pit. They've got an hour for you. So I try not to do that very often. So we try to get to know the person. And even though that's only for a half hour, there's signals in there that that help me out.

I had a meeting yesterday, just to be honest, with an individual who I just couldn't figure out. The answers were always perfectly answered. There was a style issue. Although, certainly a smart individual and starting a pretty unique company, I just didn't get the feeling that I wanted to talk to this person every month for the next five years. Not that he was a bad person at all.

There's a gut feeling. And because I've been around for a long time and because I've worked in deals in 30 countries with all those types of entrepreneurs and different people in those countries as well as United States, when I have those types of reactions, I just trust it. And if I have the reaction which is this person I just wanna give money to and see what happens, then I'll do that too. I have invested probably three or four times in the meeting. And a couple of those have worked out extremely well, like Tracy DiNunzio from Tradezy, Walter Driver from Scoply, Catherine Power from CMG, in the meetings said, I wanna invest.

Let's figure out how this works. When you're working with entrepreneurs and you want to impart wisdom to them, is there a trick in terms of how you communicate your ideas? Well, what I try to provide is this person that you can talk to, that I have seen a lot of things, that I can help you with life issues or company issues or help you hire when because I have a gut reaction on people you're hiring. I can talk to other VCs for you. I can structure things.

So I'm always throwing out, like you know, I'm always available, first of all. But I try to say, look. I can try and help you do anything. If I can't help you, I can introduce you to somebody that can help you. You know, calling me and saying, hey.

Do you know a good front end developer? Not the best use of my time and your time because there's probably better people that have that answer. If you wanna call me and say I'm having an issue with my CTO or trying to close this deal, and they need to know that there's somebody behind this company other than just a start up here in Southern California. And I love to have those conversations. So it's really without sounding callous, it's really adult experience that I try to emphasize that I'm available for.

And, I think you would find from those founders that have utilized that that they they appreciate that. I know you mentioned at the start of the interview that you don't focus on entertainment, but I'm still really struck by the fact that since entertainment is so dominant in Los Angeles, what do you see that's unique in Southern California other than the entertainment industry? I think there's a real competitiveness here in LA. There's a mentality here, like, we are competitive with San Francisco. We are competitive with New York.

We cooperate, of course, with them as well. But there is a competitiveness now down here which is coming upon everybody. If you're in this tech community in Los Angeles, you want to win. Like, I want upfront and crosscut and ten one ten and Beacon. I want them to win.

I wanna put our numbers up and say we're winning because we're betting on companies here. And the same token, the CEOs and founders and I think employees here have that same type of desire. They're like, you know, it's such a great place to live. If we just win at the business side, we're doing great. I like the direction you're going, which is the competitive spirit of LA in terms of the excitement of this competitive drive.

When do you think LA will be recognized in its own right as a top destination for tech companies? Yeah. We'll step back for a second. The reality is that we do have this incredible university infrastructure here. You know, whether it's Harvey Muddler, Loyola, USC, UCLA, Caltech, incredible infrastructure.

When I was at the government, we analyzed what was happening with just the engineers for that perspective, which we figured out that roughly about a third of all the engineers coming out of those five schools stayed in Southern California. The rest left. Interesting. There are certainly people that they're from Boston and wanna move back to Boston or from New York or they wanna go to San Francisco because that's where they wanna build their company and there's the aura up there. But I think it was more as much as a function of not a lot of opportunities.

You're coming out of school and you're interviewing or you're looking for opportunities, how many jobs were there here to start in the tech? Very few. I mean, seven years ago, very few. The Santa Monica Silicon Beach thing had not really started. Garcetti had mentioned approximately two thirds of the engineers are staying in Southern California.

Right? That's a big increase and a huge number of people. And why are they staying? Because they see there's things to do. There's companies here.

There's seed money. There's plenty of seed money here in Southern California. They know they can hire people because there's more and more people staying here. And so it's just not the engineers. It's all the types of graduates coming out of these schools.

There's opportunity to stay here other than just in, let's say, entertainment. Interesting. Yes. I don't have any numbers, but I have anecdotal information from talking to all these people that are in my companies. Why just stay here?

Well, I went to UCLA. I wanna stay here. It's awesome. I had like seven job offers here. In 2011, you maybe got one.

So there's incredible infrastructure being built. There's excitement and companies that are getting much bigger. And then we have the incumbents coming down. So Google, they're just tripling their size down here, which is great. Bring it all down.

When you walk around La Playa and you see all the names of the buildings of all the companies that are there, it's exciting. You feel like, no, this is happening. Yeah. That's exactly how I feel. It is amazing there.

So tell me, Mark, when you're investing in companies today and you're trying to figure out where the hockey puck is going, where do you see companies today versus where they were a few years ago? Where is the trend for new business in Southern California? So if I think about some of the areas that we're focused on, I would say three areas where we're seeing a a lot of activity and where we've been investing over the last five years, particularly in HR tech, particularly in logistics, particularly in security. Logistics is interesting here in Southern California because we have one of the top five airports in the world. We have the second largest port.

We have, I don't know what the number is, the seventh largest economy. There is a lot happening here, and we also have a disastrous public transportation system. So there just creates the obvious that if you're gonna start a logistics company or trying to create a winning solution, if you can do it in LA, you can do it anywhere. So, for example, we're an investor in a company called Honk. And Honk initially started or is known as the Uber for roadside assistance.

But the reality is what they're doing is completely transforming that entire industry because they're creating a new communications infrastructure and platform for communication between the insurance companies, the tow truck drivers, the consumer, the customer, fleets, the car manufacturers. So everybody needs to be on the honk platform. So instead of being the Uber for roadside assistance, it's the communications platform for all that type of logistics here in The United States. And that was started here in Los Angeles. We have another company called Tallygo, and Tallygo is navigation as a service.

They came out of USC. They have patents out of USC. And what they provide is a better mapping technology platform than Waze or Google Maps. Better from the perspective of the way that those mapping technologies work versus this. This is a dynamic, so it changes on the fly and is driven by all the sensors and the government data.

So we have a huge deal with the city of LA. We have a huge deal with the fire department of LA. It's a customer. So we are able to provide that platform for any type of fleet. For example, maybe Postmates or other entities that don't wanna be reliant on the Waze platform can utilize this navigation as a service as a software platform for navigation.

Again, came out of USC. Patents came out of there. We see some logistics opportunities here. HR tech in general, and this kinda touches on what's happening in Los Angeles in terms of all the employees, the way that millennials are used to going to work or the way they're used to communicating with their bosses or their employees or their companies or their HR benefits or anything they're doing is totally different than what we had. You came to work.

You got your desk. Go to work. Good luck. Right? Have a review at the end of the year.

That's no longer the way everything is being built. There is much more emphasis on career pathing. You know, from day one, identifying what your career path could be, how we manage that so you can see where you're heading and your bosses can see where you're heading and how to manage that together. Also, the on demand platform. Right?

So on demand employees is a big business just to start with Uber but is everywhere now. And so we have an investment in a company called Branch, which Bill Gross introduced to me a long time ago. Branch allows on demand employees or hourly employees, for example, let's say at Target. If you're an employee and you can't make your shift, what do you do today? You call your manager.

Can't make my shift. I'm sick or I gotta go to school or something. And your manager gets out a list of paper and has 20 names on it, and she starts dialing. Can you make Jim shift? No.

Goes to the next name. Goes to the next name. So this has completely ripped out that platform such that the employees, I can't make my shift. She posted on the platform. All the other employees see that.

They can just hit the bid. They'll take the shift. The shift that entire information exchange is coordinated directly into the HR and payment system of Target. So Target doesn't have to worry about it. They know and then it now shows where all their employees are, what they're owed, and it takes away a lot of the heat from the employee and the manager in terms of managing all these employees.

So this is a really exciting one. Wow. That is really incredible. A totally different approach from HR of the past and so much more efficient. You also talked about security.

And I know there's been some acquisitions in this space recently. In terms of new ideas, what do you see as unique to LA? Well, we have a company called Previty, which, really is built to it's gonna call an application security software, RASP. And so you think about the way that entities get compromised is through worms or viruses that are planted. Well, nowadays, people are coming through the website, maybe even through the customer service website.

You can actually plant through the application itself viruses, etcetera. And so this stops that. When they started the company four years ago, they were way ahead of the curve. It's now becoming much more acceptable. If you look at the Equifax issue, it came through the website.

Right? It wasn't somebody planning a virus or something. They were able to penetrate through the application software layout of the application level. And so we feel like that's starting to get a lot more traction. Mark, you've explained your background, which is very different than many VCs and certainly distinguishes you.

Can you perhaps give an example of some areas where you've helped companies that not many people may have heard about? When I'm talking to my founders and CEOs, one of the areas I was mentioning earlier is my experience level in lots of different areas. And sometimes I end up being much better for a company as they get bigger and older. And I become more strategic or more relationships in the capital markets, etcetera. For example, I'm on the board of Altice, which went public earlier this year in June.

It's the fourth largest broadband cable operator in The United States. They're also the second largest in the world. They're based in France, but they're all over the world. They're in 28 states, 20 countries. They'll do almost 10,000,000,000 of this year, earnings this year.

So they went public in June. It's the second largest IPO in the world after Snap. My point is that I'm on the board of this company. It is serious stuff. And so I can provide serious advice to my companies at different points along their lives.

So having you on the team, how does that help a company get to its ultimate destination? Well, the combination of with Jim, who has also been around for a long time and has been really focused on these companies for many years. He's been investing in Southern California b two b companies since 2006, which is back to my that era where it was still quiet. Whether it's on paper, you know, we've invested in over a 100 companies. We've had a bunch of exits.

We've been through a lot. We've been through ups and downs, difficult times with founders, CEOs, different issues. You and I went through a big issue this year. It takes a temerity, a certain mentality and temerity, I think, to help through those. And that's all we can say to that person, which is, I get you're gonna take 30 you're gonna take money from a Northern California venture capitalist who's 31.

And I think that person is extremely smart and awesome. But I've been around. Jim and I have been around, like, we have seen a lot of things, and we hopefully can impart some of that expertise on you as you build the company. On our next episode of the Puck, join us as we talk with VC veteran Rick Smith of Crosscut Ventures as he reminisces about the trials and tribulations of starting a fund in the midst of the Great Recession and the passion that kept him and his team going to build one of the leading funds in Los Angeles today.