GE 208: How Howard Marks Broke All the Barriers by Building StartEngine as an Equity Crowdfunding Platform and Raised $17M from 6,300 People (podcast)

Hey everyone, today I share the mic with Howard Marks, CEO of StartEngine, a company that provides investment opportunities for new startups to help entrepreneurs realize their dreams. He was also the founder and CEO of Acclaim Games, and before that he was a co-founder of Activision.

Tune in to hear Howard reveal his value investing strategy that allowed him to buy video game companies Activision for $400K and Acclaim for a mere $100K, how he had a vision of finance as a crowdfunding platform when no one else believed it possible, and how StartEngine has raised over $30M in capital for over 40 companies in his mission to help entrepreneurs realize their dreams.

Download podcast transcript [PDF] here: How Howard Marks Broke All the Barriers by Building StartEngine as an Equity Crowdfunding Platform and Raised $17M from 6,300 People TRANSCRIPT

Time-Stamped Show Notes:

• 00:45 – Leave a review, rating and subscribe to the Growth Everywhere Podcast
• 01:03 – Eric introduces Howard Marks
  • 01:06 – Howard is the CEO of Start Engine which provides investment opportunities for entrepreneurs
  • 01:15 – He was the founder and CEO of Acclaim Games and cofounder of Activision
• 01:46 – Howard got into gaming through Activision
  • 01:59 – It was bankrupt and paid $400,000 for ⅓ of the company
  • 02:11 – They restructured it and brought it back to a 35 billion dollar market cap
    • 02:19 – #1 Video game company in the world
  • 02:30 – Lessons Howard has learned from the Activision days
    • 02:38 – Most people quit too early
    • 03:08 – Give yourself the opportunity to turn things around
    • 03:19 – 90% quit and end their vision too early and that behavior will never make them successful
  • 03:41 – Howard shares about a critical moment where he could’ve quit
    • 03:49 – They bought the company in Nov. 1991
    • 03:59 – No one would work with Activision; Wal-mart wouldn’t work with them unless Activision took back their inventory
    • 04:14 – They couldn’t hire people because they were bankrupt
    • 04:37 – They had offers along the way that wanted to buy the company
      • 04:44 – Even Walt Disney did not see them as a real business with intellectual property
    • 05:14 – “The resilience factor is something that you don’t see very often; but when you see it and understand it, that’s success”
    • 05:31 – How they made a deal with Wal-mart
  • 06:05 – Howard’s background
    • 06:22 – He is a computer science engineer from the University of Michigan; grew up in France and was a technology person
    • 06:38 – Howard felt he was a more of an “ideas” person than a technology person
  • 07:11 – Howard left before the Blizzard transaction
    • 07:33 – He took off because he wanted to get into the internet in the late 90s and felt he left too early
    • 08:03 – The company survived the dotcom crash and a lot of its competitors got into trouble
    • 08:16 – Acclaim got into trouble, so Howard bought them in 2005 (Acclaim is known for Mortal Kombat, NBA jam)
  • 08:47 – How Howard finds these deals
    • 09:29 – He would read public documents regarding the state of Activision and found out they were really struggling
    • 10:29 – Howard got ahold of the largest investor that owned 30% and bought their share (the investor wanted out)
    • 10:52 – With Acclaim, Howard called the trustee and signed up for the auction
      • 11:17 – He put in a bid for $100,000 and they were laughing
      • 11:29 – The auction was in the beginning of August and Howard was the only bidder because it wasn’t publicized well—he got the deal
    • 12:27 – With Activision, Howard focused on the CD-ROM business as opposed to the cartridges
    • 13:08 – With Acclaim, they went with online games
    • 14:42 – Howard discusses the beginnings of StartEngine
      • 14:59 – There was no accelerator available in LA; so they became the first
      • 15:14 – They invested in 16 companies over 3 years
      • 15:30 – 90% of them quit and gave several excuses
      • 13:08 – He felt the system for raising funds was broken
    • 15:58 – Howard read bill that was undergoing approval—it stated for the first time in 80 years, companies could raise funds from any person
      • 16:42 – In 2015, Howard turned StartEngine into an equity crowdfunding platform
      • 17:25 – Howard waited a year and the bill passed
    • 17:38 – Elio Motors was their first company and they raised 17 million dollars from 6300 people
      • 17:51 – Howard explains how they made a Kickstarter campaign for Elio Motors
        • 18:03 – “Everyone said, ‘I want to own a piece of this’”
      • 18:09 – Since then, they’ve done 40 companies, their goal next year is 100 companies
    • 18:24 – Howard gets their companies from referrals or from online searches; they also do lead generation
      • 18:51 – They contact a CEO and ask if they’re interested in raising capital
    • 19:06 – They’ve raised over 30 million to date
    • 19:39 – Howard’s mission is to help entrepreneurs realize their dream and create jobs for the economy
      • 20:00 – The largest companies in the world are NOT great employers
      • 20:15 – Growth will come from the next Snapchat, Facebook or Uber companies
      • 20:32 – Howard want’s StartEngine to finance these companies
    • 21:03 – Howard’s tip for young entrepreneurs: “If you’re not passionate about what you do, just don’t do it—find something you are [passionate about]”
    • 21:31 – Find a company with a mission statement that you can stand behind
    • 21:36 – Second tip: “Do NOT quit”
    • 22:07 – Howard describes the mission statements behind Activision and Acclaim
    • 23:53 – Howard explains how he was able to fund his initial investment for Activision while he was still so young (29 years old)
      • 25:24 – Howard reinvested his money from his prior company into his new company, Activision
    • 26:17 – What’s one must-read book you recommend? – Zero to One, Lean Startup or Innovator’s Dilemma
    • 27:20 – What’s one new tool that’s added a lot of value? – Slack
    • 28:08 – Contact Howard on his blog or visit his company website if you’d like to invest in a company or raise for your own

3 Key Points:

1. Go with your passion—if you can’t stand behind the mission of the company or the work itself, pivot to where your passion lies.
2. Do NOT quit; having this attitude can prevent you from reaching your biggest wins.
3. Don’t mess with someone who has the resilience factor—resilience equates to success.

Resources From This Interview:

• StartEngine
• Acclaim Games
• Activision
• Elio Motors
• Must-read books:
  • Zero to One: Notes On Startups, Or How to Build the Future by Peter Thiel
  • The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries
  • Innovator’s Dilemma by Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business by Clayton M. Christensen
• Slack
• Howard’s blog

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