Mark Sears is the co-founder and CEO of CloudFactory which is a distributed workforce company for automating business processes. The company has raised $70 million so far from investors such as FTV Capital, Sovereign‘s Capital, The Social Entrepreneurs Fund, Rockefeller Foundation, Weatherfront Capital, and Dolma Impact Fund to name a few.
In this episode you will learn:
- The foods you want your investors to smuggle to you when working in Nepal
- The time Mark camped in a Hong Kong bank with groceries to make payroll
- How an earthquake shook their team and strengthened their culture
- His top piece of advice for new entrepreneurs
- The magic formula for startup success
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About Mark Sears:
Mark Sears is a computer scientist turned entrepreneur with over twenty years’ experience leading and working with tech companies.
As CEO and Founder of CloudFactory, Mark Sears help provide AI and other disruptive companies with a cloud-based team of highly skilled data workers to complement their own teams and perform the data-related tasks they don’t have the capacity to handle.
After a decade of working with tech startups, Mark Sears lived in Nepal for six years while building CloudFactory, where he learned that talent is equally distributed around the world, but the opportunity is not.
Driven by his passion for technology, business, and people, Mark Sears helps build new leaders every day who can contribute to the global economy and deliver AI breakthroughs to market for innovative companies throughout the world.
Connect with Mark Sears:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder that I think is going to teach us a bit about going around the world to build a business. It’s something that I’ve got to tell you, I’ve done a lot of those episodes that you guys may have listened to, but I think this one is going to be quite unique. So, without further ado, I’d like to welcome our guest today. Mark Sears, welcome to the show.
Mark Sears: It is a pleasure to be here, and unique is probably a good word.
Alejandro: Born and raised in Alberta, Canada. Mark, how was life there?
Mark Sears: Life was good. It was good until I realized that it didn’t snow eight months out of the year everywhere else in the world. I grew up near the Rocky Mountains, and was thrilled, looking back, to have a beautiful place to grow up. It’s been 12 years since we’ve lived in Canada, but I have very fond memories. And, of course, family, and we’re back there every year.
Alejandro: Very nice. What got you into computers, Mark?
Mark Sears: Like many people, it was early on in school for me. It gives away a little of my age. In grade two, we had the opportunity to start playing with Logo and programming the triangle turtle that goes around the screen. I think it was a combination of math and logic and loving computer games that just all the way back, it was great while I was graduating. I started college as a math and economics major. My mom was thinking, “Are you going to be able to get a job? Remember. You used to really like computers. Why don’t you do that?” It was literally that first year that I made the change into computer science with a business minor. I love hacking. I’ve always loved more from the logic and math perspective. I’m very glad. It feels like a long time ago, though. I don’t get to do as much hacking anymore, but that’s how it all started was way back doing my computer science, staying up all nights, and falling in love, back in the day, with Java is where it all started for me.
Alejandro: And you fell so much in love that you actually were one of those classical drop-out stories, which I’m sure that the conversation with your parents was not as exciting to have when you had to explain the dropping out. So tell us about dropping out, Mark.
Mark Sears: Yeah. It’s one of those things where, at the time, you don’t say, and maybe you don’t think you’re dropping out. You’re just like, “Well, the point of going to college is to get a good job. I got a job at Sun Microsystems working on Java, and that’s my dream. So, I’m just going to take a little time off, Mom.” I think the story probably went more like that, and then, of course, you never go back and finish. But yeah. It did, in fact, happen that I never quite made it across the finish line, and yet, I had a good foundation, and I love the opportunity to come out and have that big company opportunity of just working on amazing technologies that I’ve been using for a few years. And also, it felt like I was working on a bit of a startup team at the same time as the rest of the world was coming out of college.
Alejandro: How did you get that job having not finished your college degree?
Mark Sears: I was very persistent. The general manager of Microsoft Systems, Canada, that came there via an acquisition, and I just kept hammering him over and over and over until finally, he relented and said, “Okay, fine. You can come for a co-op internship. So, I went for the summer and ended up staying on for a while. He pretty much just couldn’t avoid me. I was very passionate about Java. I had all over my college room were Java stickers. I had Java tee-shirts. I had Java everything. Looking back, it was actually a little embarrassing. But that passion drove me to get that first job and was certainly a good launchpad.
Alejandro: That’s amazing. Then after this, you went into different roles. You were at Sun Microsystems for a little bit before you actually decided to jump here and there with different roles as an engineer, and then also as a product manager. What were some of those insights that you were getting from the engineering side, and then from going more into the product management type of role?
Mark Sears: It was a fantastic ride. Then, out of Sun Microsystems, I got to go work for a great startup that Sun had as a partner at the time, and it was really great to go and get exposure at another startup. Then my manager at Sun Microsystems made the call after his handcuffs came off, and he was starting a new company. So I got to come back and join as employee #1 with four co-founders and just go on a great two-and-a-half-year run, where we raised 48 million dollars. We grew from those five people to offices around the world, and 140 people. It was a great high-growth experience to be a part of. It was the best of both worlds where you’re not the one who is signing and taking the money from the investors, but you get to be in the room for all of the big decisions. It was fun, and looking back, was certainly that intense period that prepared me for a lot of what’s happened since. It was in that that I went from developer to project management and then crossed over to product management. I think it was the joy of first opening up like a blank screen, and with like typing text, you can create software from nothing — just that individual developer-feel of creating. Then, you move to being a project manager. All of the sudden, now, you’re hiring people and coordinating people to create something from nothing at that level. Then from a product perspective, that mini-CEO taste of getting to look at the entire picture just for one product. But again, it’s that creating something from nothing. Then, as an entrepreneur, you’re doing it at the whole org level. I think that’s been the common pattern for me of just loving the opportunity to build something from nothing and doing it at different levels and different ways.
Alejandro: You had that persistence, and it started with Sun Microsystems how you did not take a no for an answer. You had that entrepreneurial aspect in you. But in this experience of being in hyper-growth, raising the money, was there one thing from that specific experience that you told yourself, “If I ever start my own business, this is something that I am absolutely going to do” that perhaps you learned during this chapter?
Mark Sears: You know what? It feels like you know me because that question hits deep. The only change I would make is one thing that you wouldn’t do. I think that was my biggest takeaway was we came so hard out of the gate, really pushing the marketing side of the business. So the hype cycle was really big. I was on the product side, and it was hard because we’re out there making claims that I knew that we couldn’t back up, and that’s always a hard tension. But I think the pendulum for me really swung the other way as certainly as we’ve been building CloudFactory. It’s been the other side of saying, “You know what? Let’s take our time. Let’s build a strong foundation. I’ve been on the other side, and it was a fantastic ride, but I want to build something great for the long-term, and I know that we need substance. It takes time to do that, do it well, and to do it in a healthy way. I think that it was probably more of a pendulum swinging the other way was the biggest takeaway of — again, very thankful for the opportunity and the people. No question. But that was my biggest takeaway.
Alejandro: How do you balance that because you have the two schools of thought like 1) sell it and 2) then you figure out how you deliver or build and they will come kind of mentality? How do you balance those two schools of thought?
Mark Sears: It’s always going to be attention. We had a little bit of advantage in building CloudFactory, given a low-cost base. We started the company in Nepal. We just were able to be more patient. I think even in some ways, just life is slower in different parts of the world. So things were a bit slower. There was less pressure, and just financially, we were able to go slower. Like anything, setting yourself up to allow more time for the build is, obviously, going to be important. I think the pendulum maybe swung too far in our case, the whole idea of build something and they will come. We probably made a little bit of that mistake, but we were able to afford to make that mistake. The good news is, the market wins played into what we built. I think it is always attention, and it’s also selling something. Selling something is different, though. When you’re more marketing something, that’s probably more the place we went into marketing something. We didn’t even know if people were going to buy, so we didn’t sell it, and we didn’t build it. We just market something.
Alejandro: This, for you, was a nice segue into your own business, Godspeed Computing, and the experience was interesting. Can you tell us about this?
Mark Sears: It was coming out of my time at Zucotto of wanting to start a business, thinking more like lifestyle business. I loved the high growth, but I needed a season of building something that a) I could understand more of the meaning and b) that I could keep it in a way that wouldn’t completely take over life. So I went from the usual stories of two-and-a-half years on an airplane every week, sleeping under your desk for four hours, working 20 hours. It was just the intense craziness that a lot of people have in their 20s. It was again a little bit of the pendulum swinging. It was a great opportunity to get some of the fundamentals of being an entrepreneur. That lifestyle business ended up licensing our software to a publisher and getting royalties. It freed-up the opportunity for when I got married to my beautiful wife in 2006, and she wanted to take an opportunity as an accountant overseas. She got transferred for three months, and we didn’t have kids. We were small as a company, collecting those royalties, and so I said, “I can work from anywhere.” That set us up, both having some fundamentals as an entrepreneur, but also some flexibility to head overseas. We’ve been on a 12-year like you said, around-the-world tour building CloudFactory ever since. I’m thankful for that foundation that I got, and also the flexibility that I had so that when we got the call to go, it was literally — I remember sitting across from my wife. We were both working from home. She said, “You want to go to Qatar?” I was like, “Sure. What’s Qatar? I’ve never heard of that.” I remember Googling and looking to see where it was, and three weeks later, we were on a plane and haven’t been back to Canada other than to visit since. That’s where the fun began.
Alejandro: That’s amazing. Also, this was a trigger to schedule a two-week trip to Nepal that ended up being years. What happened?
Mark Sears: We met a lot of amazing people from Nepal in Canada. Then, also, when we were in Doha, there’s a huge number of Nepalese there. Two of my best friends were Nepalese. We really wanted to go. We didn’t have kids. We wanted to travel, and that was on the list. We booked our trip, and we went to go with a good friend who was going back. Every two years, he got to go home for two months, but he was in a common cycle of people from Nepal and South Asia and quite a few developing countries where they get pulled into this cycle of leaving their homes because there’s no work, and then going to work abroad two years, then come back for two months, and two years, and come back for two months. We had our friends who were trying to parent literally over cellphones, just hearing all these conversations of them trying to parent, and they’d been ten years working overseas away from their families. It was with that that we were excited to go back with our friend. He was there to meet his two-year-old son for the first time. It was a powerful time of seeing a beautiful country and meeting amazing people. We had already fallen in love with people from Nepal, but we really fell in love with the country of Nepal. It was at the end of that trip that we met three young computer software developers. It was literally eating pizza at a cafe in Kathmandu. It was through some conversations that they wanted to learn Ruby on Rails. That was a language that I had been working with for a couple of years. It was really early back then. They were wanting to learn it, and I looked and said, “I could probably stay for a couple of weeks.” The next thing I know — I’ll always remember. I was changing the ticket, and I bought an iMac. The only iMac I can find in Kathmandu. It was not easy. We started spending the mornings, four of us around an iMac, programming, learning Ruby on Rails. My wife was always like, “Well, we’re going to lose a little bit of money on the iMac, but it’s keeping them entertained.” That three extra weeks of training turned into a project. People were asking, “Where are you?” I was like, “I’m training up some developers in Rails.” “What? You’ve got Rails developers? Can you do a project?” So we extended the ticket again for three months, and it went from a two-week vacation to three weeks of training to a three-month project to just staying and living there for six years, having our two beautiful kids and Nepal becoming like home in many ways. More home as long as we’ve been anywhere as a family. It has really changed our lives in so many ways.
Alejandro: And the company being born there as well, CloudFactory.
Mark Sears: The third kid.
Alejandro: Yeah. The third kid, but on this one, there’s an exit. On the real kids, there are no exits, only breaking even when they let you sleep at night, which is important too. But here, you brought to life CloudFactory during this journey, as well, there, so tell us about this.
Mark Sears: It started with building software, so we started training up developers and finding smart, young, talented. They came out of four-year computer engineering degrees, yet there was a gap between that and being able to develop at a world-class software level. Kind of a boot camp and a training, and all that was what we focused on. We started hiring more and more developers and doing more and more projects, mostly building MVPs for startups at the seed stage or Series A stage. It was on the path of being another lifestyle business. It was beautiful. We were living cross-culturally and learning the Pali, the language. Just loving it. But what started to happen was, all these companies kept asking not to just build their software, but they had all this data work that they needed to do. They forced us to use things like Amazon Mechanical Turk, and they wanted us to hire freelancers off of Elance (now Upwork). We realized, “Wait a second. All these companies need to categorize images or moderate content, or they need to annotate or extract information from videos or go out and collect information from the internet. All these crazy things that power their business model, and they kept coming back to us. “Can’t you just hire a warehouse of people in Nepal and do this work for us?” I was really offended. I’m like, “We are a high-end software boutique. We do not do your data work.” Of course, as you said, as an entrepreneur, you keep hearing over and over, and people are trying to put extra money on their invoice to get us to do stuff. You’re like, “Wait a second. Maybe there’s something here. There’s a really big pain point. So we saw that demand in the market, but the other side was, “We’re living in Nepal.” My wife and I are in a community just outside of Kathmandu, where we’re the only business in town other than little shops and restaurants, and barely even that. Everyone’s asking us for jobs. They’re really smart, educated, but we were only hiring computer engineers, but there are all these other people. I’m like, “Wait a second. There’s a huge supply of talent. We’ve got a huge demand in the market. We’re here building platforms for all these other companies. We need to build our own. That started, like many companies, you’re a services company, and you start building your own product or platform on the side. That’s how it started was literally we went away for a retreat over New Year’s. It was January 1, 2010, and laid out a vision, which at the time was kind of really maybe opposed a little bit, like the enemy, at the time, was probably Amazon Mechanical Turk. Just saying, “Wow. Being able to send work to the Cloud and have it come back in minutes with high quality. That’s amazing.” But, of course, the reality was not there. So we had some theses on why that wasn’t true and how we might be able to build something different. That’s what started it. That week, we came back and started building a platform, and started building a workforce model, and pairing those things together and experimenting and saying, “Okay. Do you put people in teams? When do they work from home? When do they work in an office? How do we do training, and how do you assess, and how do you manage performance and capacity? All these challenges were just — we love it. The challenges of coordinating people at scale towards a single outcome like high-quality, consistent data, it doesn’t sound fascinating, maybe to a lot of people, but you know what? We spent ten years on it, and we love it. There are so many fascinating problems when you put together people, process, and technology. So, that’s what we’ve been doing is just iterating on that platform, and the process and workforce model to say, “How do we deliver easy-cloud labor to the world? How do we make it so easy for someone to just get access to scalable, secure, Agile, flexible, cloud labor, or human intelligence? For us, that’s what we’ve been going after. What happened was data has always been valuable, but with the rise of machine learning, AI, and the deep learning breakthroughs of saying, “If we can get a huge amount of high-quality data, we can train up models that will change the world. So data has become more and more valuable, and we just find out five years ago that we’re some of the best in the world at doing this because of what we built. That’s been the story the last five years is beginning to get under the hood with hundreds of companies that are building unbelievable machine learning models in every part of business and life that you can imagine. The things that we are getting to come alongside and help these teams build for within the enterprise, consumer products, financial services, to agriculture, to sports, to retail, every vertical, you name it, computer vision, NLP, predictive analytics. It’s a fun time to be doing what we’re doing. Some people say, “The picks and shovels of the AI revolution is where we find ourselves, but you know what? It’s a fun time.
Alejandro: Yeah, totally. I get it. One of the fun times for you guys was raising the seed round because I’m sure that you were trying to connect with the investors, and they’re like, “Who are these guys? They’re trying to contact me from Kathmandu.” How did you raise that seed round?
Mark Sears: The good thing was, we were bootstrapping, so we had our services business. It was paying our bills. Consulting was paying the product development fees; our costs were low. We were in a pretty good place, but we weren’t able to get ahead of it. We weren’t able to make the investment into technology and teams to really go more aggressively after growth. We did want to raise a seed round. It was a chance-connection at a conference in Thailand with someone who was talking about starting up a small fund of investing into emerging economies. Honestly, I didn’t think there was anything from it. I took his card, but I think I threw it out. It was more that he followed up, and low and behold, they started raising a fund, and we were in a good place ready to raise the seed round. I remember flying to Raleigh Durham, North Carolina, for the first time for due diligence and meeting. These people flew over to Nepal, and they wrote us a $700,000 check. I thought they were crazy, honestly. We didn’t run a process. We didn’t look at a lot of options, and yet, it came together. There’s no way we would be where we are today without that and without them. It certainly was much more, like a lot of people would say. Sometimes, it’s just money. Oftentimes, at the seed stage, it has to be more than that. Henry Kasner came onto our board, became a good friend, became a mentor, and the whole fund. We had them fly over with a frozen turkey, literally on carryon so that we could have a turkey in Nepal for Thanksgiving. My daughter was teething as a baby, and they spent a couple of hundred dollars to overnight FedEx teething biscuits from the U.S. We had them bring over hundreds of pounds of cheese because you couldn’t get good cheese. The way that they loved on us, took care of us, held us accountable, I can’t even imagine. They set a really high bar right off the bat for investors that truly care about us as people, care about our mission, and our why, but also bring some serious experience and business savvy while building a billion-dollar tech company himself was obviously in a good position to help us navigate a lot of the early stuff.
Alejandro: In this case, how much money have you guys raised to date?
Mark Sears: We’ve raised about 70 million to date. Most of that, obviously, came just recently during our 65-million-dollar Series C.
Alejandro: On this last one, you guys were wondering whether it would make sense to bring an investor banker onboard or not. Tell us about that.
Mark Sears: We did our seed, and then our A and our B rounds ourselves. Obviously, you’re dealing with a bigger amount of money. It was a big decision. It was something that I’ve never done before. It’s something our CFO has done before, so I think he had more comfort and confidence. But even as a board, we just weren’t sure if it was something that was worth doing. A lot of it was because we were shopping for growth capital in different ponds, you could say. We are extremely mission-driven. We’re all about the vision of connecting a million people to meaningful online work and going on a journey to become leaders worth following. Like raising up leaders around the world via this online platform. That’s what gets us super excited. We started talking to a lot of impact investors. They were talking to Venture. You’re talking to Growth Equity; you’re talking to all these flavors of investors that are out there today. We did decide to talk to someone who we felt understood globally. He had worked on a lot of different deals. He did a 50 million dollar deal out of Africa, head offices in New York and London, and seemed to get us. We found a boutique investment banker and then decided to take the plunge. Wow! He helped navigate a crazy nine months that I could not imagine that we would have made it to the finish line without his help. So, money well spent.
Alejandro: That’s amazing. How big are you guys today?
Mark Sears: We are growing pretty fast. We’ve got about 380 full-time employees across our four offices. We’ve got about 5,000 — we call them Cloud Workers that are logging onto our platform every day to do our work. We’ve had a good run of growing about 100% year over year for four years. Yeah, the business has got some good momentum.
Alejandro: That’s really cool. Being able to achieve this momentum and having that growth trajectory, obviously, there are some bumps on the way. I know that you had one of those, especially one of your accounts getting frozen in Hong Kong. What happened?
Mark Sears: Back fairly early on, our headquarters was in Hong Kong, and all of our contracts and all of our money came into Hong Kong. Therefore, that’s where the cash was, and yet, most of our expenses were in Nepal and Kenya. So that account had a hold on it. It got frozen. That caused, as you can imagine, a lot of havoc. It’s one thing to not have a lot of money as a startup. It’s another to actually have a little bit, but not be able to access it. That was a crazy time. I flew to Hong Kong twice. One of those times was literally going into the bank, the headquarters. I was sitting in the lounge. I went and got a huge bag worth of food, and I sat there, and I said, I’m not leaving until I get access to our money. We’ve got hundreds and hundreds of people who are depending on paychecks. I literally stayed there for hours. Finally, someone came out, and they essentially said, “Okay. We’re going to open up access for 15 minutes, so get your computer ready. You can take up to — I think it was $250,000. So, we took $250,000 out. It was the panic of logging in. I was sweating, and it was an intense trip. Actually, I’ve had a lot of intense trips to Hong Kong over the years. That battle of doing business globally — we call it, sometimes, a micro-multi-national startup. It’s easier than ever to go and incorporate and to do a lot of things, but there’s still a lot of challenges of doing business globally. There are a lot of stories there.
Alejandro: Absolutely. The tough moments also create, at the end of the day, the culture of companies and especially how we behave when those moments are in front of us. I know that when the earthquake happened in Nepal, there were 1,400 families that were part of the family of CloudFactory. The way you handled that, I’m sure that people were very inspired. Everyone was trying to get out, but you were trying to get in. So what was going through your head?
Mark Sears: Wow! That’s a tough one. Literally, goosebumps and just that whole topic of that window of time is a crazy, crazy thing. I remember waking up, hearing about the earthquake. I had just gotten back to the U.S. I had been in Nepal the week before, and getting on a plane. I was flying from Raleigh Durham to New York, and I was balling in the airplane. The people beside me were — I was crazy. I just couldn’t stop. From there, I ended up transferring in Doha to go to Nepal. It’s a very common route. We had friends, because we lived there, who met us at the airport and handed us $10,000-worth of cash. I remember in all the airports along the way, I was maxing out every card I could to pull as much cash as possible because that’s what the team said is, “The banks are closed. We don’t have cash. We can’t buy goods.” I was trying to get as much cash as possible, and literally, during my transfer, I met somebody who handed me that money. I stuffed it into every corner of my outfit. We ended up not being able to get into Kathmandu right away. We got rerouted into Kolkata and finally were able to land. I walked in to see our team just caring for one another. They were so organized and determined. We were using Trello boards and standups, and every kind of Agile development technique that we’d been doing for years to build our business was now being applied to how do we help our community? How do we help make sure the 1,400 families that now depend on CloudFactory in Nepal at that point, how do we — we saw young leaders step up. It was a crazy, hard time. I think, coming out of the back of it, with hindsight, we look at our revenue chart over the last ten years, and our inflection point was right after that. I remember one of our leaders got up, sharing her story of what happened, and so many people that just didn’t know if they were going to make it during the earthquake came out of it and were like, “You know what? We’ve made it through this. We can make it through anything together.” That was really how we came out of it. It’s certainly not what you ever want to happen, but obviously, through some of the hardest things that we have individually and collectively as companies, that’s what makes us stronger and prepares us for what’s ahead. There’s no question that the Nepal earthquake did that for CloudFactory.
Alejandro: Wow! How powerful, Mark! Here, you’ve been with this journey with CloudFactory for quite a bit, and I’m sure that during this journey since 2010, there’s been all types of the good, the bad, the ugly, the successes, the mistakes, the things that didn’t work out as intended, so you’ve learned a lot. If you had that chance to go back in time and have a chat with your younger Mark, what would be that piece of business advice that you would give to that younger Mark before launching a business, and why knowing what you know now?
Mark Sears: I think that playing off of the trail we just wandered down together that leads me to that path of, like you said, you never know what’s going to happen. It is hard to build a business if you’re thinking anything less than ten years. Yes, you can build and flip, and there can be some outcomes, but when you’re really trying to build something and do something meaningful, you need to think about can I give ten years of my life and have an unbelievable amount of twists and turns and pain and obstacles? You need to bust through doors. There’s no question that, I think for me, it is the why. You have to know why you’re doing what you’re doing, and you need to have clarity around that. That’s something we spent a lot of time understanding what is the purpose of this business? What’s unique about this? Not just our want in the product, and maybe I’m sounding a little bit like Simon Sinek and the whole Golden Circle. I do think that’s the most important thing is to build something that can bring change in the world. You need to understand why because it’s not going to be easy. There are only levels of hard. Finding your why and then finding great people around you to go through it. If you know why you’re doing what you’re doing and you can have a group of people where you build strong relationships and have fun together doing it, no matter what technology or what industry you’re in, that’s the magic formula.
Alejandro: I love it, and I’m glad that you touched on thinking ahead ten years because people typically don’t think that far ahead, and unfortunately, people overestimate what they can do in a year, but they completely underestimate what they can do in a decade.
Mark Sears: Exactly.
Alejandro: For the folks that are listening, Mark, what is the best way for them to reach out and say hi?
Mark Sears: I’m fine with the good old-fashioned email. I’ve thrown it out there before, and some people take me up. firstname.lastname@example.org if you want to get ahold of me, I’d be happy to talk. Otherwise, you can hit me on Twitter @marktsears
Alejandro: Amazing! Mark, thank you so much for being on the DealMakers show today.
Mark Sears: Thank you. It was fun.
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