Dave Parker is the CEO of the Entrepreneurs’ Organization (EO), a global nonprofit network dedicated to supporting entrepreneurs. EO supports founders through peer groups, learning programs, and mentorship to help grow their businesses and themselves. With over three decades of experience in entrepreneurship, Dave has built five companies and successfully exited three, with one scaling to $32 million in revenue. He’s also a venture capitalist, author of Trajectory: Startup, and advocate for inclusive innovation and leadership in entrepreneurship.
Here’s a Glimpse of What You’ll Hear:
- [2:20] Dave Parker shares how his grandfather’s 1911 Ford garage shaped his entrepreneurial DNA
- [8:21] The impact of a supportive spouse on entrepreneurship
- [09:24] How Dave built a startup that solved Microsoft’s licensing problem
- [12:12] The painful lessons from selling under pressure and getting fired from the company
- [16:30] Why being early to market is worse than being late
- [18:11] Venture capital myths and why most VCs are not better pickers than others
- [27:51] How did Dave battle post-failure depression and reset through therapy?
- [33:55] Product-market fit is just math — Dave’s five key metrics every founder must track
- [39:01] The vision behind scaling EO from 17,000 to 35,000 members by 2030
- [44:51] Balancing EO’s growth with preserving quality membership
In this episode…
Building a startup is a high-stakes rollercoaster ride — timing, funding, product-market fit, and personal resilience all matter. But what happens when the market moves faster or slower than your vision?
Dave Parker, a seasoned founder, shares honest reflections on his five startups, including three exits, one failure, and valuable lessons learned along the way. He explains how entrepreneurs can de-risk decisions by understanding revenue models, tracking product-market fit with hard data, and staying self-aware. Dave also opens up about the emotional toll of failure and how EO creates a space for connection and support.
Tune in to this episode of the Smart Business Revolution Podcast as John Corcoran interviews Dave Parker, CEO of Entrepreneurs’ Organization, about building startups, scaling community, and investing with impact. Dave also shares insights on revenue modeling, the role of timing in startup success, and why EO is critical for founders navigating growth, uncertainty, and personal development.
Resources mentioned in this episode:
- John Corcoran on LinkedIn
- Rise25
- Dave Parker on LinkedIn
- DKParker, LLC
- Entrepreneurs’ Organization (EO)
- Trajectory: Startup: Ideation to Product/Market Fit by Dave Parker
- The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael E. Gerber
Quotable Moments:
- “Where there’s mystery, there’s margin, and where there’s no mystery, there’s no margin.”
- “The market doesn’t care about your passion — product-market fit is just math.”
- “Timing is critical, but you’ll only recognize it in hindsight.”
- “You’re the first investor in your startup; do your due diligence like one.”
- “Being early to market is worse than being late, because belief doesn’t equal traction.”
Action Steps:
- Reframe product-market fit as a math problem: Track metrics like lead conversion and average contract value to guide strategic pivots. It prevents emotionally driven decisions.
- Audit your revenue model: Choose the right model from 14 tech revenue frameworks to align with your growth and valuation strategy.
- Invest in peer support: Join communities like EO to share challenges and avoid founder isolation. Peer insights can help make better business and personal decisions.
- Practice self-awareness in entrepreneurship: Avoid falling in love with unvalidated ideas by doing rigorous due diligence. It’s the first investment you make in your future.
- Champion inclusive growth: Support or mentor entrepreneurs outside your usual circle. Diverse backgrounds create stronger and more resilient entrepreneurial ecosystems.
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Episode Transcript
John Corcoran: 00:00
All right. Today we’re talking about how to build the flywheel. So that is a community of entrepreneurs. My guest today I’m really privileged to have him. His name is Dave Parker. He’s the CEO of Global Entrepreneurs’ Organization, an organization that I’ve been a member of for a number of years now. And I’m a huge fan of. I’ll tell you more about him in a second, so stay tuned.
Intro: 00:21
Welcome to the Smart Business Revolution Podcast, where we feature top entrepreneurs, business leaders, and thought leaders and ask them how they built key relationships to get where they are today. Now let’s get started with the show.
John Corcoran: 00:38
All right. Welcome, everyone. John Corcoran here. I’m the host of this show. And you know, every week we have smart CEOs, founders and entrepreneurs from all kinds of companies and organizations.
And if you check the archives, we’ve got Netflix and Grubhub and Redfin and Gusto and Kinkos and Activision Blizzard and LendingTree. Lots of great episodes for you, and you are in for a treat this week. Before we get to that, this episode is brought to you by my company, Rise25, where we help B2B businesses to get clients referrals and strategic partnerships with done-for-you podcasts and content marketing. How do we do that? We do that by helping you to run your podcast.
We are the easy button for a company to launch and run their podcast and content marketing. We do three things: strategy, accountability, and full execution. And we even invented what some are calling the Wix of B2B podcasting. It’s our platform Podcast Copilot. To learn more about it, you can go to Rise25.com and now I get to do what I love doing, which is talking to smart and savvy entrepreneurs and learning about what they are focused on. And I’m super excited because my guest today is Dave Parker. He’s the CEO, Chief Executive Officer of Entrepreneurs’ Organization, which is a global organization of entrepreneurs I’ve been a member of for a number of years now. He’s a serial entrepreneur, board member, has founded five different technology companies and sold three of them. We’ll talk about those three and of course the other two as well.
Got to ask about those as well based out of Seattle. And he’s got a lot of years of experience in entrepreneurship. And you know, Dave, I love to start, of course, with what people are like, what they would like as a kid and what shaped them. And we were just chatting beforehand, and you showed me a picture of your grandfather’s garage 120 years ago, one of the first Ford, I guess, service stations or assembly plants. This is pre pre assembly.
Dave Parker: 02:20
Pre assembly line. Wow.
John Corcoran: 02:22
Amazing. So explain how it worked.
Dave Parker: 02:25
Yeah no worries. So my grandfather was an entrepreneur. I’ll go ahead and share the photo here. So he had a number of businesses right. So if you think about the time of disruption we lived in in 1911, this photo is from 1911 from Camas, Washington, which is a little town close to where I grew up in Washougal, Washington, southwestern Washington, near Portland.
And in 1911 he started the first Ford garage. So Ford wasn’t doing assembly lines at the time. They would ship the pieces out to the offices and they would reassemble in this little shop and and you’d have your model T and if you notice they’re there on the left side are the gas barrels because there was no infrastructure for gas stations. Wow. And that’s him standing behind the Eagle motorcycle.
He passed away before I was born, but he. We don’t really know what happened to Parker’s garage, but he did then start the first phone company in southwestern Washington. And then we don’t know exactly what happened to that one, but he ended up running a local neighborhood grocery store at the end of his career. Wow. And my.
He was late to being a father, and my dad was in the Navy, and my dad worked for the same company his entire life. So I think he saw the craziness, which is entrepreneurship for a lot of us. And my dad probably said or promptly said, yeah, no. So he worked for the same company his entire career.
John Corcoran: 03:47
It’s funny how that happens. I see that in my family, too. My grandfather was in the Air Force, was a B-17 pilot in World War Two, and then stayed with the Air Force his entire career and was a civilian and went to work at the Pentagon. And I think it was from being raised in the chaos of the depression and just saw what that was like and just craved stability, really. And so, you know, you see that a lot of times, but obviously it came back to you. So what were you like as a kid?
Dave Parker: 04:16
Were you skipped a generation or maybe the pendulum swung? Yeah. So kind of the classic profile, I guess, in some ways in, in my generation and reflects my age is, you know, as an Eagle Scout, I mowed lawns, I worked for United Press. The black and white photos you see behind me were from working for being a photographer. I worked three jobs in high school.
I got a scholarship to come to the University of Washington. So if your listeners and viewers remember Caddyshack, that’s how I got to college. I was a caddy scholar, and that was a combination of academic achievement, financial need, and a little bit of athletics, though I would say I was never I never got below a six handicap. So to play at Washington or a Pac ten school at the time, we always got trounced by the Arizona schools. But you know, you didn’t. It was hard to play competitive golf when you live in the northwest because so much of the time is rainy and gloomy.
And yeah, the Arizona schools and California schools just would beat us up pretty bad. But that’s how I got through college. I got through in four years because that’s how long the scholarship was. So, you know, unlike other folks who were like, I extended four years into five, my answer was I got out in four because.
John Corcoran: 05:26
You needed it.
Dave Parker: 05:27
To. I applied to one school, and that one school was the one scholarship. And had I not got the scholarship, I would have gone to work at the paper mill. Like a lot of my 101 graduating class, there were seven of us who went to college.
John Corcoran: 05:39
Wow. So you end up starting a number of different companies before we get to that. So you’re in Seattle. Seattle’s the home of a lot of big tech companies. We got Microsoft, we got you. Name it all kinds of large tech companies. How much do you think? It’s kind of like a nature versus nurture argument. Like you’re born in this area. Steve Jobs famously, was born in Silicon Valley, right? Like, so he was raised around Silicon Valley. Did that have an influence on you? Were you interested in tech from a young age, playing with computers and stuff?
Dave Parker: 06:12
Yeah, I think there’s a nerd component to it. I will definitely say from being an author now and writing a book about startups from a complete nerd perspective, the answer is yes, right? So I won’t give you the model number of the first computer, because it really makes me sound old, as old as I am. But the opportunity, I think, is if you look at the West Coast, there’s a level of acceptance of risk and failure that doesn’t always apply in other places. So the further east you go, East Coast, you know, it’s all about what club were you part of, what school did you go to? Who are your parents?
And then you go further east. And there’s less and less risk profiles. Historically, at least when I was doing it. Where there’s a latitude of risk, like in the Valley, you could fail once, maybe twice, but you, you wouldn’t get funded for a third time. Seattle, you could fail once, but you wouldn’t twice.
You wouldn’t get funded. Other places, the idea that you’re taking a risk, you know, if you know, I spent a lot of time in Japan with my first startup and my first joint venture, and the idea that you would risk the face of your family by taking a risk and not having a salary, man job is was really different. So when I hear about EO growing in Japan today, I’m always like, would never have guessed that 25 years ago I would have been like oh my god no. Let alone the number of women joining, you know, that’s for a later conversation. But yeah, super interesting cultural dynamics.
I think that made it acceptable to do it. Also, I would tell you and for the listeners or viewers, like your life partner is the number one thing that will make you or break you on this thing and this journey. So we’ve been married for over 30 years and she’s had this wild ride with me as well. So the whole idea of like, should I go take this risk? The answer was, I believe in you. And thankfully she still does. And you know, we’re still together. So there’s a lot to be said for that in the risk profile.
John Corcoran: 08:00
We could get into a whole discussion around how spouses manage that or how you manage that with the spouse. Part of the value of EO is having a place that you can go to. You can talk about the things that are weighing you down, that are stressing you out so that you don’t bring it to the family pillow or to the dinner table and stress out your spouse about it, who maybe would be like, what is going on? You know, you’re risking our livelihood, right?
Dave Parker: 08:21
What are you doing? What did you do? Yeah, some of it after the fact, obviously.
John Corcoran: 08:26
Yeah. So you had five different tech startups. What was the first one?
Dave Parker: 08:30
So five startups total. One was not in tech. One was a services company. The first one was a software distributor. So if you remember back in the late 90s before people started doing digital downloads of software because bandwidth was available, we were doing software licenses.
So electronic software license delivery. So if you think about a business that has 250 computers, you don’t need 250 packs of Microsoft software. You needed 1 or 2 DVDs or CDs, depending on the timing, and 248 licenses. So we were doing electronic license delivery. So we were Microsoft’s first new distributor in 15 years.
We went from 0 to 32 million in about four years, and about 160 people, half of them were sales organizations, a good chunk of them, and a third of them were developers. So we were doing something that Microsoft hadn’t been able to do at the time, which was, how do you do a configuration engine to make it simple to buy Microsoft software?
John Corcoran: 09:24
Wait, hold on. Let me let me slow down on this. So Microsoft is the biggest game in town at this point in time. You start a startup and then you go and you sell to Microsoft, a tech company, the biggest tech company out there. And you, you, you sell them a solution that they had not figured out themselves. I mean, that’s a little mind boggling.
Dave Parker: 09:44
Like it is part of it, though, I would say during the Ballmer era, I’m not sure that they wanted to make it easy either. Right. So in some ways. So I had come from my last job. Job until I took this one was I was working for a large systems integrator, and we had this little coffee company that some of you may have heard of in town called Starbucks, and they needed to convert over to they needed to do a huge desktop migration.
Well, we just did services. We didn’t sell products, we didn’t sell hardware, we didn’t sell software. So I was the VP of sales for that company, and we lost that transaction to somebody who did bundle hardware and software. And we just were like, go buy the hardware and software anywhere. We’ll just do the services.
And we lost that contract. So that led me down the path of like, how many companies are there out there like us who don’t sell software? And the answer was most of them. And every month my Microsoft rep would come in and be like, how much software are you guys going to sell? I’m like, dude, Rick, we don’t sell software.
We’re in the services business. We don’t sell products. There’s no margin in your guys’ product. It’s good for Microsoft, but it doesn’t sell us. So that was the first idea: here you have this big market of people buying Microsoft products.
And at the time, for every dollar you sold in a product, there was 4 or $5 in services required to install the product. Right? And make it configure it and make it work. But the large systems integrators didn’t want to be in the software business or the hardware business because there was no money in hardware, ever, and software was too complex. So we basically came out to the partners and said, hey, we will be your software vendor.
You can drop a button on your website, and your customers can just click on the button and we’ll configure the software for them, because we built a configuration engine for it and we’ll dropship it and it comes from you and we’ll rebate you the margin. And you guys can set your own margin and whatever you want to do. And so the business was super fast to grow. But keep in mind 0 to 32 million is fast for a startup. But the competitors we were competing with were Ingram and Tech Data and the company we eventually sold to.
And the smallest of those was a billion in Ingram and tech data were 13 and 15 billion. So at one point Microsoft went back to the big competitors and said see what they’re doing. You guys should do that. Oh. Copy what they’re doing.
John Corcoran: 12:02
And so what did that mean?
Dave Parker: 12:02
So we ended up selling well, we ended up selling in 2002. Which were.
John Corcoran: 12:06
You were.
Dave Parker: 12:06
Kind of in.
John Corcoran: 12:07
A bad period of time. Were you sold with a gun to your head kind of thing? It sounds like it might have been pretty much.
Dave Parker: 12:13
Yeah, it was. It was a season where it was not a great time to sell. It passed the tech bubble. Yeah. But we were able to get the company sold.
But it wasn’t a great exit. Right? It was, it was one of those that you look back on. And it was the first time I actually got fired from a job. Was I.
John Corcoran: 12:28
After you sold it.
Dave Parker: 12:29
Sold the company, and then they fired and they sent me on vacation and said, hey, we’re going to recruit your team without you. And then I came back and they’re like, yeah, we’re not going to keep you. Because, you know, entrepreneurs aren’t really good at jobs. Yeah, right. Yeah. I always tell the board I’m good at taking inputs. I’m just not necessarily good at taking direction because there’s a difference between those two things.
John Corcoran: 12:51
So that must have been a bit of a disappointment. Then you build this company, it grows quickly, and then you’re with a gun to your head. You’re kind of forced to sell it. So what do you do? What do you move on to next after that? Did it take a while to kind of nurse your wounds and move on to something else?
Dave Parker: 13:06
Well not much. I went into Mitsui and Company, was a large investor for us in Japan, and they actually started a hardware company. So they asked me to come join that hardware company, and that one was one that didn’t work out quite so well. It wasn’t a it wasn’t an epic fail, but it was one of those where when I look back on it now, knowing what I know, they basically came to me and said, hey, we have this product looking for a problem. And, you know, you and I know at this point that is not a good approach.
John Corcoran: 13:37
Yeah, yeah.
Dave Parker: 13:38
Never a good starting point, right. With engineering in mind And. Yeah, so that one was one where after six months I was like, yeah, there’s not a there’s not a problem here to solve. And I had a funny interaction with one of the board members. He’s like, you’re just being negative. And I’m like, well, I’ve been called lots of things. Negative is not generally one of them. Delusional maybe.
John Corcoran: 13:59
Yeah.
Dave Parker: 13:59
You know, aspirational maybe. But negative is not generally.
John Corcoran: 14:03
You’re probably being more realistic, frankly a bit more pragmatic.
Dave Parker: 14:06
Well, especially coming out of the one with a gun to your head because you’re like, yeah, can this really get a disproportionate return or not? So that was the start of my venture experience. And after that one did a company where we were helping. We were really designed to help Chinese companies find Western talent, or Western companies find Chinese talent that were bilingual. The timing of that one was bad, and that one didn’t end up well because it was.
We started in 2007 and 2008 happened right. And before Or layoffs started the hiring stopped. So it was like going to an event where you’re like a room full of people, lots of energy and buzz, and you’re like, you and I walk out of the room like, oh, dude, I left my phone behind. And I walk back in and there’s no room. There’s a room, but it’s empty and there’s no people, there’s no chairs, there’s no anything.
And you’re like, what happened? And that was 2008. So I think that, you know, the tech bubble in 2008 was one of those things where I learned a lot about that whole process. The business was, I would say, a good business before that because there was lots of complexity. And one of the things I learned through a mentor and then wrote about in the book was where there’s mystery, there’s margin.
But the inverse is also true. Where there’s no mystery, there’s no margin. So when I think about the complexity of China, the challenge was, if you and I run a US company, we’re like, we should do business in China. We don’t know how to do business in China. We show up at the Chamber of Commerce meeting in Beijing, and all the people who know how to fleece you and I are there.
Like, who do I trust to help me launch my business in China? So that was our premise, right? But you couldn’t do it as a job board because there you’ll have 500 people or more apply for a job. So it’s kind of a combination of online, offline where we would do the services, screen the candidates, get you the qualified candidates to do final interviews, and then we would actually help employ them while they were there. So it was a bit of a combination of recruiting and staffing until you opened your office in China. So I still think it was a good idea, though. You know.
John Corcoran: 16:17
It’s a case with many, many companies, right? I mean, you think of Webvan or Pets.com or famous examples of, you know, early some of these ideas that came to fruition. They just came to fruition later, many years later. Yep. Yeah.
Dave Parker: 16:30
Many years later. Many. I know a friend of mine funded a company like Uber back when BlackBerry was the product, and it didn’t obviously never worked. But as soon as the smartphone happened, and I think for founders too, that’s our big lesson. Like people are like, oh, being late to market is really hard.
That’s true. Being early to market is worse. Yeah. Because as founders, you believe, right? And the problem with believing is that the market dynamics and your belief and passion, like I always tell founders like, awesome. You’re passionate. Super. That is table stakes.
John Corcoran: 17:03
Yeah.
Dave Parker: 17:04
To be successful in a startup.
John Corcoran: 17:06
Right, right.
Dave Parker: 17:07
Market timing, however, will have more of an impact. And you’ll only know it in retrospect because market timing is something we don’t predict. Now, as founders, we tend to be a little delusional about it. And as investors on the VC side, we tend to be revisionist about it. We’re like, oh, our timing on that investment was amazing.
You didn’t do anything as an investor. I just believed in you and wrote a check. Right? You make me think our timing was amazing. And the answer is some investors have a thesis. Most investors don’t. And timing is one of those things that, you know, years after the fact, not one of the things, you know, going into it. But I think as entrepreneurs, we believe our timing is good.
John Corcoran: 17:46
Yeah.
Dave Parker: 17:47
Maybe. Yeah, is the answer. But to your point, from a failure rate perspective, at least on the tech side and product side, that’s that’s there.
John Corcoran: 17:55
So I might be skipping over some companies here. But you, you have spent some time as a venture capitalist. What got you into the world of VC and what was that experience like for you having been a founder previously?
Dave Parker: 18:11
Yeah. So I worked for three different funds in total. One was a corporate fund for Mitsui and Company, about a $250 million fund. That one was really helping the value prop. There was, oh, you have an interesting product.
Can we take it to Asia and we’ll invest. Mitsui is a super slow investor, right? So they weren’t fast to write checks, but generally they were a great investor after they wrote a check. So that was the first fund. The second fund I worked for was called Seven Peaks out of Bend, Oregon, and they were the most active early stage investor in Oregon, which is not a high bar just to set it.
John Corcoran: 18:47
Right. Yeah.
Dave Parker: 18:48
Southwestern Washington.
John Corcoran: 18:49
I love Bend, Oregon. I’ve actually spent two summers there. It’s an amazing place. But it’s, you know, 100,000 people. It’s not a huge community there.
Dave Parker: 18:57
Right.
John Corcoran: 18:57
Yeah.
Dave Parker: 18:58
But they found some great investments there. And the fund did really well. And then I worked for a fund up until the time I joined EO called Fearless Fund. And fearless was based in Atlanta. And you may have you may have heard of them about a year and a half or two years ago when UNC and Harvard lost the lawsuit for affirmative action, and they can no longer use that as a the same group sued a small fund out of Atlanta, Georgia, because they were giving grants to women of color businesses from Mastercard and then also investing in venture capital.
And that was the fund I was with for about two years. So we invested exclusively in women of color, founded startups, with 50% being focused on tech and 50% being focused on consumer packaged goods. And the reason that we were investing there was not just that it’s an underserved market. So give you an example, 3.1% of all venture capital in the last 25 years went to white dudes named Dave. 2.8% went to all people of color.
So now if you go to women of color, it’s even a smaller percentage, right? But women of color and women in general for venture capital know how to stretch a dollar differently than a white kid in Silicon Valley. And with all due respect, they have plenty of support. So I’m not I’m not lashing them. I’m just making an observation that if you went to Stanford and studied computer science, studied computer science, and worked for Google, you can find somebody to invest in you in Silicon Valley.
John Corcoran: 20:29
Yeah.
Dave Parker: 20:29
So if you’re a woman of color, the color. The answer is I got to figure out how to stretch a dollar longer than anybody else. So our thesis at the core was investing in women of color should have a disproportionate return over time because they know how to stretch a dollar. And I would say in general, when you look at ideas in venture capital, ideas and entrepreneurs are equally distributed around the world. Access to programming and access to capital, however, are not.
So Silicon Valley’s disproportionate returns, because you have a lot of, you know, early stage entrepreneurs investing back in early stage entrepreneurs where if you’re in Kansas City, right. Pick a flyover state, right?
John Corcoran: 21:12
Yeah.
Dave Parker: 21:12
Where there’s less access to venture capital. The answer is venture capital firms continue to move up market over time, especially with market corrections. Right. So early stage funds tend to move to series A, series A tend to move to series B. So it’s just the nature of the venture. So invested in a little less than 100 companies total across those three funds.
John Corcoran: 21:34
But by the way, I’m interested in the Fearless Fund piece. How did that thesis play out or is it still unfolding?
Dave Parker: 21:41
Still playing out? Yeah. So we left a little over a year ago just before I came on as CEO. We had just deployed fund one, about $32 million. So in the early stage venture Mitsui being aside, we did some later stage stuff, but all early stage ventures have about an 8 to 12 year return cycle. So if you’re not in venture capital yet and you think it’s sexy. My answer to you would be like, maybe. Yeah, right.
John Corcoran: 22:06
So it does have.
Dave Parker: 22:07
A disproportionate return. Yeah. But on average, you know, you have to look into an 8 to 10 year window before you actually get a return. Yeah. And it doesn’t mean it’s a bad alternative asset class, but it’s not something you want 85% of your portfolio and something you want 5 or 10% of your portfolio.
John Corcoran: 22:25
So so. Sorry. Go ahead. You continue.
Dave Parker: 22:27
Yeah. I was going to say in fearless We that first fund, we invested in about 32 companies. Most of those companies are still around. The market for exits over the last couple of years, as you know, have been really bad. So the I think if you look at the venture category as a, as a cohort, what you see is there’s a lot of companies out there that are still that are still kind of alive, but they’re really just zombies because they were out of money a year and a half ago or two years ago, and maybe they took US government dollars and extended their life, but did they really get the traction they needed?
The answer is some of those, you know, those companies no longer have access to capital because of the AI market push. And it’s a super sexy category. So I think we’ll see a kind of a washout of a lot of those companies this next year.
John Corcoran: 23:16
Yeah, that’s an interesting observation.
Dave Parker: 23:17
I hope I’m wrong.
John Corcoran: 23:18
But yeah, no, that’s an interesting observation because I’ve noticed that with some companies that, you know, maybe they got a seed round, maybe they got a series A, series B, but then it stopped in 2000, 20, 21 or something like that. Back when people were giving out money like it was candy. And, you know, they’re still around, but maybe they’re, you know, profile has gone down. They’re not posting on LinkedIn or Twitter anymore. You’re kind of wondering what’s going on.
Dave Parker: 23:42
They did a down round. They were highly dilutive. Yeah. There’s lots of terms that go with the venture side. So the venture side was super interesting.
I think, you know, every venture capitalist thinks they’re a better picker than every other venture capitalist. And I can tell you from the data, the answer is it’s probably not true. What I did like was working with the entrepreneurs. Right. So because you got to really say, hey, listen, how do we help do planning.
How do you use objectives and key results and board planning? And so a lot of those things we’re doing now for EO because it’s not the organization that hasn’t done the same thing. Yeah. And then I also had a chance to help do some merger and acquisition work because with venture either you’re really busy or really slow, right? Because you’re either deploying capital or you’re raising capital.
The business is pretty simple. So it allowed me a bit to work on helping founders exit their companies. And you know, the good part about that piece of the business is instead of you getting a check to your business account with venture capital, you’re getting a check to your personal account for exiting the business. I think that’s one of the best seasons for entrepreneurs. It’s like, you actually get a reward for all the work and effort and stress you took in. And, you know, it’s nice to get that wire transfer into your personal account.
John Corcoran: 24:55
Yeah. For sure. I want to ask you about joining EO. But before I do that, you mentioned the staffing labor company focused on China. Did we cover the other company that didn’t end in an exit or was not sold? Do we cover all those?
Dave Parker: 25:14
So the hardware company didn’t sell. I actually just handed it back over to a different CEO. The China Company was an epic failure. So because I think the optimist in me didn’t recognize what was happening in 2008. Right.
So I was like, we have a developer community. We’ve got about 13 people. It’s economically a good cost for developers. But at the season we were in, not only was the Great Recession started and we didn’t really have perspective on it, but if you think about the developer community at the time, the hot development sector was working with social. So I took the team and said, I’m just going to sell us as a service company and we’re going to, you know, do software development work because we already have a team.
They’re already cohesive. The problem was, we couldn’t get through the great Chinese firewall. So we couldn’t program on Twitter. We couldn’t program on Facebook. We couldn’t write.
So the category of development that people wanted to be done was not a category we could deliver. So I held that company too long. Being an optimist. And it was super expensive to me personally. And you know, those are lessons learned that when you look back, you’re like, I always laugh, you know, John, because some people are like, well, it wasn’t a failure if you learned something.
And I’m like, well, if I didn’t return shareholder money, it was a failure. And I still learn something. But usually somebody who says that is somebody who’s never failed and or never taken the risk, right. And I don’t say that flippantly, but I think that I think for us as founders and entrepreneurs who’ve gone through the ups and downs of this crazy thing that we do, because, listen, no entrepreneur thinks the math ever applies to them or we’d never do this right. If you looked at it and said, like, I’m going to do a product startup and tech and the odds of failure are 92%. Every founder I know goes, yeah, that’s true. That doesn’t apply to me.
John Corcoran: 27:15
Yeah, right.
Dave Parker: 27:16
The math applies to you, right? It doesn’t apply to me. Right, right, right. So I think that’s part of our delusion as entrepreneurs is we see connections where other people don’t see them. We see opportunities where other people see risks.
I think as a seasoned entrepreneur, you’re like, I’m going to find out ways to mitigate that risk so that I don’t have a failure because that was personally and professionally expensive. Right? To fail.
John Corcoran: 27:39
Yeah. How did you lick your wounds after that? After that you experienced that? Like, did you have to go through a period of time of reflection or counseling or did you take therapy? Therapy?
Dave Parker: 27:51
Yeah. Self-medication and professional medication. I definitely went through a battle of depression because it was you. You go through the process of like, wow, I believed right? And again, that’s where I think I come back to passion or table stakes.
So passion with due diligence because you’re the first investor in your company, right? You should have done the best due diligence on the company. And what happens with a lot of us as entrepreneurs is we fall in love with the first idea we get. And then we go tell somebody what a great idea is, and we don’t apply the same discipline in, in that you would apply if you were, if you were a seasoned entrepreneur. So today I look at ideas differently.
Right. I’m like, is that really a big idea? Is that idea really a disruptive idea? Because in most cases the answer is, well, it’s the only idea I have. And I’ve fallen in love with it.
So don’t call the baby ugly. And you know, as an investor, I would sit down with somebody and say, oh, John, you’re doing this. That’s super cool. So tell me about how you compare to this company. And sometimes the answer is who’s that?
And I’m like, well, they’re in your sector. They’ve raised $12 million in the last year. They’ve effectively sucked the oxygen out of the room from your category, and you don’t even know who they are because you didn’t do the due diligence on the competitive landscape of the market because you fell in love with the idea. And I don’t say that to be critical. I say that to be self-aware.
I think if I could look back over the investments that I’ve made, I would have a different lens to it. The first lens I would have put to it was the entrepreneur and said, how self-aware is the entrepreneur? Because as an entrepreneur, especially in the early stage in product services, companies are different. So let me segment that for just a second. If you’re doing a services business, most of our EO members are services companies, right?
You don’t have what’s called product market risk or product market fit risk. You people are buying services from somebody else. Now the question is, will they buy it from you? You’re an accountant. You’re whatever, right?
In a product company you have product market fit risk. Does the customer care about your product or not? So if you follow any of the YC stuff, the answer is, did you build a killer product to have a great user experience and do people pass it along as word of mouth, just as a couple of data points for a starting point? So if you’re doing a product company that’s different from a services company. Now keep in mind product companies disproportionately pay off compared to services businesses.
Services businesses generally. So if you and I run a $1 million consulting company, we’re generally going to sell that company for $1 million. It has a 1 to 1 ratio of revenue to enterprise value. And this gets a little bit into the book and revenue models. But I’ll give you a quick teaser on it.
If you look at a subscription business by comparison. So I think DocuSign, a friend of mine, started DocuSign. That business trades somewhere between 8 and 12 times revenue versus one times revenue. And because it’s a subscription, instead of looking at trailing 12 revenue, it looks at future 12 revenue less churn. So you’re already trading on a higher multiple of almost two x over trailing versus future because I can predict future revenue less churn.
So that got into kind of the start of what I ended up writing a book about because I, somebody in the startup community here in Seattle came to me and said, hey, can I have a copy of your financial model? And I’m like, yeah, I’m a community guy. You can have it. Mine is a B2B SaaS company. Yours is A, B to C, B to B to C business, which is called a marketplace by the way.
And marketplace dynamics are very different from SaaS dynamics. So it got me asking the question: how many revenue models would you have to do for templates to cover 80% of the market? Come to find out, there’s 14 revenue models used in tech services Productize, the service, commerce, transaction fee, marketplace subscription, and my favorite one metered service. So if you think about AWS, AWS is a metered service business. You have a base level subscription.
And the more you use, the more you pay. Yeah. And if your product is priced right, it should be a forward looking indicator of your company’s growth. If your product is priced round wrong and you’re freaking out about AWS bills every month, you probably have a product pricing problem. So when I wrote the book three years ago, I went in with a thesis of like how many revenue models are there? So we met with the CEO of Crunchbase at the time, which is an interesting backstory separately, but they.
John Corcoran: 32:39
Started a website which tracks this various investments and tech and, yeah, startups. Yeah.
Dave Parker: 32:45
So I had them pull a list for me of all the seed funded companies in the prior 18 months, and it was 2654 companies, and we did a five year longitudinal study with my son, who’s now a JP Morgan banker for, for startups, banks and, and and we looked at those companies and we said we can’t tell the revenue of the company, but we can use fundraising as a proxy for growth.
John Corcoran: 33:07
Sure.
Dave Parker: 33:08
And we followed all 2650 for a little bit of OCD. So just, you know, hang with me. I don’t Round. I don’t do past or math very well. Okay.
So we ended up tracking those companies for five years and discovered that there’s 14 revenue models. They each have different enterprise values. They all have different conversion metrics. And so that became the thesis for some of our investments as well for fearless as we like companies that have recurring revenue. We like companies that have metered service revenue.
Marketplaces are interesting, but marketplaces have disproportionate early activity that pretends to be traction but isn’t necessarily traction. It’s not necessarily product market fit. Right. Because what you have is some early adopters finding you and making connections. But the question is, are they going to come back?
What’s the lifetime value? So a lot of those things came back to being what is unit economics? What are the metrics? How do you measure it? What’s your LTV to cash ratio?
How does that change over time? And so product market fit for the listeners is product market fit is just math right. So I’m going to give you the five things that make up product market fit. Number one is traffic on your website. Now by itself is a vanity metric right.
But if traffic is trending up and you’re not juicing the numbers through advertising or fake SEO or some black hat stuff, the answer is is traffic going up or down? It’s a good start. Our leads as a percentage of traffic going up or not. So keep in mind leads as a percentage of traffic and the trend over time. The third piece is my customer count as a percentage of leads going up.
The fourth one is my average contract value going up. So all four of those need to trend up. The fifth one needs to trend down. Is my time to close coming down. So as my product gets more mature and easier to sell, my time to close should compress.
If you have all five of those factors, you have product market fit. But product market fit is just math, right? There’s nothing whimsical about it. Like, folks are like, we’ll know it when we see it. Which was the.
John Corcoran: 35:16
I mean, I’ve never heard it described in quite that way. How often do you say that to a founder? And they know all five of those numbers. Never.
Dave Parker: 35:25
Typically they know 2 or 3. Yeah. But my observation is, as an investor, if I could come in and tease out some of those numbers, the answer was that I’m going to get a disproportionate value as an investor because I can see product market fit before they can. But again, it’s just math.
John Corcoran: 35:41
So I want to get to talking about EO because looking at your background here, it looks like you kind of existed around the trajectory of EO. I’m seeing a couple of connections here of ways in which you were a mentor with Techstars. Brad Feld, the founder of Techstars, was an EO for a number of years. I don’t know if he still is. I’m seeing you were a board member for Guidant Financial, David Nelson on the Global board. Maybe that’s how you got into this, but you have this successful career. You’ve been a VC, you’ve been a founder, you write a book about it. What?
Dave Parker: 36:15
And now I have a job.
John Corcoran: 36:16
I know it’s like the entrepreneurial seizure that Michael Gerber wrote about in E-myth. You almost had that in reverse. What happened here?
Dave Parker: 36:25
Well, I had this really interesting season where Brad was on my board. So for those of you who don’t know, Brad Feld, Brad’s a famous venture capitalist and an amazing human. And Brad wrote the foreword for my book. So I had come out of my last company, and I was running the CEO gig, that I was getting the company ready for sale, and that kind of became my brand, right? Was like, oh, Dave is the CEO.
Companies for sale. So we did that. When I moved to the board for that one and somebody else had taken the CEO gig, we weren’t able to make that transaction work. And I got a referral into this organization called Startup Weekend. And Startup Weekend had gone from zero events per year to 550 events in like two years.
And this young team of founders and organizers and community leaders had created a movement. And I came in the post merger of Startup America and Startup Weekend. And Brad was part of Startup America with Steve Case. Steve was our board chair from America Online, and I was the adult supervision. And I ran this.
I was the senior VP of programs and ended up doing the operating role. And we went to 550 events and in 18 months we were at 1625 events in 120 countries. And we ended up selling that company to Techstars. And that season of life, I would say John was the greatest, because the stuff I was doing every day was helping entrepreneurs around the world pursue their dreams and fulfill their aspirations. Right.
We sold the company to Techstars and the Techstars teams, looked at the org chart and said, hey, where do you fit? And I’m like, I don’t. I don’t do well post mergers and acquisitions. I’m a creative guy. I’m an entrepreneur.
And the organization was probably 60 people at the time and grew to 350 people. So I mean, the Techstars did a good job. They had some challenges there at the end, but the Techstars did a really nice job of how their investment strategy worked. So I had this thing lingering in my past, which was like this nonprofit, give back, go make a difference. And then during the pandemic, I finished the book and I sat down and wrote my personal vision and mission.
And one of the things I wrote about was, I don’t have to be in the left hand seat and be the pilot anymore. I’m actually happy to be in the right hand seat and be the co-pilot. Right? It doesn’t have to be about me, but I do want to impact a thousand entrepreneurs in the time I have left with the book and speaking and early stage venture and all those things. So when the recruiter reached out to me and said, hey, there’s this organization called EO, do you know it?
And I’m like, yeah, they’re like, they’re looking for a CEO. And they currently have 17,000 members and want to get to 35,000. And you know, even in my math brain, I’m like 1000, 35,000 feels like a really interesting opportunity. So that started the recruiting process. Obviously I knew David as well.
And it’s interesting because you know, the organization itself is 37 years old. So for everybody else to give you the bigger picture of EO. EO is a nonprofit member dues paying organization that supports entrepreneurs in 221 chapters worldwide, about 85 countries. And we have today almost 19 coming up on 20,000 members, 19,320. So when I joined.
So we’re definitely trending up. The goal is to retain members at 95% and grow the membership base to 35,000 by 2030. So reasonable. Not a huge growth for a growth guy, not a huge growth number. Organizationally, though, it’s a little more complex than that because you want to keep the continuity of the organization and not be disruptive, right?
So there’s a risk of being too disruptive to the strategy. So you have to make sure you deliver on that promise as well. So about 160 professional staff in 22 countries, something like that. And we really are there to serve and value the entrepreneurs and help them meet their aspirations. So if you look at the entrepreneur journey for EO, it’s helping new members meet their aspirations.
For most of those entrepreneurs that say, I want to grow my business, I want to grow my network, and I want to grow myself. Now, the flip of it is true for existing members because they get in and they discover, wow, if I grow myself, I’m a better human than networks, more appealing. And by the way, the company grows crazy. Now externally, for those of you who are not EO members, you’re like, that sounds different. I’m like, no, no, no, just come to grow your business.
We’ll help you, right? And the network will help you, and you’ll end up with this thing called a personal board of directors, which we call a forum, which is what you referenced earlier, which is a safe place for you to have the hard conversations because we all know as entrepreneurs, as entrepreneurship is a lonely journey.
John Corcoran: 41:08
Sure.
Dave Parker: 41:09
But it doesn’t have to be.
John Corcoran: 41:10
Yeah.
Dave Parker: 41:11
And EO is a way for it not to have to be lonely. So yeah, that was the appeal. Organizationally, I love investing in people. I love investing in talent. The only challenge with the sell side merger and acquisition business is I could give Daisy a high five for my dog.
But you don’t really. Yeah. You’re not really investing in people and those sorts of things. So it’s coming up on a year, joined a year ago. Last April, I bought one way tickets from my wife, and I had to go to Singapore because we didn’t have a contract in place.
And my wife came in and said, hey, what are we doing? I’m like, well, we have one way tickets to Singapore. She’s like, do you know when we’re coming back? I’m like, nope, don’t have the contract done yet. Don’t know the agenda. But so I started off on that adventure. And so that’s.
John Corcoran: 41:57
A big life, big life change for you. I mean, going from not being an employee for 20 plus years. Yeah. Unemployable to 25. Yeah.
You must have had a heck of a job interview to, you know, convince them of all this, that that, you know, that you could, you know, suppress all that many years of being unemployable and be employable for a period of time.
Dave Parker: 42:19
Maybe. Sometimes maybe it is not as I mean, you know, I’m on the board as well. So I have a group of peers that I’m both on the board and the CEO of, and I’ve spent a lot of time on boards over the last 25 years. Yeah. So I think sometimes I may be frustrating and I’m probably always too direct.
But I, I find it, you know, given my vintage, the answer is I have opinions about everything. But, you know, I’m a big fan. Bezos made the comment at one point. He said, you know, strong opinions, lightly held and informed by data. So I have lots of strong opinions, but they are completely movable if you have data to swing them over.
So one of the things we did in Aug is we sat and looked at it and said, well, what’s our real churn rate and what’s our real retention value and where is our value proposition? And keep in mind the 37 year old organization. We have as many myths and legends as we have facts and data. So you kind of have to peel some of those things back and say, is that really true? Right.
So there’s a few of them that are kind of funny, right? Because I always look at it now and say, people are like, you know, only 10% of the people who apply for EO get in. And I’m like, that’s actually not true. Because if I, you know, we’ll grow by almost 3000 people this year. And if we generated 30,000 leads, then the chapters would be calling us going like shut off the faucet.
John Corcoran: 43:46
Yeah.
Dave Parker: 43:46
Well, that’s not happening. Yeah. Right. So, you know, we’re both inclusive and exclusive, and sometimes we need to figure out what we want to be. But I would tell you, the thing that’s exciting for me is I’m a steward in a season of EO.
EO will be around 37 years from now. And you know, we’re coming up on our 40th anniversary in 2027. It’ll be a great season for celebration, and in 37 years from now will still be around. Yeah, because the needs of entrepreneurs don’t change.
John Corcoran: 44:19
Yeah, I love that. You know, one thing I want to ask you about. So I’m co-chair of membership for the EO San Francisco chapter. And I’m with you. I love growth. I get excited about growth. I feel like I’ve gotten a lot of value out of the organization.
So I want to tell other entrepreneurs about the benefits of being a part of it. But there are some who’ve been around for a long time and they say, no, hold on. Pump the brakes. Wait, that’s not a good idea. We don’t want a bunch of bad people coming in. So what do you say, as a growth guy to people who raise that objection?
Dave Parker: 44:51
Well, number one, I would reflect back with him in the early days of their business about how it felt to make their first couple payrolls. So I had a 1966 Ford Thunderbird convertible. That I sold to make one of those payrolls.
John Corcoran: 45:07
Oh.
Dave Parker: 45:08
Now, in retrospect, I probably should just fire the people. Because the business didn’t turn out super awesome, right? From a returns perspective. And I wish I still had that car today for fun. But you go through those hard decisions that you have to make, and you’re making those decisions solo, or you’re talking to your spouse, and at some point your spouse says, listen, I can’t help you anymore.
There’s nothing additional I can give you. So I would say to those folks, I think you’ve forgotten what it took to get here and who are you bringing along with you on this journey? So one of the things I did a few years ago, probably 5 or 6, was being an author and being an investor. People would say, hey, would you mentor me? And one of the things I did, John, was I put on my blog, Dave, will you mentor me?
And my answer is really simple. The answer is I’m happy to consider it. Send me a note with who you’re mentoring today. Who doesn’t look like you? It’s been an amazing filter and kind of sad, right?
Because we tend to hang out with people who are like us. And then we hit a level of success, and we hang out with people who are like us. And my whole point is, who can you bring along with you? Who can you help? So from my core belief perspective, I look at the growth opportunity for L and think, yeah, no, we’re congratulations.
We’re almost at 20,000, but could we be at 100,000. And I think that probably happens a little bit on the EO accelerator program where it becomes a little bit easier and we get to meet people and see if they share our values. Because sometimes when we say, do they share our values, what we’re really saying is, do they look like us? Right. Which is, you know, again, I spent a couple of years investing in people who don’t look like me.
And I think the answer is I think the world is better for it. Yeah. But that’s you know, that’s a bit of a personal bias, so I think there’s lots of opportunities to grow. I think there’s I think sometimes we forget and it becomes a closed club in a, in a, you know, it’s like a golf club or a country club and it’s like where we forget where we came from. And there’s another entrepreneur out there right now.
What day is it? It’s the 25th. There’s another entrepreneur out there right now thinking, how the heck are they going to make payroll on Monday?
John Corcoran: 47:19
Yeah. And they might have to sell their favorite car to do it. Yeah.
Dave Parker: 47:24
Right. And if they had somebody else, they could ask who was in their forum. The answer is the journey would be a little bit easier. Yeah. So I think if we don’t lose, if we don’t lose touch with that, we think about growth, but we think about retention. Are we adding value? So retention comes first. But it’s not without growth. You can never become a stagnant organization.
John Corcoran: 47:43
Yeah. Dave this has been great. I know we’re at time here, so I’m going to let you go. I appreciate everything. I appreciate your time.
I want to wrap up with one last question. I’m a big fan of gratitude, practicing gratitude. And I like at the end here to give my guests a little bit of an opportunity for them to shout out and thank anyone that has helped them in their journey, particularly peers or contemporaries or mentors. You already mentioned your wife, but anyone else, any other like peers, contemporaries, that kind of thing that you would want to thank for helping you in the journey.
Dave Parker: 48:17
Yeah, we have four kids. So my wife is a cancer survivor. So in the midst of all this, we went through a battle with cancer. So our kids are 32, 30, 22 and 17. And the youngest one is adopted from China.
And I watched the journey the kids have been through. Some of them knew what was going on. Some of them didn’t know what was going on. But I think they’re. You know, for them to have hung in with this, you know, tour musicians because I think I think at part level, they looked at it and said, what could be harder than entrepreneurship?
I’m going to go into music, right? But just my appreciation for them in, you know, being a little bit, a little bit older, I can be a little more reflective. And the impact they’ve had on me as much as the impact I’ve had on them is really appreciated. So thanks for the opportunity to do that. I really appreciate it.
John Corcoran: 49:04
Dave, where can people go to learn more about you? Check out the book’s Trajectory: Startup is the name of the book.
Dave Parker: 49:10
Trajectory: Startup is the book, so you can find it in DKParker. Or it’s easiest to find it on Amazon so you can find me on LinkedIn. LinkedIn.com/in/daveparker/ It’s the only place I beat the baseball player for placement. And then you can find us on the eonetwork.org. As a nonprofit helping entrepreneurs. So I would love to meet more. Love to connect with you again. And thanks to the audience for letting me talk with you for a while.
John Corcoran: 49:35
Dave, thanks so much.
Outro: 49:39
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.