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Audio File:  Download MP3Transcript: An Interview with Beth Marcus Former Founder and CTO, Zeemote Date: January 22, 2010 Entrepreneurial Heroes Interview with Beth Marcus [music] Lucy Sanders: Hi, this is Lucy Sanders, I'm the CEO of the National Center for Women in Information Technology or NC WIT, and this is another in our podcast series with women who have started IT companies, very successful women I might add... Larry Nelson: Boy, I'll say. Lucy: ...that have started IT companies. With me Larry Nelson from W3W3.com. Hi Larry. Larry: Hi, I'm really happy to be here. This is going to be an exciting interview. Lucy: Well, and these interviews have been very well received at W3W3. Why don't you tell us a little bit about that. Larry: Well we host a special channel, "Heroes for NC WIT, " and we get a tremendous amount of traffic from, everything from small business owners to C level, high level executives from enterprise size companies and it's very interesting and the thing that we like about it so much it's really helping support a push for more young girls to get into IT. Lucy: Well, very good. Well, you know this interview is going to be no exception to our great interview series. Today we're talking with Beth Marcus, who is the CEO, the founding CEO of Playsmart, a new venture for her, she's a serial entrepreneur. She's founded a number of companies including Exos which she sold to Microsoft on the middle of nineteen nineties. And she is, I think easily one of the most technical people we've spoken to in this interview series with a history at MIT, and a PhD and patents and very, very impressive technical entrepreneur. Welcome Beth. Beth Marcus: Thank you. Lovely to be here chatting with you. Lucy: Well we are really interested first to find out a little bit about Playsmart, your new venture. And we understand it is really geared towards having safe environments for children on the Internet. Can you tell us more about it? Beth: Sure. It's a complete media solution for kids, ages one to eight. It allows them to be entertained, educated, connected to other family members around the world and allows the parents to control what's happening with the kids' interaction with those environments and make it totally safe. No commercials are passed to the kids. Once they get into the Playsmart system which can run on any PC or netbook they can't get out of it accidentally or otherwise and they can't get to any content or interaction that their parents don't pre-approve. Lucy: That's pretty interesting. Larry: Boy I'll say. I've got seven grandchildren, I'm happy to hear that. Beth: In fact, one of the features that some of our investors are interested in is Skyping to grandchildren that you can do through Playsmart. All you do is click on a picture of your grandparent and it makes the call for you. Lucy: Oh, that is really cool, you know. My mother's on Skype too and you know she, I mean I actually think the other end could use some help with that, you know? Larry: Yes, I agree. Beth: Yeah. Lucy: I mean she loves Skype. Beth: My daughter is how I got involved in this. I do a lot of advising of other start up CEO's and I thought I was going to be taking a break from being a CEO and just help a bunch of other people, and an entrepreneur came to me and said, you know, "Let me show you what I've got, " and it was for kids and I have a five year old. So I said, "Susie, let's play with this thing, " and she said, "Oh, this is so cool." You know and her interaction with it is what convinced me to get involved with the company and become a CEO. Lucy: You know, we've had a couple of people we've interviewed whose children have helped them form the idea for their next venture or at least encouraged them to get involved. That's really interesting. So Beth give our listeners a sense of how you first got into technology. I mean you have a very extensive technical background as I mentioned before. What first interested you in technology? Beth: A million years ago when I was in school I liked science and math and I played around with computers. And I'm probably going to give away my age, but wrote programs in Basic that ran on paper tape into a terminal. Lucy: I did that too. So don't feel bad. Beth: And then, I ended up going to MIT because they had a lot of interesting science and math. And what got me into more core technology was freshman year at MIT they have a seminar series that you do, typically in January and I took aluminum bicycle frame building because I loved bikes and I thought that would be cool. I had never seen a machine shop, I didn't know what welding was. I had never done any of the stuff and through that seminar I got fascinated by making stuff and ended up being in mechanical engineering. Lucy: Well and we noticed you were judge for First Robotics which I think further extend... Beth: Ten years, which is a lot of fun. Lucy: Yeah, you're love of making things. Larry and I both judge as well with First, so it's a great program. So what technologies do you look out there today across the technical space? What technologies do you find really cool and interesting today? Beth: Of course the last company I was in was the mobile space so I think the evolution of mobile devices into computers that you carry around with you is very interesting. I mean, when I started Zeemote in 2005, when I said, "These are the computers you're going to carry with you 24/7" the potential investors looked at me like I was from Mars. Larry: Yeah. Beth: And now people do. Lucy: They certainly do and in fact the number of people are looking at mobile devices as a real tool to help third world developing countries as well. Larry: Awesome. Beth: Well, they don't have land lines. Lucy: Exactly. Beth: And even though we have them, a lot of people don't use them anymore. Larry: Yeah, let me kind of switch gears here for a second. Two part related questions. One is, why are you an entrepreneur? And what is it about entrepreneurship that makes you tick? Beth: Well, I think it's a challenge. The first company I started, I remember we had built some high end controllers, exoskeleton controllers for robots in space for NASA and other people. And I got this idea that we ought to be able to take this technology and make it into a consumer product. And I was giving a talk at a Virtual Reality Conference and somebody from a not to be named defunct computer company said, "Well if you can't spend two hundred and fifty thousand dollars on a reality engine you shouldn't be doing VR." And I said, "We're going to do it on PC's and we're going to make a hundred dollar joystick and everyone's going to use them but they're not going to know that it's VR." And that sort of a challenge where somebody says, "Oh you can't do that." [laughter] Or even sometimes why would somebody want that. And then you put it in front of them and they go, "Oh wow. That makes my life easier"or "That makes my health better." You know. That exciting to me. Lucy: It's a very incredibly important point I think, you know, maybe I'll just digress a moment and say that you know there's always this tug of war in any corporation big or small between the business side and the technical side and often I think the business side can't necessarily see the power of technology until a technologist puts it in front of him. And... Beth: That's why I advise all the companies that I get involved with to get those prototypes built as quickly as possible with as little money as possible and get it into the hands of the end users. Because there's where you're going to find out are you smoking something and convincing yourself there's a market or does somebody really care about this. Lucy: Absolutely. Beth: And you learn so much that most entrepreneurs will tell you that the thing that they thought they were starting their company on is not the one they made money on. And it's the ones who iterate and spend time with the consumer whether they're a consumer or a corporate customer or whatever kind of customer, the ones that spend the time and listen to the customer are the ones that figure it out and succeed. Lucy: That is a really important point and I think, looking forward, we may have to ask you again a month from now but you know we do a Toolbox series as well and I think that it would be great to hear your advice for entrepreneurs because that advice around prototyping is excellent. Beth: I was going to be writing a book this year. Lucy: [laughs] Now you are running a company. Beth: Company...My God. I spent some time on it this summer capturing things like that and interviewing other entrepreneurs and then I said, "OK, I got to put this aside until I do this center and I'll come back again." Lucy: I think it will be fabulous because of your technical background. I'm sure you'd have some really valuable insights there. Beth: And I am a published poet. So... Right in the way that is intelligible to the rest of the world. Larry: So now there is a third interview. Lucy: A third... [laughs] Larry: A poetry. Lucy: Yeah. You are really digging yourself into a hole. So, along the lines of entrepreneurship, we found that many entrepreneurs can point to a particular person or a group of people who influence them or help them along their way as an entrepreneur. Who are your role models and how do they influence you? Beth: I think the first person who got me the sort of excitement at making stuff work was this professor in MIT Woody Flowers who was involved in the First Robotics Company. Lucy: Absolutely, I have seen him. I have never met him. Beth: But he was an early mentor of mine and I became a judge for this mechanical engineering design contest while I was still a student. And then that's sort of got me excited about the excitement of innovating and trying new things and testing your ideas. And then when I went to start my first company, I joined the MIT enterprise forum and there were a number of people there who I had no idea even what a business plan was. And I was going to write one to raise money. So I listened to other people talk about their businesses and I got some of those people to help me write my first business plan. And then later on, a man named Don Spero started a company called Fusion Systems down in the DC area that successfully flowed against the Japanese and the patent area. Kind of taught me about intellectual property and the value of it and also mentored me generally because of his long experience in running companies. And then when I was running Exos and I realized that I was out of my debts from a management point of view. I hired a guy named [indecipherable 10:03] to come in and run my company. And he became a mentor of mine and he is still to this day a friend. So all along the way, I think the lesson for an entrepreneur is to talk to anybody you can everywhere about what you are doing and try and connect with them because you never know when you are going to stand next to the person who is going to get you a deal like I did when I was in a party in MIT. And I stand next to Bob Metcalf who introduced me to the Logitech guys that told me what product to build for an Exos to get an exit. Or whether I am going to hire somebody who turns out to be my mentor and teach me about business that leaves the exit in the company. Larry: Wow. Beth, let me ask this question. First of all, you just mentioned about you are going to write a book this year but now you are running a company instead. It took me three years to write a book that I just had published called Mastering Change. So I just want to let you know that you can do that too. Beth: Yeah but I have a five year old and a puppy. Larry: Yeah, I got you. [laughs] Beth: So I said my daughter is most important, my business is second most important and the rest will just have to wait. Larry: There you go. I agree with that. Lucy: Although I could throw little barb in here and say Larry is a five year old but... [Larry clears his throat] Go ahead Larry I was... Beth: Anything about relationship in any of that. So? Lucy: [laughs] Larry: I have been married for 40 years. What are you going to do? Beth: Adolescence. I am not married so... If any of your listeners want to apply for the job, I take resumes. Larry: We make a little commission on this... Lucy: Yeah... [mumbles] Larry: Yeah. Speaking of all that stuff, what is the toughest thing that you ever had to do in your career? Beth: I think the first time I had to fire people was probably the worst moment because at Exos we started out as a medical company and we grew to a million and a half in revenues selling orthopedic rehab devices using our technology. And we realized we probably sold all the units that whatever be sold because we were teaching people how to turn on the computer not have a measure motions and force in patients. They didn't care about that. They use a plastic protractor and so we figured that out and we had to restart the company, went from 32 people down to about eight in one day. Lucy: That's tough. Beth: And I believe that I had helped outplace...anybody who wanted to be outplaced in great jobs elsewhere, and I am friends with some of the people who left the company at that point for years. And some of my hired again into other companies. I feel good about it. I remember at the end I closed my door and I just cried because these were my friends. Lucy: We hear that a lot from entrepreneurs. I think that is a very tough thing to...not just let people go but it is theirs loss and also downsizing the company and restarting it. That is all tough stuff. Beth: Yeah. Perhaps to tell you that I learned in that experience that if I had done it sooner, everybody would have been happier. Both the people who did not fit the business we are getting into and the investors and everybody would have done better. So, my advice to entrepreneurs is don't be afraid to hire but don't be afraid to fire the person who is the wrong person for the job. You are not doing them or you any favors by keeping them around if they are not working. Larry: Yeah. Lucy: It is the truth. We have learned that lesson unfortunately in the Telecom downsizing. Well that's great advice and it gets us to our next question about advice for young people about entrepreneurship and you have given us some perils already. And I wander around online and I found some presentation you made about naming your company. What I found was pretty interesting. Beth: That is a new one. [laughs] I give that to an MIT class because I am still on the faculty there. So occasionally faculty members will call me up and ask me to come, give lecture to their class and the senior mechanical engineering design class didn't have a clue how to name their product. So I came and I gave a lecture. Lucy: That's good. I can't wait for your book. And so, what kind of advice would you give to budding entrepreneurs that you haven't already told us? Beth: I think the most important thing that I talk to any entrepreneur that I coached from day one is why are you doing this? What are your personal goals? What are your financial goals? How does that fit with your family? And if you evaluate that first and write it down and keep it in front of you and then say, is what I am doing today serving my goals, the company's goals and my family's goals? And when those things start to not match, that is when you get into trouble. And if you don't bother to figure it out first, then you don't have a road map because I made this mistake. I ran a company called Glow Dog which was a failure. It was a failure because we were just about break even and about a million plus in revenue and our Christmas shipments were on the water on 911. We had just grown to the size where we need to manufacture in China instead of the United States in order to compete and they were in the container on the ocean and they could not get in the United States so there was no Christmas. And we had to sell the assets and fold the company because I didn't feel like there was going to be a return on investment if I brought in more capital. But what I didn't think about when I started that company was what was the right size for this business and did that kind of a business match what I personally wanted to do? It was just interesting. People loved the product. They were reflective coating for people and pets. And you walking your dog at night, you don't get run over, right? Well, it turned out our customers were fashion stores in Tokyo who liked the logo I designed. I didn't even know it was reflective and it was a 33% margin business in an industry that is not very protectable and that I had no expertise in. What was I doing, doing this business? So, I raised a bunch of money to make a big play, before I realized that this really was a brand company, not a technology company. I raised the right amount of money for a technology company to get launched, but it turned out technology didn't matter, and to make a brand like Tommy Hilfiger or Ralph Lauren, you need tens of millions of dollars. Lucy: Absolutely. Beth: ... and you need expertise, which I didn't have. So, if I had understood my own personal goals and what kind of a work environment I wanted, and what the end game looked like at the beginning, I probably wouldn't have made those mistakes. Because Glow Dog could have been a very profitable, between $2 and $10 million dollar clothing company and pet product company, if that was its goal. It wouldn't have raised as much money. It wouldn't have spent as much money, and it might still be around today. Larry: You obviously didn't know all your life that you were going to become an entrepreneur and since we're... Beth: I thought I was going to be an academic. Larry: There you go, see... Lucy: Well, you're that too, so there you go. Larry: A little change. Beth: So, I'm an academic. I play at academia. [laughter] Beth: I actually have on one occasion taken money from MIT to teach a class, and I realized that it was not for me. Because along with taking the money, comes a lot of faculty meetings and policies and procedures, and entrepreneurs don't really love those things. What's good about a company that's under 25 people is you don't need a huge amount of that stuff to be successful. Larry: Right. Beth: Some people are really good at structure and organization and detail, and that's not me. Larry: Not you, no. Well, then, what were the characteristics that made you really become a successful entrepreneur? We want to reach out this way, because we have many young people and employers and parents, who want to know what secrets they should look at when it comes to entrepreneurism. Beth: Certainly, like anything else it can be taught, and it can be learned over time. So, if you want to be an entrepreneur and you don't really understand what it is, go get a job or an internship with an entrepreneurial firm and get to know that person who started the company and watch them. Do it a couple of times. You'll learn whether it suits you or not. But in terms of what I think gives me an advantage; first of all, unbridled optimism to the point of stupidity at times. [laughter] Larry: I love it! Beth: You know, "You can't do that! You can't do that!" "Sure I can! Sure I can!" You know there is a limit, you beat your head against the wall a few times and you walk away, but hammering on and being tenacious at getting your objective. If it doesn't happen the way you think, you think of a second way. If it doesn't happen that way, you think of a third way. Maybe you don't end up accomplishing what you set out to do, but in the course of trying to accomplish it, you figure out where the real value is. So, it's a combination of being tenacious, and also being aware and being willing to change, and willing to take advantage of what God, the world, whatever, has presented to you in terms of opportunity. So, if you're trying to build widget A, and nobody wants widget A, but in order to make widget A, you had to make a fixture. And it turns out loads of people want that fixture, well go sell a fixture. Don't keep trying to sell a widget that nobody wants. Lucy: Exactly. I like that, 'unbridled optimism on the verge of stupidity.' I am just going to have to remember that one. Larry: I was looking in a mirror when you said that, yes. Beth: Also, you have to be able to learn from everybody around you. Lucy: That's totally right. Beth: Willing to talk about what you do in a pleasant way, not obnoxious, but to anyone who will listen. Because you never know where you're going to learn something, or who's going to have, "Gee. I know the guy who started that company that you want to have buy your company" or "Gee. I had a company like that, and we made this mistake" and so you can learn to avoid that mistake. Lucy: Absolutely. Beth: Or somebody you want to hire. And don't be afraid to hire people who know a lot more than you do. Lucy: Totally. Beth: It's a matter of risk right. If you're an investor, and I've done some investing as well, you look at what's the total risk package for this business. And anything, absolutely anything you can do to reduce the risk is a good thing. And so the more experience you have that's relative to the business you're in, even if you don't know it yourself or understand it. It's going to reduce that risk. Lucy: Well and that's great advice I think. It's all pointing towards another interview I think Larry. Beth: You could have me talking for days. Lucy: I know. No, no ...I've got all kinds of plans for you know now. So you've already mentioned to us that you are a published poet and we know you're a judge for many years with First Robotics. What else are you doing to bring balance into your professional and personal lives? Beth: Well, I mean it's a struggle. I mean I'm a single mom, so there is no such thing as balance in my life. But, I do things like, I've got a calendar I just printed out this morning because I wasn't sticking to my exercise routine. And just like my daughter gets stars for reading books and she turns it in at school every month. I'm going to have her help me put stars on my calendar for my exercise. Lucy: Oh, that's nice. Beth: And I have family dinner night, where I cut off work early usually on Fridays, so that I can cook a meal. And we can sit down and eat together because it doesn't happen that often. And when I was growing up that was something that was somewhat absent and I wanted my daughter to have that, and I wanted me to have that too. Because, there is this idea that, when I was in the beginning of my entrepreneurial career, I obsessed about the business 24/7 and drove myself nuts. You know, I hardly slept, and that's not the best way to be productive. As I've gotten older, I work smarter. And so I do everything that I can do to make every minute of my time incredibly effective. If I'm having a bad day and I'm not productive. I'm not going to hammer my head against the computer or the telephone, which is where most of my work happens. I'll go and do something nice for myself for an hour. You know, call a friend, go have a coffee, or do an errand I need for my home. Go do some food shopping and come back. And then I'm refreshed and renewed. I listen to books on tape at night as I'm falling asleep so that I can't think about business at night. I love novels and I love fiction. So that for me blocks out my ability to think business. Lucy: That's a great idea. Larry: Yeah, it really is, wow. You know Beth, you have achieved so much in so many different ways. Going back to your first company that you ended up selling to Microsoft and all the other Wins and that challenges along the way. You've achieved a lot what's up for you next? Beth: I would like to have a huge exit in Playsmart. So if anybody is listening who wants to buy a company like that, that's the goal. To build this to where there is enormous excitement about the product and many, many families are using it. And then get a bigger company with huge resources behind it. And then I'll be happy to step back, finish my book and invest and advise in others. Lucy: Wow, and we would love to see you write that book. Larry: Boy, I'll say. Lucy: That would be I mean great, great advice here and we thank you for taking time to talk to us. I want to remind those who are listening to this interview that they can find it at W3W3.com. Larry: That's right and we'll have it up also on our blog as well as our podcast directory so you can download it 24/7. Lucy: Well, I'm pleased to pass it... Beth: And if there are there any moms of kids interested in Playsmart. That's at Playsmart send me an email, I'll make sure you find out about a product when it's out this summer. Lucy: Absolutely, and we'll have that as well in the bio up on the site. So everybody can find it when they come to download the podcast. Very good, well thank you very much. Larry: Thank you. [music] Series: Entrepreneurial HeroesInterviewee: Beth MarcusInterview Summary: Beth Marcus has been Founder and CEO of several successful startups, most notably EXOS, Inc., which was venture-backed and sold to Microsoft in 1996. Since then she has been involved in 14 start-ups in a variety of fields as a founder, investor, or advisor. Release Date: January 22, 2010Interview Subject: Beth MarcusInterviewer(s): Lucy Sanders, Larry NelsonDuration: 24:00