INNOVATORS | COVER STORY
$13 billion in “committed capital.” They’ve invested in everything from clean energy to tech to lingerie and even a DJ booking and training company. Among the area startups they’ve backed: Everfi, an education technology company that helps schools with off-curricular issues like bullying and financial understanding for kids; Sonatype, which is headed by serial entrepreneur Wayne Jackson and helps developers reduce risk in the use of open-source software building blocks; and Science Logic, a cloud systems management company; among others. GROTECH Since Frank Adams founded it in 1984, GroTech has put more than $1 billion into 100-plus ventures, typically investing in tranches of $500,000 to $5 million. Local investments include SocialRadar, a cross between Tinder and Facebook, or as SocialRadar chief marketing officer Kevin Alansky puts it, “Waze for people.” VENTUREHOUSE Mark Ein is a homegrown Washington, D.C., success story. Even at the relatively young age of 49, he’s no newcomer to the business startup and turnaround space. He spent seven years at the Carlyle Group, starting there when Washington’s other homegrown financial powerhouse was just five years old. Before that, he honed his skills at Goldman Sachs. He’s proud to suggest he was the first to set up an urban business incubator. In 1999, long before Washington’s Penn Quarter became the hot spot it is today, Ein set up Venturehouse in a loft-like space on 7th Street NW, a couple of blocks down from the Verizon Center, which had only opened two years earlier. Numerous startups have begun there, whether they received investment and leadership from Ein or simply took space under his umbrella. “Most of the venture capital and technology community was located in Northern Virginia, but I always thought the creative class and younger entrepreneurs would prefer an urban environment,” he says. “I also believed it was important to support and encourage the growth of a vibrant entrepreneurial ecosystem
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in the District. Fifteen years later, the world has come our way and this is now where all of the interesting activity is occurring.” And Venturehouse has seen a lot of action. “I’ve been an early investor or a founder of six companies that ended up being worth over $1 billion, either upon exit or they hit a billion dollar valuation.We’ve been involved in some extraordinary things,” Ein says, chatting in his high-windowed conference room over an Evian and a Diet Coke. He may be best known for buying Kastle Systems, a local office building security company that he turned into a national company offering an expanded suite of
‘There is no question in my mind that right here in Silicon Beltway, you can feel the rise of a next larger generation of innovative and, most interestingly, important companies that can vie for being No. 1 in their markets.’ — Harry Weller, NEA services. Its success inspired the name of Ein’s five-time champion World Team Tennis team, the Washington Kastles. But there are many others. Ein’s biggest successes also include Sirius XM satellite radio company; Matrics, an early RFID company; Aether Systems, one of the first to add data to the voice traffic that cellular networks were transmitting; and Cibernet, a back-end clearing house for cell phone network companies to pay each other for roaming charges. Ein bought Cibernet for $35 million and sold it four years later for $210 million. So, how does Ein spot opportunities? “You need to be able to put seemingly disparate
bits of information or trends together to see things that will happen several years out that aren’t obvious if you haven’t put those pieces together,” he says. “And then you have to take that idea and pair it with the right people and they have to execute really, really well to make the dream become a reality.” There are surely infinite people who would like to pitch Ein, but he stays focused. “I don’t do a ton of things, I don’t make a ton of bets. I try to pick the ones I think are the best opportunities and put more time and capital into a fewer number of things … And once we’re in I really try to make sure they work at some level, I hate failing … What we’ve done a lot in recent years is buy existing businesses and change them to attack bigger opportunities.” In addition to great ideas and execution, Ein says timing is crucial. In 2006, he started a mobile payments business within Cibernet. It didn’t take off. “That was an example of a really good idea and good strategy with bad execution and timing,” he says. Today, of course, mobile payments is coming of age and between Square, Google Wallet and now Apple’s smartphone payment system, a huge business. A similar example is Aether Systems, one of the first to add data to cellular networks. “It was a very successful company for awhile,” Ein says. “and then it didn’t adapt to the times.” “I’m not a gadget guy. I’m more a ‘where’s the world going?’ guy — what’s going to happen in the future as opposed to today. It’s often not that hard because oftentimes what happens in the future is not about inventing things, it’s about putting things together that already exist to solve a big problem.” Ein’s record is such that a certain folklore surrounds him. One Washington denizen active in the startup and VC space said they heard that a friend of Ein was once at a loss on what to do with a certain flailing dog of a company, offering it to Ein for nothing. He bought it for $1, the story goes, and turned it around into a $100 million sale in short order. Asked about this, Ein is modest: “I think that is a bit of hyperbole and urban mythology, but I’ll take it.”
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