Bootstrapping a Company with Mac Cummings

george grombacher 0:02
Well love for this George G. And

the time is right welcome today’s guest struggle powerful Mac Cummings Mac.

Are you ready to do this?

Mac Cummings 0:08
I’m ready. All right, let’s

george grombacher 0:09
go. Mack is the co founder and CEO of Terra Keet. They are the largest pure SEO company in the United States and the founders of a new category called owned asset optimization, as well as reputation management. Mack excited to have you on tell us a bit about your personal life’s more about your work and why you do what you do.

Mac Cummings 0:32
Appreciate it. Thanks for having me.

george grombacher 0:35
So tell us a little bit about the personal life a little bit about the work give us the why.

Mac Cummings 0:41
So personal life I’m a son to Martha and Larry Cummings, I grew up in a small farm town called Tallinn, New York that’s not far from where I’m sitting right now. In skinny Atlas, New York. I got married at 35 years old. To my wife, Michelle, I have three little kids, one of which just celebrated her fourth birthday on Sunday. got also a five year old and a seven year old. We made a big move down to Palm Beach, Florida, last fall to put our kids in school there. But we still get to spend summers here in upstate New York, which is our favorite place in the world. We we started our company, not far from here at Cornell University in Ithaca, New York, which is where I went to college and around my sophomore year decided at a Cascadilla Hall at Cornell that I should start a company. And I was so naive to think that that would work. And, and so that was really the start of it. It was in Ithaca, New York in 1999 that I started this company that still kind of exists today, although the name has changed a couple of times.

george grombacher 2:03
started the company in 1999, starry eyed up or optimist enthusiasm and it turns out it actually worked.

Mac Cummings 2:11
Yeah, it’s a 25 year overnight success story, as they say. It was it was really out of necessity that we started the company, we were just trying to figure out a way to make money. I know, founders often have these stories that they tell of, you know, something happened and my car broke down on the side of the road. And I decided to start this, you know, online insurance company or something like that. I wish that that was the case. But really, we just were so naive that we thought that we could start something at that age. And we did and we kept trying and, and 25 years later, here we are.

george grombacher 2:50
In was it in the in the the internet search space?

Mac Cummings 2:55
Yeah, actually, it was. So the first business that we started was called the money crawler. And it was a search engine, believe it or not in the financial space where you could type in the name of a stock or a ticker symbol. And we would very quickly return a series of articles that had been recently published about that company. And we thought it was quite useful. We got a bunch of traffic to the website. But it was the wild wild west of the internet, very difficult to monetize traffic, we were trying to sell banner ads, and we just had a really tough time figuring out how to make money. And we were trying to pay our way through college. So we had to make money, or we were going to be in real trouble. So we very quickly pivoted to software and consulting. And around that time, there was an ecosystem up at Cornell of startups that were venture backed that were starting businesses, and we kind of decided that if we sold the pick, you know, the shovels and, and and the tools to those entrepreneurs, we could make money because we could charge a retainer or we could charge a project fee. So that was the first business that we built at Cornell that was doing that called Mind shark software and consulting. And that was the business that we ran through college and us to pay our way through college. And it was pretty successful. But by the time we graduated, we wanted to start something bigger and something that had more of a recurring revenue function to it. And that was when we launched Tara key, which is the business that we run today in 2001. And the premise of Turkey was actually built off of the original idea for money crawler, which was that people were looking for information online, but that that was going to migrate to this idea of Voice Search. And we got really interested in voice recognition and speech recognition. And that’s where we came up with Tarocchi. The name actually was based on parakeet and terabytes taking data and answering people’s questions. And it failed miserably. We, we spent about two years building a product that no one wanted. And we took that product out to market and no one bought it. But thankfully, the original company that got us into that business, that was a voice over IP company said, Hey, could you help us drive more traffic to our website, and things came full circle to working with that company, to try to rank various terms on Google so that we could drive customers to their website. And in 2003, that really became the basis for what is the modern day Turkey.

george grombacher 5:51
You were just 20 years too soon on The Voice stuff.

Mac Cummings 5:56
I went to a conference out in San Francisco, I think in probably 2000, to 2003. And they had a bunch of experts from all around the world that were working on speech recognition, some of which had been working on it since 1960, at Bell Labs, and someone from Microsoft got up in front of all of us and said, by show of hands, when will voice recognition in a call center be as accurate as a human. And I raised my hand and said 2010 Someone else said 2020. And then he put up the screen the year 2050. And I kind of turned to my partner and I said, Pat, we don’t have this kind of times, we kind of think we gotta figure something else out. So there we were back to pivoting again, and, and trying to figure out what was next back then we called it going out of business. Now entrepreneurs call it pivoting, which is essentially shutting down what you’re doing and then doing something else.

george grombacher 6:58
That’s the that’s, that’s really funny. It’s we needed a bigger boat moment. All right. So from humble beginnings, and now you are a very large company, lots of employees. And but you’ve done it differently.

Mac Cummings 7:14
Yeah, so what we always learned about in school, when we were studying business is that you have to build a business plan, you have to build a pitch deck, and then you have to go out and you have to pitch a bunch of investors. So that’s actually what we thought we had to do. So that’s what we did. And we went out and we raised about $400,000, from my grandmother from a guy who I had worked for his company, a college roommates father, and we tried for two years to raise money, and it was our entire fixation. And what ultimately ended up happening was we raised money too soon, we built a product that no one wanted. And we went through their money and ran out of it, when really what we should have done is just grinded and tried to find customers and, and build a product based on what the customers told us. They wanted, which is what we ultimately did. So when we had the opportunity to try to rethink teriyaki, we had had a customer that had held back payment on us for a couple of years due to some litigation that they were going through. And we knew that a big payment was coming in that we kind of didn’t expect. And we use that as an opportunity to go back to our original investors and say, Hey, Turkey, as we knew, and as we planned, it’s pretty much gone. And the business that you invested in doesn’t exist, would you be interested in being bought out. And so every single original investor A Few Years Later opted to get bought out at a premium to their original investment, which they were quite happy with because they thought we had gone out of business. In reality, we just felt so guilty about the idea that we had their money in the company that we never bankrupted the company and shut it down. We just kept going with Tara key. And we decided kind of from that point forward, that the real way to build this business was to answer to ourselves to build something that didn’t have misaligned interest didn’t have the pressures of time and returns and to do it in a bootstrap way. And, and that turned out to be one of the best decisions that we’ve ever made because there are probably a lot of moments where we were in, you know, financial stress or we were wanting to do something big. That was rather crazy. Where if we’re answering to a board of people or a different group of people that had an interest in getting a return within a certain period of time, we’ve never would have been given the leeway to do some of the things that we’ve done.

george grombacher 10:12
Appreciate that. So having all your interests aligned? That makes a lot of sense to me. Is that something that now looking back on? Do you think that that is a viable model for businesses who are starting out today?

Mac Cummings 10:33
Yeah, what I would tell young entrepreneurs that are thinking about building a business or building a company, is that whatever you imagine, in your head that you and a team of people are going to build will change quite dramatically, from the time that you come up with an idea to the time that a customer or a series of customers actually purchases what it is that you’ve built. And so when a young entrepreneur comes to me, and they show me a pitch deck of an idea that they’re thinking of, typically, they’re asking for an investment. And what I tell them is imagine that this will change 567 or eight times, imagine the name of the company might change. Imagine the product that you think that you’re building will change dramatically. And imagine that most of the money that you invest, to figure this out, will probably be gone by the time you come to that realization. And you’re probably going to need more money. Would you rather raise money now at a low valuation to figure all those things out and essentially, learn an expensive lesson? Or would it be better with a smaller team to tinker, to talk to customers to take a little longer to take the time to figure out whether the dogs like the dog food, so to speak, and then build something that the market wants and then go out, when you have a viable product, you have actual customers, you have revenue coming in, and then make the you know, it’s kind of like in basketball, the pivot position, like you can not raise money, you can raise money, you could take a bank loan, you know, you have a lot of optionality at that point. It’s not that there’s anything wrong with raising money. But the way that I’ve described it is it’s like fuel on a fire. If you just have a little spark, which is an idea, and you begin pouring gasoline on it like that spark is going to go out. If you have a spark, and a fire is starting very quickly, like you’re on to the next Uber or Airbnb or something like that. And you know it and time is of the essence, then certainly, those types of businesses require injections of capital.

george grombacher 12:46
That makes a ton of sense, it’s great metaphor, just having Spark, not necessarily the next step should not necessarily be dumping a bunch of gasoline on it, because you could just put your idea out.

Mac Cummings 12:57
Yeah, and the other thing about ideas are that all of them are good, until you begin to scrutinize them heavily. And the ideas that tend to be thought of as the best are the ideas that often we know the least about. And when you start peeling back the onion and understanding the realities of the business that you’re getting into the simplicity of the business begins to get stripped away. And the complexities and realities of what you need to create to satisfy a market need, begins to rear its ugly head. And all of that takes time. And the less you know about an industry or a technology, the more at risk you are of iterating so many times that you give up. And so the other thing that I encourage entrepreneurs to do is to get involved in businesses where rather than try to be, you know, an inch deep and a mile wide, you know, you’re inch wide and a mile deep and you become the expert and the specialist in that one thing that you do and the more you know about a business going into it, the quicker you’re going to get to market and the quicker you’re going to get to revenue and customers, the less you know, the more you’re going to stumble. And that’s okay. I mean, there are plenty of people that have gotten into businesses where they are learning very quickly. And they question also the status quo because Why are things the way that they are? You know, that’s how Elon Musk has really been so successful. He’s come into very traditional industries with embedded companies and he said why are they doing the things this way? Why are they building cars with this technology? Why are they building rockets that have to be the exact size of a railroad when you can just build the facility next to where the rockets to Take off, and so on and so forth. But not every entrepreneur is Elon Musk and has that level of intelligence. And and for most of us, we have to find something that we can learn a lot about, be really good at it and try to be the best in that one thing.

george grombacher 15:17
Well, that’s really well said. So there’s certainly a time for urgency, if you are Uber and trying to be first to market for, do you think that that’s less common?

Mac Cummings 15:29
I think that if you just look at the statistics, the number of people that raised venture capital, and then extrapolating out to the number of companies that actually become large public companies, it’s a very small percentage chance. But I think if you look at the number of entrepreneurs that have started a company without raising venture capital that have iterated that a bootstrap, that have built something, there have been some great companies that have been built that way that are less talked about. Because if you just think about how the press is controlled, there’s venture capitalists, private equity firms, they have PR firms lobbying firms, they’re pushing out press releases, they’re talking about their investments, they’re talking about their returns. But the little known fact is there are a lot of amazing companies that are out there that have never raised a drop of venture capital that most of us have never heard about. But I think if I had a choice, or I was advising someone, how to build a company, that’s where I would start. And I think what I would say is you can always raise money, if you’re building a great company, the first question you get asked if you go in front of a panel, and you’re trying to raise money, or you’re doing like a roadshow is, you know, what’s your exit strategy? And I’ve never had an answer for that. The answer that I say is build a fundamentally good company, build a company that has a great culture, that generates revenue that has profits, which most people are familiar with, and, and then figure out what you’re going to do and figure out what the best, most opportunistic way to grow is. And you can grow through acquiring other companies, you can grow by being acquired by another company, you can grow by raising private equity, or venture capital, or you can grow organically by trying to add customers and add revenue and adding people in the process, which is what we’ve done.

george grombacher 17:37
I love the What’s your exit strategy? Well, I’m going to build a fundamentally good company that’s profitable, and it’s sustainable. And, and we’re going to be mindful about how we’re doing it and make sure that it’s aligned with our values. Yeah.

Mac Cummings 17:52
What a novel concept.

george grombacher 17:53
That’s sounds pretty Correct.

Mac Cummings 17:58
One of the, one of the things kind of when I did the pre read for this interview, were questions around building and why and with who, and, and things like that. And I was reflecting on that a little bit. And a question that I think entrepreneurs can ask themselves if they’re building something, or they’re thinking about building something, or anyone really going into a job or a career, or business, comes down to this poem that I read, and I heard quoted one time, called a builder or wrecker. And the poem from Charles Franklin Ben Burghard. Talks about am I a builder who works with care measuring life by rule and square? Am I shaping my work to a well made plan, patiently doing the best I can? Or am I a wrecker who walks to town content with the labor of tearing down, oh, Lord, let my life be in my Labor’s be that which will build for eternity. And I think when I thought about Turkey and reflected back on Turkey, we chose to be builders. And what that means is that we want to build things for our customers that make our customers more successful. We want to build things for our employees, that give our employees a platform so that they can do something in our company that they can’t do anywhere else in the world so that they have great skills that benefit us if they stay here, but also that benefit themselves and maybe the next company they go to if they decide to move on and become an alumni of Turkey, and then building in our community. And the fact that you know, we started this company in Syracuse, New York, not Silicon Valley, or New York City. You know, we chose when we were 19 years old, my business partner, Pat, and I knew that we were going to be builders, and we weren’t going to be wreckers. It’s not to say that there isn’t a purpose for the Wreckers, but I think As entrepreneurs, we choke we choose to be builders. And it’s a good poem to read if, if your audience is interested.

george grombacher 20:09
We love it. I love it. It is. How did you come upon the poem,

Mac Cummings 20:17
actually read a news article and there was a politician that was reflecting back on their time in Congress, and describe their time as being a builder versus a record, I think a lot of times we tend to think of politicians as being records. And he referenced the poem and, and I looked it up another poem that resonated with me. And I think would resonate with anyone who’s building a company, or has been through the trials and tribulations of entrepreneurship is just the concept that entrepreneurship often looks like a straight line, like from beginning to success, and it’s everything but that its ups and downs, and incredibly challenging and incredibly hard. And there’s a poem called if by Rudyard Kipling, and in that poem, there’s a section says, If you can dream and not make dreams, your master if you can think and not make thoughts, your aim, if you can meet with triumph and disaster and treat those two impostors just the same. And I read that and I thought to myself, Well, why would triumph or disaster be an impostor? And the reality is that those two things are just moments in time. And the longer you dwell on your triumphs, the more you become egotistical and begin reflecting on the past, and how great you are. And that can be a pretty miserable place to be, particularly people that like sell their companies and have the big celebration and rent a big yacht, and then ask themselves, can I just go back to what I was doing, or people that have a major failure, or what they refer to as a disaster, and they blame someone, or something, and they kind of live out their days blaming their problems, and everything on something else, or someone else, or this awful thing that happened. And that’s a pretty miserable place to dwell as well. So what are we really doing, you know, as human beings, and entrepreneurs. And the way that I think about it is this idea, of course of building but also the human fabric is the fabric of evolution, and getting a little bit better every day, the idea of improvement. And I think we’re all chasing excellence. But the thing that gets us up in the morning, the thing that keeps us going is constantly improving. So I think a lot of entrepreneurs imagine, back to the thing I raised earlier around exit strategy, they imagined this one day with the big celebration, where they get liquidity and they exit a business. But that triumph is fleeting. And I think it’s important for all of us to think about what gets us up in the morning. I know you’re up early in Phoenix doing this, but um, but every interview that you do, and, and everything that you publish, gives you an opportunity to learn something. And for me waking up every day and being around an amazing group of people at Tarocchi. And working with my co founder who’s brilliant, and getting to try to be a better dad and a better husband. All those things are what keeps me going and keep me feeling alive. And so this idea of triumph and disaster being imposters was very impactful for me.

george grombacher 24:02
Great, I love it. Well, Matt, thank you so much for coming on. Where can people learn more about you? How can they engage with you?

Mac Cummings 24:11
So pretty sure my email is on the website, tarocchi.com you can engage with me on LinkedIn. I’ll respond to anybody who has any questions or any advice for me. And I really appreciate you having me on today and appreciate your time and keep doing what you’re doing because everything that you’re putting out there gives people a chance to learn and get a little better which is again what we’re all here to do.

george grombacher 24:39
Amen. Well, if you enjoyed this as much as I did show, make your appreciation and share today’s show with a friend who also appreciates good ideas go to turkey.com It’s t e r a ket.com. Check out everything that Mark has built and is working on there. You can find him on LinkedIn and also check out out a builder or a wrecker as well as if the two poems that Mac referenced and I will link those in the notes of the show as well thanks again Mac Thank you and until next time remember do your part by doing your best

Transcribed by https://otter.ai