With 3 startups acquired this year, Mike Jones talks Myspace, Science and LA tech

by John Siegel
October 18, 2016

Over his 20+ career in LA tech, Science CEO Mike Jones has developed an impressive ability to grow and scale companies. In 2016 alone, the startup studio — which invests in and fosters media, marketing and commerce startups — has seen three of its investment companies (Hello Society, Dollar Shave Club and most recently FameBit,) go through the acquisition process.

Jones sat down with us to discuss how he helps young companies grow and succeed, and what he sees for the future of LA tech.

How involved are you in the acquisition process, and what advice do you give companies going through it?

I'm personally involved with management, specifically the CEO's and founders on how they think about their future, and how they think about building additional shareholder value. One of the individuals on our team is a fellow named Jason Rapp, and he has an incredible amount of experience with mergers and acquisitions. For both HelloSociety and FameBit, Jason really worked the day-to-day along with a fellow named Greg Gilman, who's our internal general counsel.

For Dollar Shave Club, they worked with external representatives, so I was really just involved as a board member. But with HelloSociety and FameBit, my direct report shared clients were intimately involved through that process. 

What do you look for in a startup team when you're initially investing?

I look for individuals who are personally connected to these problems and that I think have a general positive spirit and will to go through what is typically a very high risk of starting and scaling a company. I particularly look for businesses that I believe my team can help, and would be more successful with us than if they were doing it on their own. When I find those individuals, that I think can be great longtime startup founders, and are paired with a business model that we have advantaged information on, then I'm excited to be a partner with them.

How important is being flexible as an entrepreneur?

I think it's extremely important, and the earlier the company, the less you really know. If you're starting a business, within some specific sector, you may have a lot of great plans in regards to how you're going to execute that company, but the reality is that once you start getting into it, your plans may really need to change.

From the early stages when we're working with a founder, we want to understand the broad level of disruption they want to accomplish. We have a lot of internal knowledge around tactics on how to build and scale companies, but we fully recognize that when we step into one of these businesses, the actual execution and the methods that make them successful are going to change dramatically over time.

What do you look for in terms of talent if you were looking to bring someone to Science Inc.?

At the Science level, I look for vertical specialists. If we're going to be doing a lot of things with mobile, for instance, I want people that really understand monetization of mobile and growth on mobile. In many cases, we look to be specialists for startups so that they can rely on our specialists to help them navigate complicated challenges. The Science staff is made up of really vertical specialists, where I might focus on strategy, Peter Pham will focus on fundraising, and Jason Rapp on development and Greg Gilman on legal and Tom Dare on structures and operations and Dave Fink on marketing. We typically employ vertical specialists and we're very slow to bring people on here, honestly, because we've had a great long-term team that has worked really well together, and I think we can make early stage companies successful quickly. 

How do you stay involved in all of your investments?

At the earliest stages I will request that management distribute a daily update of progress, not just to me, but to their whole team. I think we need to look at progress daily. What are we doing every day to make progress toward whatever goal we're going after. I think for early stage teams, having super transparent daily updates is a fantastic sign of good working teams.

For CEO's, in most cases, I'm working with CEO's weekly, either on strategy, management or where they're having challenges. I'm spending time in-person with them weekly. For my later stage businesses, I might be on a board, and receive weekly or quarterly updates, it just depends really on how the CEO is running the company. I'm always available, and I talk to most of my CEO's probably every day. A lot of our early-stage companies sit in the office here, and so we're really hands-on with them. If they're talking to me about strategy, they're also talking to the other team members about other needs they might have.

When did you come up with the idea for Science, and how has it evolved over the years?

I had seen Idea Lab years ago and fell in love with that model. Peter Pham, who is one of my co-founders, and I had talked about this over 10 years ago, and we thought it would be really positive for the LA ecosystem. It just happened to be that five years ago, post-Myspace, I was at a point in my career where this was intriguing to me. Peter had just finished with one of his businesses and he was excited by it, and I was able to pull together my co-founders who were all in positions to start something new. It's an idea I had for a long time, and I was really excited when I was able to grab great partners to join me on the journey. We're successfully helping companies get to scale and find strong investor returns.

How fulfilling is it  both personally and professionally  to see a company you have invested so much in get what they want?

I love seeing founders realize their dreams. In the early days of me building companies, I was fortunate to realize some of my dreams and see the validation in getting a company purchased by a large corporation. It's definitely personally fulfilling to see someone we met with five years ago who just had an idea, that we spent a lot of time with and they put in a ton of time and labor, and suddenly that founding team has accomplished that vision. In my mind, it's all them. It's all about the founders and about them becoming successful, and if we can help them on the journey, I'm excited to do it. I'm happy every day looking at the people that we got to help accomplish their dreams.

What was your time at Myspace like? 

Myspace was, as you can imagine, one of the harder business scenarios you can encounter. You have a public company in News Corp that purchased an app that was getting kind of pounded by an upstart in Facebook. I think it was remarkable that we understood we could substantially downsize the company, but the team that remained found tons of efficiencies and was even more innovative than when we were a larger team. I think we found that there is a really hard cliff to social, and if you lose grip within a social environment, you can see very detrimental reduction in usage.

One of many problems there was the Myspace brand was so pre-established in that no matter what strategy we threw at that audience, we ended up in the same place. I found that we were wrong about the way we tried to execute, but the strategic thinking is proving to be true in the market. Overall, I think the strategy that Jon [Miller, then CEO of Digital Media at News Corp] and I talked a lot about and tried to execute on Myspace, we were actually seeing done in lots of other places. 

How did your time at Myspace affect the ways you work with companies at Science Inc.?

Time is your number one core asset. What we all have to realize is that when you're an equity holder or CEO of a company, your goal is to drive value to the bottom line of that business, and no one rewards you for doing it slowly. At the end of the day, we're not here to guarantee people long-term employment, what we're here to do is build long-term, sustainable businesses that by proxy will guarantee people long-term employment. What that means is, if something isn't working, change your approach. This isn't something where you can do the same thing every day, and think the next month will have different results, even though you're doing the same thing.

My statement to CEO's is if you've been given time, and someone has given you money to implement this strategy, you cannot iterate fast enough. You need to try different things all the time until you find something that is clearly working, and then you need to put all your effort in driving success into that methodology that does work. Time is your number one asset, and you have to try as many things as you can until you find something that works.

What have you seen in the LA business community over your 20+ years here?

One of the core components of a founding team's success is the network and community in which they live. Because I established myself in technology here in LA over 20 years ago, I built out an incredible network here. I have people I trust, I have people I love working with and I don't have a problem recruiting great talent. I think LA is the city to find great people that have talent and creativity to grow fantastic businesses. It's a highly supportive city in that sense. In my mind, I love building companies in LA, and I plan on continuing to grow companies here. There has not been a time where I thought, 'oh my gosh, only if I had built Science in San Francisco.' LA is a great market for me, and I think we attract great people to work for us here. 

Images via Science Inc.

Some responses have been edited for length and clarity. 

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