March Capital was investing in generative AI long before ChatGPT went mainstream.
Wes Nichols has brought his 30 years of analytics and AI experience as an investor and entrepreneur to help March Capital with this area of focus.
Thanks for doing this. You know, when I first met you, I really didn't know all the history of your entrepreneurial journey. Maybe we could start there.
Sure. It's been almost the only thing I've known. I grew up back east in Maryland and my dad was an architect and was very entrepreneurial himself. Had his own architectural firm. So, I got to live through the highs and lows of that.
But aren't the high highs and the low lows also just entrepreneurship.
Yeah, it is. Absolutely. But being exposed to that just sparked my interest And, I started doing things when I was a kid. You know, doing car washes and setting up a carnival for neighborhood kids and just whatever I could do to try to turn a buck was something I was very interested in. And, then McDonald's, which was fantastic. I love the McDonald's training and the experience and the speed. And I got very good at predicting what people were going to order as they walked up to the counter. That was my parlor trick with my coworkers - so maybe an early analytics bent of mine.
And then I started working in, you know, other weird jobs: restaurants, servers, and just, you get good at understanding how to read people and also how to be in service to other people.
Sure. And we're going to talk about the fact that you voluntarily went through the police academy and all of that. But going to McDonald's doesn't train you to be the CEO of a huge company like MarketShare or sit on a lot of public company boards. How did you go from that to building these iconic companies?
Well, I knew, I was sitting at McDonald's and realized I wanted to be Ray Kroc, and it was like, 'Hey someone did this. I could to. And so, a weird kind of naivete combined with arrogance or something as a teenager that, 'Hey maybe there's, you know, anyone could pull off doing this if they put a lot of hard work into it.'
And so, I was not afraid of work, and I think most people will attest I've been a little crazed on that front.
But I, I wound up joining a company that, that was involved in launch of Capital One early on. And so, I got very exposed to Capital One, worked closely with them. And they were one of the first companies to really embrace the use of data driven decision making. They had whole orientation called information based strategy - IBS.
The idea was everything could be done through data that you could figure out who you're targeting with marketing, you could figure out someone's credit risk and therefore what to offer them, what rates to offer them, what their, likelihood of, default would be, things like that.
So that just further connected into my, weird brain around, uh, interest in analytics and told a, someone about this recently that I just even remember back in middle school. I started going to the library a lot and reading the books I would love to read about were airplane accidents and reading the NTSB and FAA reports on the breakdowns of these things, I don't know, I just, I was always fascinated by what combination of variables lead to a particular outcome.
It's kind of like the incident in, uh, you know, the Titanic submarine. You know, when they break that down, it's not gonna be one thing. It's gonna be multiple things that come together, that led to that accident. And so the same thing happens in now marketing. It's like, you know, it's a multitude of things that come together that drive a particular consumer behavior, and it's never just one thing. So I, started off launching uh, direct partners, in the early nineties. And my background had been in the, well, the pre-internet was direct mail, so using database marketing and CRM to do this, like only through printed matter. So as soon as the digital realm started popping up, it became, You know, a no-brainer.
Like I remember having my first Prodigy account in 1989, realizing I'm gonna figure this stuff out. And so I created one of the first digital marketing companies that used, you know, digital media and marketing to actually drive customer activity. So in that company we got to, we helped launch DirecTV and EarthLink and XM Radio and TiVo, and a bunch of really interesting iconic technology companies.
So I did that for several years before realizing that, you know, these CMOs and CFOs needed a tool that could tell them predictively and prescriptively how to spend their marketing money. And that had not really existed. And things that kept coming up as digital marketing was starting to emerge was CEOs asking, why do I need to spend money marketing? I, Steve Jobs asked that question of our team, and, I was often the one to get asked those questions cuz of my analytic background. But then I didn't have an answer to that. So I found, through my partner, my first company, an academic at ucla and then another one at Wharton that were actually building those sort of models.
And we brought them in and it was amazing. it actually, Was able to answer the questions about resource allocation in a predictive and prescriptive manner.
And sorry. so the models were models of, if you spend here, it'll drive these Outcomes.
Yeah. It was all p and l outcomes based. Not eyeballs or clicks or brand impressions, BS metrics.
It's really about, if I move this much money from TV to YouTube, how many extra, iPhones am I gonna sell? But it also, to get to that level of granularity, you need to go broader to look at thousand variables simultaneously.
What's the weather effect? What's the economy? What's going on with competition? you know, it's never just one thing, it's multiple activities. Like you know, regardless if you see an incredible ad for the brand new MacBook Air, matter marketing money is gonna make you go buy that.
If you are fearful of losing your job tomorrow, or fuel prices are $8 a gallon, like that's gonna have an effect on whether you're likely to buy something or not. Were any really weird ones, like the weather makes a big difference on whether I, buy a MacBook Air or...
Yeah, for, soft drink companies, which I will go unnamed. we found that it wasn't temperature that was a variable, but it was humidity. Was a big variable. So we actually figured out a way that you could factor into vending machines, humidity levels, and do dynamic pricing of soft drinks.
Isn't that a classic, like business school case that people get pissed off if you do dynamic pricing or something? Yes, but if they're thirsty, No I mean, another one that was interesting is with, Roche, and it's public, so we, I can talk about it, but, the pharmaceutical company owned, uh, Tamiflu and they were doing budgeting based on the year before business outcomes. You know, so if you had a bad, or if you had like a weak flu season last year and then you set your budgets for this year based on last year's flu season, and it's a different flu season, you're either over budget or under budgeted every year. That was the game. So we used the analytic engine to, Look at all these variables simultaneously, we worked out a deal with Google to get, query volume data that would allow us to understand, what people were, typing in for flu symptoms and where by day, by market and then the analytics emerged. It's like early AI that said, oh, well one other thing you haven't seen is bus ridership and public transportation dips two days prior to people googling for flu symptoms. So that's interesting. So people start to feel a little sick. They don't go to work, and then they wind up googling flu symptoms and then they get, some sort of, you know, prescription. Yeah. So by knowing that, and then we could start to say, okay, marketing team, now let's start to move money to these markets real time based on what we see are some of these driver variables at work.
And then be super. You know, gorilla style, uh, in terms of how to go to market. But just having the data and having the tools, I mean that's evolved. a huge amount. Do you have thoughts on where AI is now and, How that's maybe changing the marketing landscape.
I think it's changing all the landscapes.
is yeah, everything.
And you know, I think we're in an era where, you know, AI eats software.
So you know, and that's why I'm here at March. I'm super excited about the focus that we have, we've deployed hundreds of millions of dollars into generative ai, Way before it became, a hot thing.
So I think finding entrepreneurs with, big visions and experience to pull this off, and then we're seeing some product market fit and now we can, pour the gas on with the relationships that March brings and the experience and the pattern recognition, that's where it gets really exciting. That's what I was looking for when I was at market share, when we were looking for investors. you know, we talked to a bunch of people and there's a lot of capital out there, but what I really wanted was, I wanted people who could help me with pattern recognition and, you know, help me not look, I had a portfolio of one. Like that was like, it was all or nothing when you're running a company and like, it's risky, like yeah, I have a, you know, I have a young, family. I'm like, you know, like all in I don't have a lot of money in the bank. it's a lot of pressure. And so could I have a team of people who could join as investors that could actually help me de-risk, help me find patterns, and do things that, avoid mistakes that others have made and help me with introductions and help me with access, help me with go to market, And that's really, I got that. I got that with Roger MCee and Ted Meisel Elevation, and I got that with, uh, Sean O'Neill from Silver Lake. And they were critical. So they're my model for what do I want to be as a good director and how do I help? These companies, that I'm very passionate about. How do I help them grow one thing I did with, I've had three public boards and one thing I learned in training of public boards is NIFO, N-I-F-O, nose in fingers out. Mm-hmm. Like, it's hard to do that as someone who's been an operator for a long time. but those are the best board members. Those are ones that understand enough what's going on in the companies, but aren't trying to like, grab the wheel And, and keeping their fingers out. So I try to practice that as well. So then you went from being a very successful founder, CEO to being a very active and successful angel investor. Yeah. I started doing a lot of co-investing in companies, you know, probably at the tail end of market share. Then after, running market share. And so we, I, I was able to get into some, you know, interesting opportunities. SpaceX is the most exciting Oh snowflake, you know, early 2018 was a, very good investment in Because you're a prominent founder in a prominent founder network sort of. Yeah, exactly. So I get, I've been able to get a lot of access to, they look at a lot of different deals. I think Datadog was a, has been a really good one... serviceTitan. But also some in biotech, like VE biotech, and oh, weird ones like AppLovin GitLab, due security was a good one that was at Cisco acquired, So I've been able to have, some good, investing experience and some very good outcomes, but also, you know, now doing this in institutional with, nearly 2 billion under management, it's a whole different game. Wow. wow. wow. I didn't realize you guys had 2 billion. A hundred percent agree though, it's a night and day. Like your capabilities. When you're by yourself versus with firm and infrastructure. That's right. Yeah. one of the things I'd say, you know, that I have a good reputation of being able to see around the corners and I do sometimes think five years out too much, but like where is that world headed? So that's why I've enjoyed that and that's why I've, I've enjoyed, just freelancing on the investment from, but you know, I thought, oh yeah, I keep up with Jamie and he's been a very close friend and one of my, career mentors actually launched market share in Jamie's old office. Wow. Okay. I'm interested in March connection. So okay, so it's via Yeah, exactly. Jamie's the glue. but that led to coming over and seeing what they were doing here. And just knowing what I know about Jamie and Samant, this seemed like a great fit for me. and I hadn't planned to go back to work full time. but it was a no-brainer because they really wanted to lean in on enterprise ai, which is my background. I mean, what sort of surprised you coming over full time? What stands out? what I really liked about March when I, started digging deeper, was not only the fun performance, which has been incredible. I mean, the h e c study that came out last week, you know, I, I'll share that with you, is, very complimentary of how well March is done And, you know, I think that the team is very collaborative. It's a nice group of people, a lot of brain power here. And when we get together, you know, we, are looking at companies. We, do a lot of homework on them. We put together a multiple page, tear sheet on them that is shared to the team prior to meetings. And then we get in and we discuss it. And if it's goes to the next level, that's when we get the founders to come in and, zoom in or, or come in in person and share their story and what they're trying to do. And and then we make a decision after that. And like I said, it's very collaborative and, everyone has a voice and, You know, I mean, I think Jamie and Samant have the most, most experience and the incredible track record. So I think we really lean heavily on their, on their experience votes. do you vote? on companies? oh, okay. rate companies. We do like, Yeah. No, I mean, it's,, less structured than that, but it's, collaborative for sure. Yeah. And are you seeing interesting trends or things that you're particularly excited by around in the AI world? I mean, we talked about marketing automation. like I feel like with ai, like all marketing it's just gonna be automated and it's gonna be targeting, Gil likes to say, you're not targeting people anymore. You're targeting the AI that is deciding what to show them. Like, do you have thoughts on. What you're seeing. Yeah, I mean, I think as, as a whole, we've been excited about those areas that, as I mentioned earlier, are going to lead to cost reduction, lead to fortification of trust, you know, through cybersecurity. But I think my, thinking has been that the, the horizontal AI businesses are gonna be the ones that be most likely to be commoditized. So we've been really focusing on the vertical apps that, can be very defensible Do you have a good example of that? Uh, UNIFOR is just on fire. I mean, UNIFOR is, is a multimodal, ai, probably one of the larger AI companies in the industry now. And what they're doing is they're helping with call center optimization and customer experience. So they're listening to voice. You know, sentiment and words being used, they're using tools in the background to help automate functions, to help the, person working the phones, have a better experience for that evil. Wait, so what's a good example of that? Like, I'm the customer service rep and it tells me, it me some insight. Yeah. Like, it gives you tips on what you should be saying based on what that person is saying to you based on what the customer is saying or in the background. you know, I'm calling an airline and I'm complaining about a, canceled flight. And in the background, UNIFOR is able to pull up and look at records and, pull that information, surface it for the agent very quickly, or helps with rebooking, things like that. You think about the amount of money that has spent in customer service and the. Disdain customers have for that experience. Yeah. And the risk it provides, it is the frontline risk for whether a customer is gonna turn out or not, is that touch point. So you better get it right. Yeah. I just had an experience, recently with Google, coincidentally, who's been usually pretty good. Uh, but I have a, bunch of nest cameras, and you know, and it's just been like pulling teeth to get anything solved and you know, like that's not great. Cause I've spent a lot of money, with them across, uh, a bunch of different products. But they should know that they should see my lifetime value. Right. and then surface things, listen to my tone, listen to me getting a little heated and maybe, you know, like come up with a solution that like, Hey, maybe send me a replacement for the dud that you sent me and, you know, save a lot of trouble. Um, I imagine some people push back and say, it's creepy, all this data. And it's not just data now it's sentiment. Right. So it's like, Not only do you know everything about me, but you've got, whether I'm, you know, generally in a bad mood this day or this month or something. Well, McDonald's has just launched an AI solution that can listen to your voice at the drive in to see if you sound tired and offer you coffee. Really. Yeah so I mean, I think it's cool personally, I mean, I'm not a luddite at all. I'm a big believer in improving the human experience. And, I think part of that is, if they can read some of my behavior or read some, like, read I'm having a hard day, and make it better, that's a good thing.
I mean, that's even where you started, which is like starting from a. Getting to understand people. Predict what they're gonna order. it's, uh, I don't know. It's just people get weirded out about data and, and about privacy. But if you do as much work as I've done in this space, it's. Remarkable how predictable we are as humans. Hmm. That's interesting. Yeah. The, like, we are super predictable. you know, where we drive route that we take. like, I mean, people are, you know, go the same place as they eat. They make the same call, they watch the same TV shows. I mean, they're, you know, they're creatures of habit. so we just happen to have the data to look at that and then see if we can then, you know, predict, predict And, and influence. Yeah. Like I, I actually had the, CEO a large automotive company did an audit on market share's, analytic engine, five years ago. and I shared it with, at our company at an all hands meeting because I want people to realize, You know, what we're doing is meaningful. Like it's not just marketing spend optimization. It's like the ripple effect is enormous. Like this guy told me that we'd help sell an extra billion and a half dollars of cars. through the marketing optimization, it led to, a new plant being opened up, which led to more jobs being hired. It helped their stock price go up. So then think about all people, like, you know, my mom and others who are in pensions, that, have stock in these companies that helps their preterm. I mean, the ripple effect if you get the analytics and the ai AI right, is enormous. And it impacts a lot of people for a lot good. that's the way I think about the power of this.
Yeah. I wanna take a tiny tangent because you're talking about the impact that these have, and I know you've been involved with sort of, geopolitical level, uh, getting involved with our state department or Department of Defense. I'm super curious how you, you know, do put that same lens on sort of those discussions and What are you advising when you're talking generals? What are your messages and what are you seeing there? Yeah, No, for the past four years, Yeah. I've been working with a military leadership as a, Advisor on analytics and ai. And it's the same story, like, Whereas business is focused on optimizing for revenue or market cap, the military is optimizing on readiness. That's the dependent variable is readiness. And that means we have to be ready at a moment's time to act and to help defend the country. So that could mean do have enough, you know, recruits Do we have the equipment that's working and maintained? Are the troops getting enough training? Are they, you know, How are they battle ready? And so the opportunity to apply analytics and AI with these generals, in many cases, they're moving from running so, You know, a battalion to all of a sudden, like being a CEO of a business within the army or within the, uh, air Force or what have you. So giving them guidance on here's the best way to start to use data to make better decisions. How do you do better for forecasting? How do you do, uh, optimization, reduce paperwork? It's the same problem big companies have, but like the Army, I think it's, uh, it was 180 billion budget and about 2 million employees. I mean, it's a big business. So it, that's been an honor to help. And I was just back, at the National Security seminar back east with them to, for four days talking about everything from readiness to geopolitics, what's happening with China, Ukraine, all the hot buttons Okay. I wanna come back to geopolitics in China cuz I, I think it's really interesting. but on that, I know you went through the police academy and are a volunteer officer And you go on patrol. And one thing you said to me about that was, it's so striking. What a totally different world it is. yeah. This was a, uh, Something I've always wanted to do. I, beyond being a DJ in college, my, primary source of revenue, of income was doing undercover security. Wait, both. Well, you're so badass now. I did not know you were a DJ in college or undercover security. Go on. a great playlist. Uh, the, no, but I, I, worked undercover in retail stores, and at, at an amusement park. Just weird jobs. back east. And, and I was good at it cuz, you know, just observational, skills that I have and that's my pattern recognition. And, I come from a family. My, my mom comes from a military family. she worked at the nsa. A lot of my family went, uh, worked in, military law enforcement. So I was, you know, when you're live in Maryland and come from that area, a lot of people are part of that. And, so in high school, I had a weird event, this is probably tmi, but I had a weird event in, my neighborhood in my town where little town in Maryland I grew up in, where we had a serial killer, and it's called the Mannequin Murders, which is a whole nother, another podcast, it's literally is a podcast right now. and it happened, you know, when I was starting, when I was about 12, it went on for 15 years and killing now our next door neighbors and killing people. We, my sister's best friend, stuff like that. It was really weird, little weird thing. And so I got a front row seat to how crime terrorizes communities. And not just actual crime, but the fear of crime. Totally. And, so that's just has really stuck with me and that's, and I felt like I wanted to do something about it. So I got into the cadet program called the Explorer Program when I was in, in high school, all through that program. I did that, I worked the police department every week. And so I got my exposure to that. and that explorer program was something that was really influential to me. so about eight years ago, Jim Wyatt is, used to be at William Morrison as a friend and saw LAPD badge on his lapel one day at a, at a meeting. And I asked him what that was and he said, oh, he is on the board of the foundation of the police foundation. I'm like, I wanna get involved in that. I wanna help give money to the Explorer program cuz it had such a big effect on my life. and I, I learned more about it for LA it helps like 600, I think 600 kids in, in LA and South, primarily south la. Like, it changes the lives of people. And so to get them involved in doing some good and doing something community minded as opposed to doing something for themselves. And I learned about the, reserve police force at lapd and I'm like, well, that sounds cool. I talked to three of my friends who did it, and did some ride alongs and I was like, okay, I'm gonna do this. So I applied, I took a year to apply. It's like a three or 4% acceptance rate. It's really hard process to go through. I mean, the mental evaluations, physical, you know, the five hour polygraph. I mean, it's just, it was a really wild experience. Wow. but I went into it and, Went through it all did fine. It was the hardest part was illegal. I mean, it's just the, it's four months illegal legal, law, like understanding what, you know, understanding about all the amendments and have to law. Oh, you have to, to. Yeah. if youre trying to understand if a, crime's been committed, So, that was really interesting. So I did that on, you know, that's on the weekends and in evenings, so I did that and then, then I decided to, yeah, go into patrol. And so I've worked basically one shift a week, since I started doing this for past three years and Wow. Yeah. So, you know, it's a a huge time commitment. It is. It's, but I do like, like Friday nights, I work Friday nights and, you know, in Hollywood right now. And it's wild. I mean, it's just, it's, but it feels like you're helping. I mean, I've, my partner and I've helped, um, I think it's either four, maybe five people. Yeah, four, four teenagers and one adult were in the process of committing suicide. We were able to, you know, talk them out of it real time. we caught our first home invader. There was a couple woke up and there was a man staying at the foot of their bed and terrorized 10 year old, kind of similar to what I went through as a kid. And I was able to talk to the girl about my experiences as a kid and that you get through that and it's okay. And, and we checked every corner of her house and let her know everything's okay. There's no one else there just, but like, you're touching people on their worst moments. and it's very humbling and it's an honor. I mean, it's to go into, do a death investigation and talk to their family about the person who's dead, laying on the floor like their loved one, or laying in bed. It's after a long life, uh, you're helping them, every death investigation LAPD has to go to, to make sure it wasn't a crime, and then you help them. You know, with getting a death certificate signed off by doctor, you get the mortuary lined up to come and you're there with the family supporting them. Like, like it's super intimate. It's a very unusual thing to do, but it feels, for me, I felt like I've spent, you know, I'm a, been a member of YPO for a long time, no longer in the y part of it, but the, um, but, YPO o has this thing called, this idea the success to significance and that we're all under this, pursuit of success for so long. And I've feel like now really focused on significance and like, how can I help and how can I help the community? I also have been working with the department for the past four years about technology adoption. How can we streamline the paperwork, And we've, the Chief Moore and the Police Foundation have been raising money,to help completely change the technology stack. When Covid started, most of the police stations didn't have wifi, so they couldn't do Zoom. yeah. Like that kind of stuff. So so we put wifi in, like the foundation funds crazy stuff. Like like all the children's sports programs in South Central, there's no budget for that. So the foundation pays for that, of for a donation I wrote down. I need to make a, you need to include the link for the foundation. Oh, that's, yeah. That's, it's a really good cause. it's a good it's a really nice group. and it does, it's doing important work. going through like, and thinking about how do you deescalate these situations? Yeah. What have you learned about yourself going through this whole program? learned that the skills of entrepreneurship and dealing with customers and dealing with humans in general is really helpful. And age is helpful. The one thing that the department likes about the reserves is they tend to be older and they tend to have, you know, more time under their belt, used to dealing with people and like to talk to people. and as a result that leads to, you know, a deescalation that maybe if I was. 21 years old little little coming in hot. That might be a little different thing, What about lessons from your entrepreneurial journey when you're working with entrepreneurs, when you're sitting on boards, you know, do you have ways that you take in some of that, those learnings and apply them to entrepreneurs? Things you're Find yourself repeating. Yeah. No, it's really, important. I I have an immense amount of empathy for entrepreneurs. like like I look at it like it's like being a parent, like you can't know what it's like to be a parent unless you've been a parent and you can't know what it's like to be an entrepreneur without being one. and it's hard. It's stressful. it's, it takes a very weird person to power through, uh, the ups and downs of this Particularly, you know, if I feel like some people come out of very large companies and start to try this, they have no idea how hard this is. and I think that's what is it? 90% of startups fail? I mean, I think half of it is probably it just, people don't realize how hard it is I was at Google most of my career and then I started a company and someone said, Minnie, it's like you've been, you're a domestic animal. You've been domesticated. and you're, And like you don't just take the dog that lived in the living room and put them out into the wild. But you've you had a little, little, ferness apparently. So Well said. Thank Wes. how do your friends describe you? that's a good question. Let me think about that a It's my last question. I am I'd say my friends probably describe me as a ambitious and honest and funny. I think if I had to categorize it, I am a comedy nerd, so I, when I'm not listening to your podcast and others, I consume a ton of comedy. I, I go to com live comedy. I'm like, I'm a, really into that and I, just always try to find humor and Do you get up on stage? No. Just checking. I'll, I'll, go, no, I'll do karaoke with you though. I, I mean, I was at karaoke last do this. Right. We got these microphones right here. Let's Wind beneath my wings right Okay. Okay. Gaslight tonight.
Wonderful. Well, Wes, congratulations on your very impressive career, and thank you for taking the time to do this with me. you. This, I love what you're doing and just, it's really nice for the community
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