Venturehouse Group CEO Mark Ein

Auren Hoffman (00:00.43) Hello, fellow data nerds. guest today is Mark Ein. Mark is the CEO of Venture House Group and has been involved in founding or in early stages of over six companies worth over a billion dollars. He also served as the chairman of the president's export council, the executive chairman of Castle System. He owns the DC Open, which is the biggest tennis tournament in DC and was a key partner in the $6 billion acquisition of the Washington commanders.

Auren Hoffman (00:28.918) Mark, welcome to World of DaaS.

Mark Ein (00:30.824) It's such a pleasure being here, Auren. Thanks for having me.

Auren Hoffman (00:33.602) Yeah, absolutely. We've been friends for quite a few years now, so I'm super excited to dive in. Now you've got this like very weird portfolio. You've got like, you've got cruises, you've got prop tech, you've got sports teams. Most investors kind of stick to like one sector. why, what, is there some sort of commonality amongst these things?

Mark Ein (00:54.612) Yeah, well, first of all, maybe it seems weird on the outside. I wake up every day just like so happy I get to work on the coolest stuff, stuff that I've got a wide range of interests. And so I truly like literally wake up every day just feeling so lucky that I get such an interesting portfolio of activities. And I would say to some extent, it has been driven by things that I have an innate interest in. But as you said, it's not focused in one sector. It is pretty broad.

Auren Hoffman (01:02.734) You

Mark Ein (01:24.492) And I'd say, Orin, it's an interesting question because I would say rather than it be a negative or a disadvantage to not be focused on one area, I'd say it's an advantage to be able to see across a variety of things and bring the things that you learn in one area to an area that may not have been exposed to them. And I'll tell you, one of the things...

that someone said to me early in my career, because I came to DC 30 some years ago to work at Carlisle when it was new. And we backed this amazing entrepreneur. And he actually told me, I was young, I was in my late 20s. And he said, Mark, you know, it's amazing. You bring things in from the other things you've seen to hear that we wouldn't have seen. And I told my dad that. And my dad said, you know, from a very early age, that was the thing about you I found interesting is you would apply things from

one part of your schooling or education or one part of your childhood experience and apply it to others and see things that maybe others didn't see. so this topic is one I'm super fascinated in. Actually, a woman, Jillian Tett, who was editor of the FT, wrote a book called The Silo Effect. And we spent a lot of time talking about it. I was in it because I told her, I think there's great power in being able to do this well. And we can talk about how to do it well and what the pitfalls are.

how to do this well. I think there's really great power in being able to see across a broader set of things and bringing the things you learn in one area into another.

Auren Hoffman (02:56.076) can see some of the perils. I can see like, okay, this stuff you learn in prop tech, you could actually like move to a sports team because in some ways like it's, you you're dealing with these very, very complex spaces. You're trying to fill those spaces. there's some like there's definitely seems like there's some overlap between these things.

Mark Ein (03:14.72) Well, think actually, so if I just take Castle, which was an amazing company, and I'd say, know, interesting maybe for your audience, the thing that I focus on how I got to sort of this portfolio and the stage of company is in my career, I did everything from starting companies, early stage growth to buyouts. And over time, I just developed sort of a model that appealed to me, which was I loved the psychological rewards.

And I love the process of building companies that you do from an early stage. My only thing is I didn't really love working with companies that were always losing money. I always said, you know, the day after you write the venture check, they're losing your money the next day and you hope you get to the next fundraise before you lose money. And so I came up with this thing that I want to find existing companies that are really fantastic, but for whatever reason, their existing owners haven't made the most of it. And we can come in and apply.

that venture growth mindset to maybe a company that could grow a lot faster, but hasn't. so Castle was one of those companies, incredible company, incredible business model, great entrepreneur, but for a variety of reasons, it had kind of been stagnant for a while. And so I came to it with a tech per and everyone who had been in that company had just done that for a really long period of time. The minute I saw that company, I dropped everything in my life until we signed it up and got the deal done because I saw this and I said,

from all these other experiences I've had, we can take what this company has done in a very narrow way and broaden it. We can do more things for more verticals in more geographies. We can bring new products. Because I had done an RFID company. I had done wireless networks. And then in my sports stuff, I had done customer. I understood what it takes to delight customers. And we could bring that. the company, this will be the deal of my life. It'll be an extraordinary return.

someday. And a lot of it, I think, comes from how we transformed the company from what it was when we got there to all the things that we brought from our other experiences to make it what it is the company today.

Auren Hoffman (05:25.096) In some ways, what you're doing is a little bit more of like the older school private equity. Like back in the day in the 80s and 90s, you would like buy a company and you'd actually make it significantly better. Today, it seems like a lot of private equity is more about financial engineering and because they're often buying it from another private equity firm that isn't done. So they actually did a pretty good job on it as well. And then they're kind of flipping it to another private equity firm. you kind of see it like you're harkening back to like

Mark Ein (05:44.277) Thank

Auren Hoffman (05:53.858) like the more the original era of private equity.

Mark Ein (05:56.528) Yeah, so I think it's interesting because private equity originally was what you said and then it went through a phase that really was about financial engineering, buying, putting leverage on, getting whatever growth, flipping at a higher price, especially with low interest rates. People made great decisions doing that. I do think as the world's become so much more competitive and so many more firms, and I was doing what I'm doing long before this last phase of institutional private equity,

Institutional private equity, a lot of it has gone back to how do we institutionalize the business building. So if you look at a firm like a Platinum, they have a 50 person operations team. We've worked with them. If you look at Black Zone, have a lot of, you know, look at Vista, that's a great example, the big in-house group. that, like people have come around to say, we can't really generate the returns without actually building the businesses. And so I think the industry has come back to it, but it's always what I've done because

Like I like making money, there's no doubt. Like it's a good thing and it's something that is good. But my motivation to get up every day is not actually about making money. It's about making a difference in the world and doing things that are gratifying and that you feel like you're accomplishing something. And so for me, like just buying with leverage and having modest growth and flipping didn't really feel like that. I loved the building process. I love being

the closest partner to the CEO, because I've been a CEO myself. I know how badly you want it. And so being an active partner and building great businesses is what drives me. And that's how we got to the model that we execute on today.

Auren Hoffman (07:36.526) Is there like, do you have like some sort of money ball thing that you're looking for in CEOs that other people don't either they don't appreciate or they think of as a flaw?

Mark Ein (07:48.298) Yeah, the hardest part of this business, the most gratifying and the hardest part is picking the right people. It's all that really matters at the end of the day. And it's funny because when you're young and in this career, everyone tells you that. you probably don't appreciate as much when you're young. And then you get a few decades in and you really realize that is the absolute most important thing. And picking people is really, really, really hard.

I tend to be, especially for CEO jobs, a very slow hire because I find that a lot of times people are great in the first session, sometimes the second, but if you spend enough time with people, you eventually get down to who they are, how they think, what matters to them. And so just, spend a lot of time really trying to really getting to know people. I get very specific in what did you do in your previous experiences and how is that connected?

to what we want to do. I probably over index on clarity of thinking and communication because I think that's indicative of how people, how.

Auren Hoffman (08:52.814) And how do you, is it just like having conversations with people or do you want to see that written or how do you see that communication?

Mark Ein (08:58.155) It's more just the communication and spending the time. mean, we have done it where at times you'll say, us a business plan or do a presentation on what you would do. And I do think that could be a useful part of it. And that can really be illuminating too. But a lot of it just comes down to spending the time with someone and seeing how the conversation goes.

Auren Hoffman (09:17.622) And you've been kind of like focused on these things sort of like continuous improvement potential. Like, how do you know when it has that potential?

Mark Ein (09:26.635) Well, it's more about how do you bring continuous improvement. I'll tell you the story that got me on this was one of, you know, we all have these moments in our life and I had this moment. I was on the board of a company with a guy I was telling you about who I invested in. was a Carlisle Rocks thing. He had a company called LCC International, which was the biggest engineering firm for designing wireless networks in the nineties. We took it public and we had a guy on the board named Arno Penzias who won the Nobel Prize.

Auren Hoffman (09:29.868) Yeah.

Mark Ein (09:52.46) for discovering the Big Bang. And I love Arno. He unfortunately passed away a couple of years ago, but he became a dear friend. And it's interesting, because if you know the story of how Arno discovered the Big Bang, it was kind of by accident. He wasn't looking for the Big Bang, but he saw an echo in the telescope and put this whole theory together. And so the genius in working with Arno was that he just saw obvious things that other people missed. And we were working on this company.

And things just kept going wrong, but they were always a different thing. And we were in the middle of a meeting talking about the latest thing that had gone wrong. And Arno just like started pounding the table and said, stop, stop, stop. When are we going to stop putting out fires and figuring out why the fires are starting? And it's so obvious, right? And it's root cause and all that stuff. Back then in the mid 90s, that was not well, wasn't written about as much as now.

But it really got me to like, that is the right thing. If you're in a situation where things keep going wrong, you gotta go root cause and you gotta get continuous improvement. So that's, and the greatest companies and the greatest individuals are all about continuous improvement. And it's the thing that I just, my whole life is obsessed with this. How you do it is a lot harder than saying it. And a lot has to go in. You have to put the right process in place. You have to have good collaboration, good communication. You have to be able to have honest.

Communication, people need to be able to receive it without being defensive. That's one of the hardest things. People have to be willing to not just gloss over what went wrong and put a bandaid on something, but dive into the root cause. But when you do it, the organizations, the companies you build reach levels that people never thought they could. And I'll tell you, I view it the same as with people, that people who are committed to continuous improvement reach levels they never thought that they could.

And we talked about, you talked about, and I know we're gonna talk about it in a bit, my role in the tennis world, but I befriend a lot of tennis players. And we talk about this, that if you look at the greatest tennis players in the world, and we had an era for a while that was on the men's side, Roger Rafa Novak, who separated themselves from everyone else. You look now, you have a situation with Sinner and Alcaraz who have separated themselves.

Mark Ein (12:16.651) The reason isn't because they're that much more talented than everyone else. The reason is they are the best at getting better faster than everyone else. And they have played each other in the finals, I think, of pretty much the last eight Grand Slam. So people are like, how is that possible? And I'm like, the reason is because they are the best at continuous improvement. And so whatever you do in life, I think continuous improvement is the unlock to levels that otherwise are not achievable.

Auren Hoffman (12:43.246) How do you get a sense that somebody is there? Because obviously you could watch them over long periods of time and see the delta, right? And that's one way, but it's a little bit more difficult. And sometimes you're not like, you don't even have that observation ability. So how do you get a sense by talking to them, by meeting them, that this is the type of person who is into continuous improvement?

Mark Ein (13:05.611) Well, look, I'd say once if someone is a zealot for continuous improvement and you talk about their history, it's going to come out because the people in my life who I've sort of bonded with over this, you can't talk about your experiences if this has been embedded in it and not bring it up. So it will come up. So that's a thing. And, you know, the way you ask the questions, as I said, to me, the biggest thing in hiring is to be very specific. So I'm always like,

What did you start with and what did you end with and how did you get there? And so in the course of that, you can uncover it. And then this is the hardest thing. You can't know this in, I don't believe it's hard in the interview process unless you do psychological profiles, which I actually think can have a good place. And a lot of people swear by, and I think can be really good, is are they defensive or open-minded? Because if you don't embrace this, a lot of people in the world get very defensive, very stubborn, very standoffish.

when you go through this exercise, their first instinct is defensiveness. And it needs to be the opposite, is like, let me hear what the group's talking about. And is there truth there? And is there something I can do better, we can do better, that I should be embracing?

Auren Hoffman (14:20.662) Is there, is it correlative or anti-correlative where like some, could see someone, let's say you saw someone who's continuous improvement at getting better at running or something. Like, is that actually correlate to how they do in business or is it almost like that's their outlet for continuous improvement? Maybe they're not actually as good in business.

Mark Ein (14:41.323) It's a great question. I've never thought about it. I don't know. I've never thought about it. I'm now going to think about it. But I will say I have a passion for sports. We talk about it for our kids. My passion for sports isn't sports in itself. It's sports is life. And it's why I love not just being involved on the business side of sports, but competing and playing myself because

So much of the things that I think about or am committed to in business, these beliefs comes from playing sports itself. So it should be correlative. It definitely should be. But, you know, there might be people, a lot of it really just comes down to how open-minded and non-defensive and non-stubborn people are. That's where people get stuck. You need to be embraced. so...

I'm not sure how much that's related to sports, but no one's great at sports, really great, without trying to figure out how to always get better.

Auren Hoffman (15:37.164) Yeah, yeah, yeah. Okay, that makes sense. Now, speaking of sports, like if I was evaluating like a car wash to buy or a bunch of car washes to buy, you know, I can do some sort of understanding the cash flows and understanding how much I can improve it and maybe the growth and expansion opportunities in the place and all these other. And then you could have a sense of like how much the business is worth when you're looking at a sports team. There's that, of course, but there's also this kind of like trophy aspect.

to it. Like, how does one understand like the value when those things come in these kind of weird non financial intangibles?

Mark Ein (16:07.082) Yeah.

Mark Ein (16:15.773) Yeah, it's such a good question. Look, I think especially when it comes to the highest profile sports teams, it's a combination of a business and a piece of art. And the value is somewhat determined by the underlying business and probably equally and increasingly maybe even more for its scarcity value.

and its desirability as something that someone would want to be involved in. And so it is not easy to do traditional financial analysis. I'll start with not that. Let me start with the other ones. And some of the other ones I've done, it always does start with, like when I bought the tennis tournament, it started with an underlying economic analysis of what is the possible.

economic potential of this. And I didn't count on the fact that someday the value may be something more than that. And we actually did that. As we've looked at bigger sports teams, and you mentioned the commanders, and I made investment in a British soccer team called Leeds United, which has gotten the Premier League. And by the time this comes out,

I will have closed an investment in the Baltimore Orioles, my hometown team. There, you you do do the financial analysis, but the likelihood is you're not going to get to the value solely on that. And so, you know, then it starts to be a bit of relative value, which I actually find is usually pretty dangerous. Like if this team went for this in this league, then this team should go for this. If this league's going for this, then this should go for that.

It's not easy to, you can't really evaluate them the same as another business. And I'd say if you go in it because you think you're gonna get super wealthy because the business is someday gonna support the valuation you paid plus the return you hope to get, that's probably not it. The reality is so far,

Mark Ein (18:26.395) The values have kept going up because more and more people want to own them. They found ways to find other business opportunities around it. so today they've all been really amazing investments.

Auren Hoffman (18:39.756) And is there some sort of sense where it's almost like a leverage bet on the U S economy or something, or like, or is there some sort of sense, like if the economy did bad for me, like, or maybe like art is a little bit like that or, know, or it's like the global economy.

Mark Ein (18:46.332) No, I didn't!

Mark Ein (18:53.445) It's more like, it's more, yeah, I think it's more a store of value. it's like, I think it's a combination of a business, something people want to be involved with because they're at a point in life and they're like, this is something I want to do for me and my family. And then there's a store of value. Look, the Commander's deal is a super interesting situation. We did incredible amount of financial analysis and, you know, for a long time, it was Josh, his team, me working on that.

Auren Hoffman (18:58.092) Yeah, okay.

Mark Ein (19:22.603) And we did extraordinary amounts of analysis. And look, there is a real case. mean, I love the NFL is by far the greatest sports league in the United States, if not in the world. And it's so dominant. you know, two years ago of the hundred highest watched TV shows in America, 94 were NFL games, three were college football games. So it's the one place that, you know, delivers a mass audience, which is something that a lot of people want to get to.

Auren Hoffman (19:31.444) sure yeah

Mark Ein (19:50.572) whether it's an advertiser or network or streamer. So you have that. But then the interesting thing about the NFL, Warren, is that the Super Bowl is only watched by 140 million people. It's watched by about 100, 110 million people in the US, which is obviously the biggest by far. But then it's only watched by 30 or 40 million people outside the US. Whereas the final of the World a lot of potential. Whereas the final of the World Cup is watched by a billion and a half, two billion people.

Auren Hoffman (20:13.262) There's a lot of potential.

Auren Hoffman (20:18.594) Yeah. And by the way, I love to see like there's NFL games now in Brazil. There's in London. There's Frankfurt. You're starting to see a little bit of, okay, let's kind of expand the appeal to other folks.

Mark Ein (20:30.687) So to take, exactly. So to take a venture mindset, how do you expand the TAM, right? So traditionally the TAM for the NFL has been domestic. There's a very, very strategic, well-executed plan to bring it to the rest of the world. And that's all new people. So that's big. The other one that I love is flag football and especially for girls and women. You know, my daughter plays flag football and

Auren Hoffman (20:36.067) Yeah.

Mark Ein (20:58.621) It's extraordinary to go out and you see these girls field. Like literally the place she goes, there's six games, all young girls, all loving it. And then they're all coming. Then I go to our stadium and there's all these young girls coming in their flag football uniform. So you also want to talk about this. Tim, now look, there's always been a good female fan base in the NFL, but when the girls are actually playing it, that's only going to happen. Exactly. Exactly. So.

Auren Hoffman (21:21.006) Yeah, understand the game more when you're playing it for sure.

Mark Ein (21:26.813) So like these were all the things we thought about is like, is this a league that's kind of tapped its potential? The more actually international and those are two gigantic, relatively untapped Tams that we knew the league was going to go after. Plus they've really delivered this audience. That was good. But that all said, you know, it's pretty well reported that we brought in a, you know, a pretty good size set of, of partners to do this. And the amount of people who were willing to write a really big check.

for this, I'd say was somewhat surprising. And it really opened, I think, all of our eyes that I think a lot of these, and a lot of them are families view this as they have a subjective reason for doing it, but they wouldn't do it if they didn't think there was a financial underpinning. It's a store of value. It's just like a great piece of art. There's only 32 franchises in the greatest sports league in the world. There only probably will be 32. I don't know, maybe that'll change, but.

it's probably 32 and that scarcity should continue to drive higher and higher values.

Auren Hoffman (22:32.045) We saw in the NBA where Mark Cuban like sold his or at least part of his interest in the Dallas Mavericks. Is there some sort of sense that in some sports leagues we could be, you know, maybe at the top or do you think like in these permanent sports leagues, the NBA, major league baseball, you know, et cetera, premier league that there's still just so much room to grow.

Mark Ein (22:56.299) You know, it's interesting. mean, Mark Cuban sold his, Michael Jordan sold his, right? But the values since then have gone up dramatically. I mean, if you look at it, you say they left money on the table. But I can so relate to both. I mean, I'm a little younger than both of them, but in the same zip code. I can totally relate though. You know, they both got involved. They poured their heart and souls into it.

They're the most fun, greatest things in the world, but you also spend a lot of time on it. And you hit a point in life where you're like, I could take out all this money. Maybe someday it'll be worth more. But you know, I've got 20 summers left in my life and what do I want to do? Do I want to keep doing it? I think these, when people do that, it becomes, and then I think Mark thought he could use help in getting a new stadium done. And that's a whole nother work stream.

And at some point, the decision to sell, whether it's a sports team or a company, has less to do with the company itself, more to do where is the owner in their life? What is it that they want to do? And I think I totally understand how someone could reach that decision at some point.

Auren Hoffman (24:03.128) It's also a little bit weird where today there's so many, in some ways, there's so many like benefits to fame. and it's like a very weird thing where, a lot of wealth is generated by fame and by influence and stuff like that. And of course, if you're like a sports team owner, you're like instantly famous. may have been like the super billionaire, like, you know, you run Apollo group or whatever, but like, no one's ever heard of you until you buy the sports team.

Mark Ein (24:30.943) Yeah. And some people want that. Some people accept it as part of it. Some people don't want it. And some people have it for a while. And then they say, I'm ready to not have that life anymore. And it is part of the overall equation.

Auren Hoffman (24:44.31) Yeah, of course, then you have millions of people who like all they do is they rail against you every day and stuff like that.

Mark Ein (24:53.203) You have to be humble in all of these things because it's all precarious and you know, one day you're on top of the world and things are going great and then the next season you're not. So you can't get too, take it too seriously on the way up or the way down.

Auren Hoffman (25:08.258) Now on the DC Open, like until I met you, I didn't even realize these USTA events could be owned by like an individual. For some reason, I just thought it was like owned by the UST. I didn't understand it before. Like how does economics work?

Mark Ein (25:22.953) Yeah, so the tournament in DC, the Mubadil at DC Open is, and it's, it's, have both an ATP men's event and a WTA women's event. Those are the names of the two tours and they both run the men's and women's tours. The USTA owns the US Open, the Grand Slam.

And it is interesting because a lot of the events in the tennis calendar are owned by the federations or the governing bodies of the sport around the world. But there are tournaments that are privately held, including obviously mine. The great thing about mine is when I was a kid, I was a ball kid at this tournament. And the highlight of my summer was getting to be a ball kid for Jimmy Connors and Guillermo Vilas and

Auren Hoffman (25:53.314) Yep.

Mark Ein (26:11.657) Jimmy Arias and all these guys. Yeah, and then, you know, fast forward later in life, you end up finding a way to own it. It's pretty amazing. our tournament had been owned by a not-for-profit for almost 50 years. And as the requirements to showcase these tournaments got higher and higher and the need for investment got more, frankly, they weren't able to make those investments. And the tours were imposing requirements.

Auren Hoffman (26:13.25) Sounds amazing, yeah.

Mark Ein (26:39.615) And so they had to find someone to come in and do that. And I had been talking to them. This honestly was my dream. I mean, the two things I cared about as a kid were the tournament, being a ball kid and the football team. And so now to be in a position to be involved with both is indescribably, you know, it's indescribable, the feeling of it. I feel so incredibly lucky, but the chance to come in and really

elevate that tournament to where it should be on the world stage was something I was so excited about. Frankly, there were people from all over the world bidding on it and the price got higher and higher and I almost at one point stopped and then I thought this tournament had meant so much to me as a kid and so much to so many tens if not really hundreds of thousands of people in DC over 50 years that I had to try to be the buyer so that it would stay in Washington. Fortunately that happened.

And we've transformed the event. And so it really is a really solid, good business. We make money from tickets, from sponsorships, from TV, from food and beverage and from merchandise. And they're not the biggest businesses because they're one week, but they're really solid business. And the sport is in incredible shape. mean, the sport is really, really thriving around the world and now in the United States.

Auren Hoffman (28:02.126) And is there, is there like, how does a nonprofit even sell a business? Like, how does that work?

Mark Ein (28:09.291) Well, they own it and then they sell it and then it goes into an endowment. And part of our deal with them, which was sort of what my pitch to them was, and it was, I believed it, is they get all kinds of intangible benefits for being the owner. They get tickets, you highlight them. It's an incredible program that provides after school programs combining tennis and education for kids, many of which enter city in D.C.

it's an incredible organization, is I can leave you with all the intangible benefits of this, the tickets, the recognition, we'll support your gala, all the things they got, but you can rid yourself of the financial obligation and you can't really, you don't have the wherewithal to make the investments that are being asked of you. So it was kind of perfect. And then you can take the money and endow the organization forever.

which is what they've done. They now have an endowment from our deal that will support the organization for the rest of time.

Auren Hoffman (29:15.726) One thing that's really been changed in the last 10 years or so is sports betting. And it seems to now it's becoming more prevalent. It's bringing in some ways also bringing new fans, maybe fans because they're finding other like I remember when I was a kid, I got into baseball because I was into baseball cards, not the other way around. And dealing baseball cards. What how does that like affect the sport long term?

Mark Ein (29:44.468) Yeah, so sports betting has been an interesting phenomenon. When it first came on the scene, I remember a decade ago, it was actually a woman who's just retired as the tournament director of the US Open, Stacey Alister. She was talking about the fact that sports betting was happening on the content owned by the leagues and the events, but you weren't sharing in it. And it would almost be as if people were selling t-shirts outside your stadium, unlicensed, un...

you know, without permission and making money. And so eventually people said, if this is happening, A, we should share in it because we own the content. B, we should also make sure that it's safe and governed and, and, you know, there's a set of guard rules around it. And so that trend obviously happened. think people thought it would be in and of itself a bigger financial windfall than it has proven so far for teams because

you really only get a small piece of the overall bedding. And so it's nice additive in tennis, the data revenue, which tennis is the second or third most bet on sport in the world, actually, because people. Exactly. And if you talk to people, you know, in Europe, a family will have dinner and one of the parents after they put the kids will bet, he'll go sit and watch a tournament somewhere and bet on. And so.

Auren Hoffman (30:53.11) there's always a game right there's a game like every day.

Mark Ein (31:06.987) And so there is additional economic change from the data and betting, but you hit the nail on the head. The real value is engagement. And so an interesting stat in tennis is 80 % of the tennis bets are after the match starts. So what people are betting on is not who's going to win or lose, is who's going to win the next game, who's going to hit the next ace, who's going to win the next set.

Auren Hoffman (31:31.672) That's fun.

Mark Ein (31:32.69) Yeah, well, and so really the way to think about sports betting, and it's true, think, in fantasy football and all these things, is it's entertainment amplification, right? Like watching a game because you have, watching a game is fun, watching a game because you're passionate about the team is way more fun. Watching a game because you're in love with the team and you have money on it is all another level of engagement. And I think that's the real benefit to the sport is it just gets people

more engaged. Now, the last thing, this topic, you can't talk about it and not talk though about how important it is to also really make sure that you have the right guardrails and safeguards, not just for the sport, but the people, you know, betting on it. But in its right place, in the right balance, it really is a great catalyst for people to be more engaged in the sport.

Auren Hoffman (32:22.882) It's one of the things I don't like about it, like from the draft kings or these other kinds of things, is I've had so many friends who've got kicked off of these things because they're winning too much. And it just seems like kind of unfair. It's like in the stock market, if you win too much, great, keep going. That's the whole idea. I don't understand why they don't change their business model and just be like a market maker.

rather than having to always take like the other side of the bed.

Mark Ein (32:55.103) That's interesting. wasn't, I'm not a better in anything or a gambler. So I don't think I've ever made, I've never made a sports bet in my life. So I'm not that close to it, but it is interesting. It is kind of amazing when you look at the point spreads, how accurate they are though, how often they did exactly right. You know, it's two and a half and the game is either two or three points. It's amazing. So you would have thought like,

Auren Hoffman (33:09.953) Yeah.

Mark Ein (33:18.291) Vegas that they get it close enough, right? That they don't, you know, they can win on either side, but there probably are people who are figuring it out. I'm sure they don't like to lose money.

Auren Hoffman (33:28.93) Yeah. Yeah. Yep. Now you were doing SPACs like kind of like long before they became, they became like a thing. Like, why is that potentially like a better path for public markets for certain companies?

Mark Ein (33:42.229) Yeah, we did our first back in 2007, right before the financial crisis and turned that into one of the best mortgage rates ever formed. And then we did a whole bunch of them. And then obviously the space got super crowded and we kind of stopped, which I'm glad we did when we did.

You know, the whole idea and I really, did this because what I love to do when we talk about this a bit is work closely with companies. And I don't like to work with a big portfolio. I like to have a really concentrated portfolio and make big bets of time and money. And this was to me a really interesting deal by deal, like single deal vehicle.

where you could give access to public market investors into the kind of investing that we're doing, kind of value creation we're doing. And I thought it was, and it was for a very long time, and a bunch of the stuff we did turned out fantastically. It was a really interesting way for certain companies to access the public market. The thing that was, the common thread was generally there was something about the company

where a traditional road show where you do a series of 30 minute meetings and no Q &A and no diligence was needed to talk about the company, right? And so trying to start a mortgage rate in the depth of the financial crisis was zero possibility on a traditional path. But through its back, what we did is we actually spent a huge amount of time with a set of investors who in the end believe what we were doing.

and gave us the capital to go do it. And each situation had some element of that where the actual process of going public that was a lot more intensive, a lot more diligence, a lot more time was gonna be beneficial to the company. And what's interesting, Lauren, for the longest time, we had the stickiest investor bases. It was amazing. People would back us in the SPAC. The vast majority, almost everyone would stay in.

Mark Ein (35:47.284) And then they would then stay in longer in the company than the people who came in when we did the merger, because it was almost like it was like a private equity deal. Like they did a massive amount of work upfront and they knew the company. They weren't swayed by quarterly stuff one way or the other. And we had really sticky investor bases and it worked really well for a long time. And then, you know, obviously the space got super overheated. People was hot money and it all changed. But for a long time, it was a really interesting vehicle.

Auren Hoffman (36:18.006) Is there like what, in the world of today where it's so much easier to access money in the private markets, is the SPAC just an SPV that I could just do in the private markets today and without all the regulation and I could, cause you know, the problem with the SPAC is I can't say the target ahead of time when I'm raising money, whereas an SPV I can go do that or is it just like a PE firm with one kind of thing?

Mark Ein (36:29.897) Yeah

Mark Ein (36:46.621) Yeah, I mean, the thing about the financial engineer around SPACs on the IPO of the SPAC before you identify target is you're guaranteed at least a reason of a return, right? Because you can always ask for your money back and the deal's done. And so it's financially engineered because of the Warren and the option value intrinsic in it. Now, we did a bunch where the interest rates were so low that you

Now you're getting interest on trust plus the option value. And that's why people do it. The flip side is the more attractive the return is to just giving the money at the IPO and then redeeming is you create a higher hurdle for the merger to actually get people to not ask for their money back. And that is what happens. But one of the reasons that in such a short period of time, SPACs have gone from, you know, kind of a

a four letter word to now hot again is because the opportunity for investors in the IPO is kind of you can't lose. And if someone uncovers some amazing deal, you can win big. So it's pretty asymmetric. That's why you see a lot of people raising them. Yeah.

Auren Hoffman (37:58.542) Yeah, yeah, interesting. Now on Castle, you guys track occupancy rates across tens of thousands or over 10,000 buildings. Like what is the data showing right now around return to work? And how is this? Is it any different than the media narrative suggests?

Mark Ein (38:17.843) Yeah, so from the very beginning, because we didn't know this until the pandemic, that we had the best source of people going to office by far, there's really no comparable.

And then we started publishing it and then everyone was asking our opinion on it. And from the very beginning, I've been a believer that CEOs and executives generally wanted their people in the office. I know you run a generally distributed company and other tech companies do, but the vast majority of executives want people in the office at least some of the time. They feel like that's the way it is. And they just for the longest time couldn't because of the labor market and whatever.

Auren Hoffman (38:48.459) sure.

Mark Ein (38:55.829) But over time, this has just been a continuing trend. And more and more executives and more and more high profile ones put a stake in the ground and say, you need to be in the office at least some of the time, all of the time. If you're not coming in, don't work at my company. And that's been it. And so it's been a steady increase up.

But you really need to get underneath the data because across the country, think we're at 55 % of pre-pandemic occupancy. So you go, well, that's not that high. But there's a couple of things. First of all, that's a weekly average.

Auren Hoffman (39:27.83) Right, so like on a Wednesday it might be 80 % or something or whatever.

Mark Ein (39:30.795) That's what it is. It's like 65, 70 % across the country. And on Fridays, it's like 30 some percent. so, and Mondays is slightly less. that brings down the, it's also a constraint to getting the number up when a couple of days are so low, you can't get back to a good number. The other thing though that's important is there's become huge stratification in type of buildings. So,

When you look at C buildings, B buildings, A buildings, A plus, when you look at A plus buildings, meaning the best buildings in the best locations, on the peak days, they're mid 90s. They're basically back to where they are. And so you hear real estate developers.

Auren Hoffman (40:06.316) Yep. Makes sense. Like if I'm going to come back to work, I want to come back to work in a good place with a great, you know, great building, with great amenities, with all the other types of things.

Mark Ein (40:17.777) And vice versa, that's one side totally right. And on the flip side, if you're a company and you're paying the highest rents, you're going to say, I want my people to use it. So it's both sides. So yeah, it totally makes sense when you think about it. the data, but then look, we know that there's a lot of C buildings that people are looking to convert to other uses because for the exact opposite, the exact reason you said.

Auren Hoffman (40:25.346) Good point. Yeah, yeah, yeah.

Mark Ein (40:41.373) If you're gonna go to the office, you want it to be a good environment and a good location where there's amenities and stuff. A less good building in a less good location is gonna find it really hard to get people back and their occupancy is way less. And so the average has gone up, but the growth rate has slowed a lot. But when you get behind the data, you really realize that there's this stratification and that the average is swayed by the different days of the week. And that's sort of the picture of it these days.

Auren Hoffman (41:09.352) these like leases change and you know we're already starting to see them change from you know pre-pandemic leases and stuff like that because some some of these had like these seven-year leases and stuff like what happens in the office market?

Mark Ein (41:21.803) Yeah.

Mark Ein (41:25.609) Well, most major markets, if you want a big block of A plus space, you can't find it anymore. So like you can't. so now.

Auren Hoffman (41:34.328) True, yeah. But for people who had C &B buildings, and there's all these lenders that that lended money for the C &B buildings and stuff like that.

Mark Ein (41:44.076) Yeah, so I look, you've seen banks take over. You've seen distress sales. You've seen that you've seen some of those turn to condos. I think, you know, a not great building in a good location. You'll probably see someone buy it and renovate it and try it because it's probably a quicker path to getting it to an actual building. You know.

If it wasn't for interest rates and frankly, costs of materials, which have a lot of things, including tariffs and other things, I think you'd start to see some real office building construction right now. I think that is gonna come just because the space actually doesn't exist for the best spaces. If you're looking for less good space, you have a lot of options with a lot of flexibility. it's interesting. I followed WeWork from the very beginning and to me, the innovation in WeWork was never about

like keg parties and vibes. was like, you know, the basic relationship between tenant and building owner was like sign a long-term lease, put a lot of capital upfront for tenant improvements. Doesn't really work for most company and also no flexibility. To me, what we worked in temporary space was actually giving people that flexibility. And I think what you see in less good buildings, you're gonna see more of that kind of flexibility.

Auren Hoffman (43:02.254) How are these like real estate owners like thinking about data?

Mark Ein (43:07.839) They love it. I mean, it's one of the things that makes them like Castle so much. And it's one of the biggest requests we have, which is give me more data, more data, more data, more data about my properties relative to other things. Everyone's focused on it. like, you know, we have the occupancy data. it's like, if you're a building owner and a lease is coming up and we can tell you if those people are coming in the building or not, you can tell if they are.

risk to renew or not, right? If no one's coming in, they're probably not. And so there's all that kind of stuff that people are pretty voracious about. I mean, it's interesting, Oren, because when we first bought Castle in 2007, we came with a tech background. I mean, I have done a lot of different things, but a lot of it really was tech, telecom related. So we came to the company thinking, well, we're going to really be a forward. We're going to be a video. We're going to provide a vision, a tech vision.

And for the longest time, the real estate industry was really tech laggards. And it was frustrating because it was very hard to get people to embrace it. Interestingly, right before the pandemic, you started to see real estate owners actually change on that. And what you realized is that they knew that people wanted the same tech-enabled experience where they live and work as they have in every other part of your life. If you can order a cab,

on an app, if you can do your banking on an app, if you can get your sports tickets on an app. I also want to interface with my building in the same way. And so that started, it accelerated in COVID. You know, until that time, until a few years ago, there was no such thing as PropTech. There were no PropTech conferences, newsletters, venture funds. And then all of a sudden they popped up. I will say that it has cooled a little because getting to scale in that industry is very difficult.

Auren Hoffman (44:57.005) Yep.

Mark Ein (44:58.175) You know, every building is a small sale. So it's definitely cooled off a bit, but the real estate industry now is looking for data and other tech that lets them run their businesses better.

Auren Hoffman (45:13.87) Okay. A couple of personal questions. you, you've, you, you actually are, we haven't played tennis, but, I know that you're extremely good tennis player. Like, do you have your own like training process of continual improvement to get better?

Mark Ein (45:26.379) I do. And that's why I love the sport. mean, in the summer, I play two hours every day with a young couple of young pro like college players, but they're pros now. And the thing that I love is just the pride that I every single time I go out there, I'm trying to get better at something. And I now I have.

Auren Hoffman (45:48.162) Now are you like, what's the better, is it to work on the weaknesses or work on your strengths?

Mark Ein (45:53.964) I actually work on my weaknesses, but you should work on your strengths more. That's actually the smarter thing to do, but I, I'm obsessed with figuring out the stuff that I know I should do better. Interestingly, I, I, for the longest time, videoed not always, but I would, for a while of, I mean, for part of our workout, I would video and then I would actually go back and look, there's now some amazingly cool apps that you can get that will track the speed where the ball goes.

can show the highlights and it really is a great tool for all that. I mean, love it. Tennis is such a great sport and it's so fun. It's such amazing exercise, but it's also like, it's great if you're obsessed with trying to figure out, you can always get better. And it's fun to figure that out.

Auren Hoffman (46:39.982) So I started playing when I was older. I didn't, I didn't really have the basis of it. And the first coach I had was this very, very, very interesting philosophy where he would only tell me when I did something well. and it was so great. was so great for my confidence as an early player. Like the first time I went out there, he's feeding me balls and they're like going all over the place.

And then ever once in a by accident, I would hit one well and he would like stop and then he would bring me to the net and he would dissect exactly what I did well. And of course, once I, if you could do it, if you can do it, even if it's by accident, it means you could do it again. Right. And then out of, instead of one out of a hundred, I was doing five out of a hundred and then 10 out of a hundred. And it was a really great way to get someone like into the sport.

Mark Ein (47:17.737) Yeah.

Mark Ein (47:27.241) Yeah, that's, I will tell you one of my other pet, it's an obsession that may turn into a pet project is I generally think the state of tennis coaching in our country is not great. In other countries, there's a lot more certification and education that goes into it. Here, it's a lot easier just to hang out a shingle and do it. And, and, and I see on the courts all the time, very few coaches who are great. And I'd say the two things,

that are most important is tennis is a moving sport, not a hitting sport at any level. So knowing how to move is equally, if not more important than knowing how to hit. And then secondly, the best coaches, if they want to teach you something, what you just said, they teach you progression. So they break down the stroke into two, three, generally three, four or five steps. And you do one step, then you add another step, you add another step. And that's how you build up to actually know how to do it the right way.

Auren Hoffman (48:23.628) And to me, the most difficult part of tennis is the surf. And it's like the most important part, but it's so, because there are so many weird steps and in some ways it is a somewhat of a foreign motion for people to go do it. But until you master that, you really can't really play at any serious level.

Mark Ein (48:40.202) Yeah.

Mark Ein (48:46.155) It totally true. I mean, the best comparable to serving is throwing. So if you go out and you'll see, if you go to the practice courts at our tournament or any, you'll see some players will bring a football and they'll literally warm up before throwing a football because throwing a football is very similar to hitting a serve. In fact, I remember watching Novak Djokovic who used to have a horrible serve, speaking of continuous proven now is a very, effective serve watching him.

Auren Hoffman (48:51.905) Yeah.

Mark Ein (49:14.973) really try to learn how to throw a football as a way to learn how to improve his tennis serve.

Auren Hoffman (49:19.916) interesting. Interest for a non-American throwing a football must be a very interesting thing. Now, I mean, now this wouldn't be a good interview without bringing up my favorite sport, which I know you're not like necessarily the biggest fan of, which is pickleball. How do you see the pickleball tennis rivalry changing over time?

Mark Ein (49:24.011) Yeah.

Mark Ein (49:43.5) You know, I think we found a good balance, to be honest. was really disruptive for a long time. In fact, I gave a speech, I joined the USTA board in 2012 and in 2013 I gave a keynote at the.

USTA Southern section, which is the whole Southeast of the United States. And I said, Pickleball is going to be the great disruptor the way these tech companies did. And people just were like, come on, it's loud. It's got a funny name. I was like, no, look at the growth curve. Or we talked about taking things from one discipline, one party to another. I just saw.

Auren Hoffman (50:16.888) Growth curve is unbelievable, right?

Mark Ein (50:24.447) the growth curve and then you listen to it. The issue with tennis that pickleball solved is tennis is not really that fun for either person if you're not in a narrow band of the same field. Whereas pickleball, anyone can play with anyone. There's guys, friends of mine who played on tour.

Auren Hoffman (50:37.282) You have to be in a super narrow band. Yeah. Yeah.

Mark Ein (50:45.949) in tennis and they can play pickleball with their buddies. And so it's all for that. was social. And so obviously it took off. And I mean, just as an aside, since this is a, you know, a lot of venture tech investors who watch your podcast, the journey for acceptance for the tennis industry was just like sort of every other disruptive force you've ever seen when it started. It was totally dismissive, as I said. And then the next thing is, well, let's go buy it.

So they went to the Pickleball Association, the USDA, said, do you want to sell? And they said, no, we exist because we don't like you. And that's our phrase. So I don't want to get in trouble. But some version of that. then we said, OK, we need to start our own. So we started our own version of Pickleball. So it's like, oh, yeah, yeah. So what was the Google social media? Google circles to compete with Facebook. So let's start our own.

Auren Hoffman (51:23.192) Hahaha

Auren Hoffman (51:33.503) I didn't know this, okay.

Auren Hoffman (51:38.722) Google +, yeah.

Mark Ein (51:44.213) Of course that failed. And then it's like, okay, acceptance. And that was the tennis world's reaction to pickleball. And for a long time, you know, people were converting tennis courts into pickleball courts. Now I think people realize that if you can have some pickleball courts, brings people to the club. They're probably not going to go. Not many people go from pickleball to tennis, but it'll support the club. It's their growth is slowed a little. Tennis growth is through the roof.

Honestly, Padel or paddle is a new force that is really growing fast that people love. And so you're creating these really great clubs at a pickle paddle and tennis. And I think it's kind of everyone's found their happy place for the moment.

Auren Hoffman (52:27.406) Yeah, it does seem like pickles growing. Padel seems is is really fun. It's growing though, though, much less accessible than pickle. I pickle. just go, you go to like a public court. were, there were used to be like three tennis courts. Now you have, you know, 10 to 12 pickle courts in the places. They're completely full. used to drive by these tennis courts. Nobody would be there. Now I drive by and just like, well, there's like a sea of

people. It's like, I don't know, it seems like a very good community. Now the neighbors don't always like it, but good for the community as well.

Mark Ein (52:54.858) Yes.

Mark Ein (52:58.252) Right. Yeah. Yeah, no, it was a participation sport. It's been great. I did invest in a pickleball team and their values have gone up for all the reasons, all sports teams. It has not yet proven to be a great commercial success on the pro side. It's a little harder. It's not the same viewing experience, but on the participation side, it's been great. But tennis from 2019 today has grown to 45%, which is like also one.

Auren Hoffman (53:12.087) Yeah.

Auren Hoffman (53:24.621) I didn't realize that. Okay.

Mark Ein (53:26.252) In the pandemic, it grew tremendously because it was the perfect sport and it's kept going. So they're both doing really well.

Auren Hoffman (53:29.622) Makes sense, yeah.

Auren Hoffman (53:35.264) Okay, amazing. Last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?

Mark Ein (53:41.803) You know, the thing is, you know, whenever someone says no one's ever lost money doing X, that's usually a sure sign that someone's about to lose money doing X. And, you know, look, writ large, that was something that people said about buying a house, right? That was always like, you'll never lose money buying a house. And then eventually, obviously, unfortunately, that turned and caused a lot of issues. mean,

Auren Hoffman (53:53.164) Hahaha

Auren Hoffman (54:09.858) By the way, I've lost money on every house I've ever bought. I have no idea anything about real estate. So I've enjoyed the houses immensely though. So

Mark Ein (54:12.428) shit.

And that was when I did it, the best advice someone gave me is don't worry about that. If you need a fun, you need a nice place to live. So think about it that way. So I agree with that, but that was one, you know, look, one of the things is no one's ever lost money buying a sports team, right? Values only go up at some point that.

may not be true either. people say like, what's your reason for doing it? And they say, well, no one's ever lost money doing this. I'm like, well, that's a sure sign. So doing that. So it's a red flag and something that that I that I always try to steer away from.

Auren Hoffman (54:55.52) Interesting. Well, this has been great. Thank you Mark Eyn for joining us on World of DaaS. I follow you at Mark Ein on X. I definitely encourage our listeners to engage you there. This has been super interesting as I knew it would be and a ton of fun.

Mark Ein (55:08.493) It's great to be with you, Auren. Thanks, I really enjoy this series you do and I'm a huge fan of everything you're doing, so it's fun to be with you.

Auren Hoffman (55:15.755) Awesome.