Lessons From Silicon Valley: An Interview with Mark Hoffman
Mark Hoffman is an American-born entrepreneur who has spent most of his career founding billion dollar companies right out of the country's tech hub, Silicon Valley. He tells entrepreneurcountry what growing up in the US taught him about being an entrepreneur, why he’s now disrupting financial services with his latest start-up, Oxygen Finance, and what he thinks British businesses could learn from the US.
Mark begins our interview by telling me about his childhood, growing up in a small town in Minnesota. "My Father ran a dry cleaning establishment and my Mom was a teacher starting in a one room school house and eventually got her undergraduate teaching degree when she was 40. The village was very rural and small and I had a lot of independence from a young age."
When Mark graduated from school his first port of call was West Point, named the best college in America by Forbes Magazine for its academic, military and physical excellence. Students are known as 'cadets', with tuition fully-funded by the Army in exchange for service upon graduation.
"West Point was not just about a great education, but discipline too. I got an engineering degree and then joined the military and was given a lot of responsibility at a very young age.
"In the military I was running companies and was responsible for a lot of expensive equipment and most importantly people’s lives. All of those things shaped me. I spent a year in Korea in the seventies and ran a transportation headquarters company, which involved vehicle and electronic equipment repairs and running a warehouse for an Army Division."
While WestPoint did prepare Mark for a career in the military, it was also the place in which he first began to take an interest in computers, which would shape his later career in Silicon Valley. "West Point had to be one of the first institutions that were really using computers in student instruction" he says, "We had to do engineering projects utilising main frame computers that we had at West Point. Then, after getting out of the military and getting my MBA at the University of Arizona, I decided I really wanted to go to work for a high tech company."
Mark's first job in the Valley saw him working for Amdahl, a mainframe company, which was competing with IBM, who dominated the market at the time. It was a great learning experience. "Then the guy that hired me left to join a start up company and took me with him. It's hard to think about it today but at that point in time in the early 80’s we were creating relational database machines that were fast enough to finally run high performance databases, and that was cutting edge.
"We then spun off from that company to create a start up company which was Sybase. Sybase was a real inflection company for me personally and my career. I was CEO and Co-Founder of Sybase, and we built it from nothing to a billion dollar company. I was CEO for 11 years. It was eventually sold to SAP in 2010 for 5.2 billion dollars."
With phenomenal success as an entrepreneur and enough money to retire, what made Mark want to start all over again with Oxygen Finance in London? Hoffman tells me he had 'unfinished business.'
"Another company I had co-founded was CommerceOne. I had a man called David Brown working for me and many years after he left he called me telling me about this company that he was starting up in London and what he wanted to do.
"I said I would be interested in going on the board of the company but David wanted me to run it instead. The timing wasn't right for me then, so I was on the board last year and David kept talking to me about moving to London and running the company.
"In September last year, I called David and said why don’t we get together and talk about me running the company. Out of that conversation, I decided to move to London. The technology, financial play and services were very exciting as was the possibility of building a huge company again. It reminded me of CommerceOne and some of the things we were trying to accomplish.
"What David and I talked about was how do you get 50-70% of buyers and suppliers to start interacting with each other in a network in a win/win manner. The answer was to incentivise buyers to offer early payment to their suppliers but to do it with a rebate from suppliers instead of a discount. Rebates can be recognised as revenue. We would also get world class integrators to do the implementation for free and banks to finance the gap between a 5-10 day payment to suppliers and payment of 30, 60 or 90 or more days. The way that works is we pay the supplier early and the buyer can pay us back in 30, 60 or 90 days, whatever they want. Then the buyer receives a rebate and we take a percentage of the transaction. The way this offering becomes real big is when you have something like 70% supplier participation with the buyer in these networks. No one has been able to get that kind of participation with Supply Chain Financing (SCF) or any other program. If you can do that then that’s super exciting and it changes the world in terms of what’s going on between buyers and suppliers. We then began to prove out this theory where we can get great buyer/supplier participation.”
"Oxygen Finance is like a super service play into the market and so it’s much more complex than just a simple 'here’s a product, build your application or do whatever you want to do.' We take it from beginning to end with great partners like KPMG, Mahindra and Accenture on board with us". With a mind-blowing track record for creating high-growth companies, what did Mark forecast for Oxygen Finance in the near future? "I think Oxygen Finance will be a huge company. The companies that we are going after are the FTSE 250 type companies or in the US, The Fortune 500 or 1000, with billions of dollars of spend that we can help to automate."
Now that Mark had migrated to London and was working for a financial technology start-up, as well as networking with other entrepreneurs and investors, had he made any comparisons between the US and UK entrepreneurial scene? He tells me, "You know, I’ve definitely seen differences but just like in Silicon Valley, way back when Apple started in the 70's, I also see here this super smart, inspirational community emerging.
"As a result of years of entrepreneurial activity there is an established infrastructure in the US that's there to support entrepreneurs. These are employees, VC’s, banks, legal, accounting and others. They understand entrepreneurial companies and their needs. This culture has been centered in a few area like Silicon Valley and Boston but is now growing out everywhere across the US. New York, for example is really a hot entrepreneurial area right now.
"In the UK you have a lot of people trying to get into an entrepreneurial company, but I will say that entrepreneurial companies aren’t for everybody. You have to be very driven, there’s long hours of hard work and usually the pay isn’t as high as you could be making in an established company because in that ‘start up’ you’re working for the stock. There is always different attitudes and drivers that work out for some people and that don’t work out for others."
On the topic of driven, hardworking individuals that thrive as entrepreneurs, Mark mentions his early interactions with none other than Steve Jobs. He tells me how the two worked together while he was still CEO of Sybase and Steve was CEO of NeXT. "Steve and I always had positive interactions as at the time he wanted Sybase to support his hardware. He was a brilliant guy and had a reputation for being very hard and very driven with his own people. On Friday night's at Sybase, we had a cheese and wine event. At one of those, Steve came along following a meeting and he took the role of cutting the cheese up for everybody. As we were setting up, one of our employees came up to him and said ‘You really look a lot like Steve Jobs.’ Steve didn't give the game away and his response was ‘Yeah, a lot of people tell me that’ - so he had a good sense of humour!”