Announcer:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York City, you're inside the Ice House, our podcast from intercontinental exchange on markets, leadership, and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE and at Ice's exchanges and clearing houses around the world. And now welcome inside the Ice House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Washington, DC is known for its hot summer months when most of the nation's capital head out to Delaware, Virginia, or the Carolina shores to stave off the heat. And as a former resident, I can certainly attest to this. There are only a few events for which most Washingtonians are brave enough to venture outside within the capital during the summer, including listening to jazz in the garden at the National Gallery of Art, flag waving at the National Independence Day parade, or sitting court side in beautiful Rock Creek Park, watching tennis greats.
Josh King:
The city open has been a DC summer ritual for over 50 years, bringing some of the most innovative changes to tennis, including blue courts, instant replay, and a Sunday main draw start. In 2019, with new management, the tournament took on new meaning as a Washington summer tradition. Mark Ein, our guest today, is the founder and owner of MDE Sports, which owns the city open and the Washington Kastle's World Team tennis franchise. In addition to his tennis endeavors, Mr. Ein is an investor, entrepreneur, philanthropist and a civic leader.
Josh King:
Mark's acquired, invested in and built a series of growth companies across a diverse set of industries over the course of his 30 year career. During this time he's been involved in founding or early ages of six companies that have been worth over a billion dollars and has led to over 1.8 billion in private equity venture capital and public company investments. He has a deep insight into all aspects of the SPAC market and its history, given his experience of successfully raising SPAC capital and executing SPAC mergers over the past 13 years. Our conversation on 202's SPAC boom, and what to expect in 2021, it comes right after this.
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Navigating dynamic markets requires a relentless pursuit of knowledge. Now, join market experts to learn with ICE Education Live. Attend live video training with practical lessons across global asset classes, on demand modules provide base knowledge. Participants can then attend live training sessions, including group review and test for certification. We also tailor training for your needs and in-house projects. ICE Education Live courses, continue your education today.
Josh King:
Our guest today, Mark Ein, is an investor, entrepreneur, philanthropist and civic leader who has acquired, invested and built in a series of growth companies across a diverse set of industries over the course of his 30 year career. Most notably, he's the founder and chairman and CEO of Capital Investment Corp one, two, three, four and five. Welcome, Mark, inside the ICE House.
Mark Ein:
Josh, thanks for having me. It's a pleasure to be with you today.
Josh King:
So you joined me here, Mark, on the first Tuesday of 2021. We'll be discussing 2020 in detail a bit later, but can you share one of your highlights from the past year?
Mark Ein:
Well, I think the biggest highlight is getting through it in good health, with everyone in my family getting through it in good health. It was obviously a challenging year for everyone in the world and, unfortunately, a very tough year for so many people. For me, my top priority was really to keep my family safe and healthy, as well as the people who work for our companies, making sure that we help shepherd our companies through the year. Some of which found a lot of opportunity in 2020, some of which had to overcome meaningful obstacles, but trying to help shepherd those companies through those times and try to keep the people who work in those companies safe as well.
Josh King:
Bring me back to, I don't know, you could call it February or March, but how did you scramble everybody and get everyone to safe places and surely re-engineer the way you operate, manage and lead?
Mark Ein:
Yeah, I mean, really, for all of us, it came a bit out of the blue. I had been in Davos in January and there was just a little talk about this virus that was in China, but no one really thought that it was going to have the kind of impact that it did. But as we got into February, the warning signs were growing and we started to obviously pay closer attention to it. One of our company's castle systems is one of the leading providers of security systems for commercial office buildings. And so we started to think specifically about that company and how it would help people in those buildings be safe.
Mark Ein:
We also owned an expedition travel company that sends people to the world's most remarkable locations, Lindblad Expeditions, to Arctic and Antarctic. We had to start to think about in case it got worse, how would we get people home? And then I think the aha moment for me was in March, at the very beginning of March, was going to a couple restaurants that I go to often. And the impact that it was having, the severe impact it was having so quickly on those places as people didn't want to go out. And that really hit home that obviously this was going to be a health crisis, but it was also going to be an economic crisis. And we needed to hunker down with our management teams and get to work to get them through it.
Josh King:
Where do you think things go this year in terms of the way you're going to have to manage the company? I can't imagine Lindblad is scheduling a lot of sailings.
Mark Ein:
We've been ready to go for quite a while. And we have a testing protocol where we will be able to screen our guests before they come, and then right before they get on the ship. So we've been ready. Actually, the challenge there has been getting people to the ships, which are departed from places all over the world. That's actually been the bigger challenge, but we do expect that we'll be back relative soon in the new year. I think we're at a very interesting and a bit of a dangerous inflection point, but also the light is at the end of the tunnel. The vaccines have arrived. People are starting at vaccinated, so you can start to see the light at the end of the tunnel when life will begin return to normal. And then we'll actually be normal.
Mark Ein:
At the same time, as you mentioned, I think there's just fatigue, a lockdown fatigue. And so people have decided they're willing to take risks and want to, especially over the holidays, travel and see friends and family and get away, which is leading to the biggest surge, at least in this country, we've had. And so on one hand you have great hope and optimism because of the vaccines and what that will mean. On the other hand, you have great danger because of the amount of travel and interactions people are having that are leading to great surges. And so our advice to people is we've made it this far, hunker down, stay safe. There's a light at the end of the tunnel. Let's just get there and we will get there. And hopefully then we'll get there with a minimal amount of loss of life and damages as possible.
Josh King:
Well, let's take a big step back, long before we knew anything about mask wearing, social distancing, quarantining. Let's go back, Mark, to your early days. You graduated from the University of Pennsylvania, went on to HBS before working at The Carlyle Group in Goldman Sachs, eventually moving onto LA based early venture firm, Brentwood Associates. East coast native with that kind of pedigree, Carlisle, HBS, why'd you decide to move west?
Mark Ein:
Well, I had moved west before business school, because I was always intrigued by California. I love being outdoors. I love being active. I always was attracted to the notion of California and also just the innovation and the economy out there. And so I had the incredible opportunity to work at really one of the country's oldest venture firms, a group of people who were just terrific investors. And I had a chance to go there, live there and learn from them. In many ways, it was one of the most in informative, impactful years of my life, that experience. And it was wonderful and it was very hard to leave, but I left to come back and go to school.
Mark Ein:
And then coming out of school, thought long and hard about going back, but my family's in the Washington area and it was important to me, if I had the right opportunity, that I could be close to them and my parents as they got older, that we could be closer together. And fortunately, the Carlyle Group, when it was only five years old, gave me an offer to join them. And I viewed that as the perfect situation to come back to my hometown, to a firm that was small, but had already amazing promise and a fantastic opportunity to work with wonderful people, and to do it in a town that I love. And that was really the big beginning of my real journey.
Josh King:
David Rubinstein has been a guest on this show before, had him in the library of the New York Stock Exchange before we were all spread out during the quarantine. But Mark, you eventually from Brentwood Associates, founded Venture House Group, serving as its chairman and CEO since 1999. How were you able to go from learning with great venture partners and mentors and decide that it's time to do something on your own and put your own shingle up?
Mark Ein:
Yeah, and I should start with David Rubenstein, who, as you mentioned, is the founder of Carlyle and he's been a guest on your show, is one of my role models and mentors. He was the one who hired me. We hit it off from the minute I interviewed there. And there's something about the way David approaches, not just business, but life. He tries to make a difference in everything he does. He's incredibly creative and innovative. He was in the way that he positioned Carlyle, which is the reason for its success along with the incredible investment prowess of Bill Conway and the operations of Dan D'Aniello, that trifecta.But then also just the things that David has done outside of business. I really admire him.
Mark Ein:
And so when I got to Carlyle, it was small, very small. There was 30 people total in the firm. And as it grew over the years, it grew to be bigger and bigger. And at my heart, I'm an entrepreneur and I either want to do something on my own most likely, and, or be in a smaller environment. And so I eventually got to the point where I had built a really good track record. I had proven myself, We were very early investors in the wireless communications industry, and there was an abundance of opportunity. And I saw that it was my chance to go off and do what the Carlyle founders had done and start my own firm, which I did, as you mentioned, in 1999. It's not easy to leave a place as outstanding as Carlyle is, but the dream of being my own entrepreneur was something I couldn't resist. And it was the right moment and I never turned back.
Josh King:
So you're probably about seven years into that journey. In 2006, you set your sites on Kastle Systems, which installs and manages security systems for commercial office buildings. So many people recognize the name from the ubiquitous key fobs found across corporate America. Mark, when you first met their CEO, Gene Samburg, the business I understand wasn't for sale, but Samburg reportedly said, you met Mark. We developed this instant rapport. Being that this is the first time investing in security space for you, was there something about it that had peaked your interest?
Mark Ein:
Yeah, so I think it's important to maybe spend a second on what my strategy was when I set off on my own. I decided that what I really loved to do as an investor was roll up my sleeves and help CEOs, founders, and members of management build world class companies and help them grow and compound them over the long time. And that because I like to do that, I didn't want to have a huge portfolio. I wanted to concentrate my time and my capital in a small number of extraordinary situations where we could, as I mentioned, partner and be the closest partner to the management teams. And so that's what I set out to do when I started Venture House Group.
Mark Ein:
And after a few years of doing that, I decided what I really wanted to do was to buy a company or a small number of companies that I could view as platforms that we could build and grow maybe for decades. And so I was in search of that and had been looking for a couple years, and I was actually introduced to Kastle by someone. And I went to my first meeting at the company and it was a breakfast. And I came back to my office and I told my assistant to come in with my calendar. And I said, cancel everything for the next month. I'm dropping every thing until we figure out if we can buy this company. And it was because A, that was what I was looking for. And then B, Kastle was, and still is to this day, just an extraordinary business where we protect the large commercial office buildings across America, the people that are in them. We do it on a managed service basis.
Mark Ein:
And Jean had built this extraordinary business with a wonderful culture and incredible brand, a great following. But he recognized, and I recognized there was so much more the company could be if we gave it some capital to grow and some time and just basically re-instilled a growth mindset into it. And so Gene, as you mentioned, we hit it off. We agreed to do the transaction at the end of 2006. And it still to this day is my core holding. It's a company I love. I'm incredibly proud of the team we've built and what we've done.
Mark Ein:
We've dramatically expanded the company into new geographies, new services. We've embraced video. We work with municipalities to connect our video networks into their video networks and on and on and on. It's just one of those things I was actually looking for, not that specifically, but a company with exactly those characteristics. And when I saw it, I knew it. Fortunately, Gene and I got along great. And he felt comfortable with me being the caretaker for his life's work, which is, I think, really how he viewed the transaction. And I was honored to have that opportunity.
Josh King:
So at this point, I got a sidebar with you and question at the vast reservoir of data that a company like Kastle throws off in the midst of a pandemic. What has it told you about commercial real estate occupancy and trends that you've seen evolving over the year? And what does it pretend for 2021 and beyond as basically the gatekeepers of the most magnificent structures in the United States?
Mark Ein:
Yeah. So from the very beginning, we recognized our unique role in helping to protect the buildings and the people in them, but also create an environment where people would return to the office as quickly as possible. So we've developed all kinds of technologies in a framework called Kastle Safe Spaces, which has been widely adopted. As you mentioned, we also have this incredible data of office building occupancy, actually, how it's being used. And we've now published on a weekly basis, the Kastle barometer, that's widely sourced as the definitive source for our ... to what extent people are returning to offices.
Mark Ein:
And what you see is that it pretty much follows as you would expect. There was a precipitous drop off to a low of 12% of the occupancy pre-pandemic, right, when the country went into lockdown. And then it gradually increased over the summer. And then lately it's been coming down a bit. What's interesting is not just the aggregate occupancy across America. But when you look within markets, it's very telling because markets like New York that were hit early, where now the government has been stricter. And it's lockdown have lower occupancies, Northern California, where you have tech companies that have embraced work from home, they've had lower occupancies.
Mark Ein:
Places like Texas, where they have a more maybe libertarian lenient view towards to what extent to lock people down have consistently had higher levels of return to work. And so it's been very interesting to track, and we talk to our clients all the time. I mean, obviously people who own real estate want people to get back to buildings, but they also recognize it has to be done safely. So they've invested a lot into things like Kastle Safe Spaces, so that when people are ready to return to work, it will be done safely. But I think beyond that, not just the building owners, but business owners, I think, really are extraordinarily eager to get people back in the same place.
Mark Ein:
We've all done the best we can with video technologies like Zoom and teams and others that have been fantastic substitutes, but it doesn't replace the interaction of being together. To some extent, we also had a lot of connective tissue built over years of working together with our teams, but over time, people leave people, join companies. It's very hard to do that virtually to become a member of a team and integrate as a team when you're not sitting in person. So I think everyone's eager to get back. For the most part, everyone is putting safety as the top priority, but people have been preparing for months and will continue to prepare so that we can all get back into the office and work together as quickly as we can.
Josh King:
In no place do you see a lack of occupancy and commercial spaces as much as you do in our stadiums and arenas around the country, where the NBA, NHL and NFL play. Certainly gearing up for the NFL playoffs, Washington football team, making its first appearance in a long time, but there's going to be empty stands. And Mark, I understand that you are a big tennis fan. On this show, we had hall of fame president, Stan Smith, the former Wimbledon and U.S. champion, on the show. You are the founder of MDE Sports, which owns this city open tennis tournament in Washington, one of the five largest events in the U.S. Tournament is certainly woven into the fabric of the DC community. And I remember those summer weeks in Rock Creek park, but this year threw a wrench into the plans. What was it like to manage expectations for the event in the wake of the COVID 19 pandemic? Certainly at the National Tennis Center, the Billy Jean King Arena completely empty for the U.S. Open?
Mark Ein:
Yeah. We spent a lot of time last year trying to navigate the city open through the beginning of really the COVID period. One of the first boarding events to be canceled in the world was the Indian Wells tennis tournament, which is a huge event in Palm Springs in the middle of March. And everyone was there on site. And two days before the event, they said we're canceling it and everyone needs to leave. That I think was the first big event, that maybe one NBA game, but it really was the first big sporting event that was canceled. And so tennis was at the forefront of this.
Mark Ein:
For a while, we thought the city open was going to be the first major tennis event back in the world. We were the first on the calendar. We worked with our medical providers at MedStar to develop protocols that we felt would keep people safe. And we were going to be the first tennis event back in the world. And unfortunately, three weeks before the event, frankly, it was the travel issues that were causing us the biggest problem. We could have held the event. Unfortunately, we wouldn't have been able to do it in front of fans, but we still thought it would be great to do, provide an opportunity for the players and for people to watch it on TV. Tennis is such an international sport that we couldn't get all the athletes in and guarantee they could leave. And so, unfortunately we weren't able to go ahead with it.
Mark Ein:
Those issues ended up getting resolved for the U.S. Open, and so people obviously came and they played the open in the Western and Southern open before it. It was a disappointment, as you mentioned, the city open that's been in our community now for 52 years. I actually was a ball kid when I was a young boy at the tournament. And so it holds a dear place, not just in my heart, but in generations of Washingtonians who have loved going to that tournament. And last year was the first year in 51 years. It didn't happen. I was really committed to doing everything in our power to try to put it on. But just, in the end, we couldn't, but we're very hopeful for this year. We're looking forward to it.
Mark Ein:
You mentioned we acquired it in 2019. And really again, the same philosophy we applied to our business is really tried to lift the event to a new level with just a completely different level of food, entertainment, stands, facilities, everything, and people loved it. And I know our fans are excited to come back and we're excited to have them in 2021.
Josh King:
I grew up watching the Boston Lobsters play in Boston, Massachusetts, MDE Sports owns the Washington Kastle's World Team tennis franchise that has won the league championship six of its 13 years since its founding. And has had one of the longest winning streaks in U.S. pro team sports history, winning, I think, 34 straight matches from 2011 to '13. What's been the secret of that franchise's success?
Mark Ein:
Well, that's been such a joy for me to own the Kastles and build that franchise from the very beginning. And I've learned so much from owning and building that team and operating it. One of the things from the very beginning that our mission was all about community. So our mission statement from the very first day we started, it was bring the city of Washington together, promote a center of high quality, fun activities, promote physical fitness and tennis, and help local charitable partners. Those were the four things we set out to do. We never talked about winning championships or setting record winning streaks.
Mark Ein:
But the thing I learned is that because people felt there was a higher calling, that it was about something bigger than themselves, the players actually, these great players, Venus Williams, Serena Williams, Martina Hingis, the Bryan Brothers, on and on and on, they too felt like they were part of something that was more than just them. And it's interesting, tennis is an individual sport. This is the one time a year, and then plus Fed cup or Davis cup, where they play together as a team. And then here, we had this team that was just embraced and inspired by its community, and even players like Venus and Serena felt that. And so we did have this unbelievable streak of winning championships and winning matches.
Mark Ein:
During a lot of that, we did not always have the best players on the court, but they always got the most out of the team that was on the court. It's something that I've taken to all of our companies too, is when people believe they're part of an organization that has a higher calling and inspires people to do things they never thought they could accomplish before. And I think that's the secret to what has made the Kastles so great and have all of those milestones that you mentioned.
Josh King:
After the break, Mark Ein, investor, entrepreneur, and philanthropist and I will discuss his five SPACs and what to expect in this space over the next year. That's all right after this.
Dan Primack:
Hi, I'm Axios' business editor, Dan Primack, host of Axios Recap, a new week day podcast featuring interviews that get straight to the point. My guests are business leaders, politicians, and reporters driving the day's biggest stories. We're joined now by Jalen Rose.
Jalen Rose:
Thanks a lot.
Dan Primack:
Bill Ackman.
Bill Ackman:
Thank you so much.
Dan Primack:
Senator Amy Klobuchar.
Amy Klobuchar:
Thank you, Dan.
Dan Primack:
Steven Soderbergh.
Steven Soderbergh:
Thanks for having us.
Dan Primack:
Andrew Yang.
Andrew Yang:
Thank you. It's a pleasure.
Dan Primack:
You can find Axios Recap on Apple or Spotify or wherever you like to listen to podcasts.
Josh King:
Welcome back. Before the break, Mark Ein, investor, entrepreneur, and philanthropist and I were discussing his many ventures that have led to his early success. Mark, as the pandemic created a new set of needs for market participants', SPACs certainly emerged as a major force. The NYSE raised an industry leading 45.3 billion in SPAC IPO proceeds over the course of 113 transactions just in the last year. What's your take on the surge that led to this phenomenon?
Mark Ein:
Yeah, and it's been extraordinary having evangelized facts since 2007. And I always had a deep belief that for the right companies in the right situations, SPACs are the ideal way to raise capital. Seemingly out of nowhere, they became mainstream and top of mind for everyone. And I think to some extent it started by the number of successful transactions coming out of SPACs increased. And so when people saw that ... I mean, fortunately all the ones that we've done and sponsored have worked out well, but the track record over the long term, there weren't enough of those.
Mark Ein:
And in 2019 and '20, at the end of 19, going to '20, more transactions happened that were successful. And to some extent, success begets success, perception becomes reality. And frankly, companies that we and others had talked to about doing SPAC transactions, who wouldn't consider it in the past, now all of a sudden saw the merits of it because the underlying reality of what the opportunity that SPACs provide to companies hasn't changed. It's more the perception that this is a really attractive vehicle, which we've always believed. And I think now it's just become more widely recognized. And then we got on the virtuous cycle as that happened and more good companies would use facts to raise capital.
Josh King:
Was there something about the first quarter and a half of 2020 that set the ground work for it? I mean, historic volatility in the market, is there some level of issues that create a perfect storm that allow SPACs to flourish?
Mark Ein:
No, there's theories about what the time of COVID did, people not being able to travel and do due diligence. The level of, I think, corporate acquisitions went to down because people couldn't get on the road and travel. Even private equity transactions went down for the same reason. And then you had SPACs out there with capital that were willing to do things. I mean, you still have to go see the companies, but on a relative basis, people think that that improved the standing of facts relative to alternatives.
Mark Ein:
I think that's a little bit of it. I actually think more than anything, it really is just the perception over time. It's not even the perception. The reality of the advantages of SPACs became accepted. Ourselves and others had been talking about this for quite a while about why SPAC for certain companies really is the best path. And us and a few others were evangelizing it, but then people saw it and they saw it actually work for a number of situations. And then the spigot opened and then it just kept reinforcing itself. And that's where we are.
Mark Ein:
And there really are inherent advantages to accessing the public markets in SPACs. You can get public quicker, you can raise more capital, you have price certainty, you can share more information. You get a sponsor like us, which for certain companies is very useful. And so there's a lot of advantages to it. That said, there's other companies where traditional IPO is probably the better route, but there's always been this set of companies who should have considered us back who previously didn't, who now are embracing it.
Josh King:
As I mentioned earlier, Mark, you're the founder, chairman and CEO of Capital Investment Corp one, two, three, four and five. So surprisingly, you have a deep knowledge of the SPAC product and have looked at, I guess, 1200 companies or so for SPAC deals. What exactly do you look for in a potential partner company? Bring us into your office and tell us how you scan the horizon for deals.
Mark Ein:
Yeah, by the way, just as a quick aside, when we rang the bell for Capital One, it was on the old American stock exchange because it was the only place you could list these things. Obviously the New York Stock Exchange bought it. It was that beautiful building over there. It feels like yesterday, but it was 13 years ago. That shows you how much the world changed.
Josh King:
I think that building is still available for renovation if you want to take it on.
Mark Ein:
If I had a use for it, it was spectacular.
Josh King:
Yeah.
Mark Ein:
That was a special place in its own right. So what we look for, and it sounds overly simplistic, but when people say, what are you looking for? My first answer is a great public company. And that's definitional, but by definition coming out of a SPAC merger, you will be a public company. So is being public an advantage for you. Is it a good thing? Is it something that you desire? Is it something you're ready to do? That's a gating question. Once you get past that, then for us, it really is ... we're looking, as I mentioned when I talked about the beginnings of my career, it's the same mission, same objective as when I started on my own, now 20 some years ago, which is that we do this. We create facts and find investments because we want to concentrate our capital with public market capital in a small number of companies that we can help and build and grow into world class businesses and compound for the long term. That's what we're looking for.
Mark Ein:
So we're looking for a situation that's not a trade or a transaction, but it really is a way of having a stake in a company that we're going to roll up our sleeves and help the team build into a world class company. Or if it's already world class, make it even better and compounded for the long term. And fortunately for us, since we've been at it for so long, we're able to keep an opportunistic mandate where we're not limited to one sector. And we are very growth focused because growth is the fuel that lets companies compound for the long term.
Mark Ein:
But interestingly, while growth is usually associated with things like technology, you actually find growth in a lot of different areas. So we found it in travel. We found it in financial services, we found it in infrastructure, and we found it in technology. Those are the four previous deals that we've done. And so that's at the core what we're looking to do, invest in a world class growth company that we can help build and compound over the long term.
Josh King:
I mean, do you also get personally passionate about the product, like a Lindblad?
Mark Ein:
Well, definitely. I mean, that's the ideal. So I'm chair of Lindblad, this expedition travel company, and I'm always passionate about working with great entrepreneurs and executives to help them build great companies. That's something I just have a deep passion for. I love to do it. I love the people that I get to collaborate with. So no matter what the industry is, I find great pleasure in that. And I find great pleasure in the feeling of satisfaction. When you set a collective mission, you roll up your sleeves, you work really hard over a long term to align an organization to achieve those goals and you achieve them. It's one of the great feelings in life to be part of teams like that. And so that no matter what the industry is, is something we're passionate about.
Mark Ein:
And then oftentimes we get to invest in industries and companies that fuel that passion even more. And you mentioned expedition travel where we take people to the world's most extraordinary locations, Arctic, Antarctic, the Nile, the Amazon, Alaska, Galapagos. I mean, for a lot of people going to these places are the bucket list. This is what they want to do in their life more than anything else. And we help take them there in an educational way, in a safe way, in a relatively affordable way, and providing people those opportunities. When you go on these trips and you see the experience you're providing to people, it really is an extraordinarily satisfying feeling.
Josh King:
My family has done a back roads trip every year for each of the last five years, a similar experience, certainly an experience that you don't get anywhere else. Lindblad has a long legacy before you got involved with it. And I'm curious the things that you bring to it to scale it, improve it, bring it to the next level.
Mark Ein:
Yeah, I think Lindblad is an incredible case study of when SPACs are just incredible platforms to help companies. So Lindblad was founded by Sven Lindblad whose father, Lars Lindblad, actually founded expedition and travel. He took ordinary people to Antarctic in 1966 on Chilean naval vessels, so he really was a pioneer. He opened up [inaudible 00:34:10] for travel. Sven learned from his dad and started his own company. Sven's an incredible entrepreneur. He's still the CEO of the business, and he had bootstrapped it for 40 years. And so Sven, every few years, would borrow money and buy an old ship and renovate it. And then eventually the ship would make a lot of money and that would give him the resources to go bootstrap the next one and the next one.
Mark Ein:
And he did an extraordinary job and built an amazing company, forged a relationship with National Geographic as a strategic partner where we co-brand all of the ships, and we co-market, and we have their naturalists and scientists on board. So Sven had built something very special. And at the end of 2014, we met Sven and saw this situation and said, there's a whole nother level you can take this company, but you're going to need a permanent capital base. You're going to need to build your team. But you should take this model you have that you've done an incredible job at and take it to the next level. We want to help you do that. We want to give you the capital. We want to roll up our sleeves, help you build the team.
Mark Ein:
And we also hit it off. I mean, it's one of the things ... again, I love working with entrepreneurs. And fortunately, oftentimes when we meet them, we developed these quick, fast relationships that are really close, like with Sven. And he embraced it and he was excited about it. And so we also let him, frankly, take a little bit of money off the table if he was going to do this. He had never done that in his 40 years. So we gave him a little bit of money and so that's what we did. So we put a couple hundred million in the company, and we roll up our sleeves. We've helped him build his executive team, stand it up as a public company. My SPAC team, one person on our team actually went inside the company for over a year. My partner and I spent most of our time for a year helping stand it up as a public company. We hired a CFO, a CMO, a chief expedition officer, just tons of different roles ... not chief expedition officer, chief Marine officer.
Mark Ein:
And over the five years we've been involved, we've built three ships with another being delivered this year, including the most icebreaking capable passenger ships ever built. We bought a land-based travel company called Natural Habitat, which has been extraordinary. We've opened up new markets and we've totally transformed the company. Pre-COVID, the company was going to double an EBITDA, the stock. The units of our IPO investors have over doubled. And the company's thriving and set to thrive long into the future. And that's just been an incredible collaboration of so many people.
Mark Ein:
But frankly, at the point when we had met Sven, the company couldn't have done a traditional IPO. It didn't have the infrastructure, it didn't have the know how, it didn't have the systems. It really took the combination of our team and our capital. And the way you can get public through a SPAC that enabled this company to tap into the public markets. If it wasn't for SPACs, Lindblad would still be a wonderful business, but it would be orders of magnitude smaller. It would employ a lot less people. A lot less people every year could go take their bucket list trips. But instead, because of this SPAC, it transformed the business and transformed the experiences that tens of thousands of people get to enjoy.
Josh King:
When you look at a company like Lindblad going public and you compare it to expedition travel names that stay private, stay bootstrapped like back roads, perhaps Abercrombie and Kent ... I don't know who owns them, but I think they're in private equity now. What is the basic benefit that a company gets just by being a public company, but by being able to tap the exchanges into scale that way?
Mark Ein:
Yeah. Look, I think that's a great question, and I think there's many benefits. I think in ordinary to times it's fantastic for recruiting employees because people see an equity opportunity that's easier to measure and recognize. So I think there's that. There's always ability to do acquisitions where you can use a listed stock is easier than a private stock. It's easier to access the capital markets when you need it. And I also think there is a little bit ... although private equity can simulate this, there is an accountability with being a public company that I think is good discipline. I think all of that is only accentuated more in COVID times.
Mark Ein:
And I think what you're going to see in our sector especially is Lindblad, because of both the public equity markets and then we were able to tap into a debt facility, at the end of 2019, we had about 80 million of capital in the bank. Today, we have almost two hundred million, which sounds counterintuitive after a year where you haven't been in business, but our view is now's the time for us to be opportunistic. And the combination of having a public currency that we can give to companies and also this war chest of capital we think is going to help us take this company to a completely different level. And I think when you look back on this period for travel companies, the ones that were public are going to be generally the ones that emerge stronger and more successful than the ones that weren't because of access to capital.
Josh King:
So in terms of access to capital, Mark, your business is Capital One and Two Harbors Investment Corp. That's NYSE took a symbol, TWO, outperformed the S&P 500 by 22% during your tenure with the company. What made that deal so successful?
Mark Ein:
Well, that was another one. That was another great American New York Stock Exchange company that never could have even ... it wouldn't even have existed if it wasn't for SPACs. We created it. We raised capital one in 2001, and we created Two Harbors in 2009 in the depths of the financial crisis. And basically during the financial crisis, there was massive dislocation in the mortgage market where a lot of the capital just fled the space, whether it was Fanny and Freddy who closed the prop desk, or the banks and other traders who just basically stopped allocating capital to the space. And so returns on underlying mortgage assets had become extraordinarily attractive as often happens in a crisis, but there was no way to tap into it. And you could never have taken a new mortgage rate public in that moment, just couldn't have happened in a normal IPO process.
Mark Ein:
And in partnership with actually one of our investors who had an extraordinary mortgage investing team, Pine River Capital, and the CIO there was Steve Kuhn. And then the CEO became Tom Siering who's still the CEO of Two. We decided we're going to stand up a new mortgage rate to create a public platform, to enable public investors to tap into this incredible moment of opportunity. And so we stood it up relatively small. We started with 120 million of capital, and within two or three years, we raised over three and a half billion of capital company at a four billion dollar mortgage cap. It is the third biggest mortgage rate. You mentioned the returns. It significantly outperformed the S and P while we were involved with it. And it was just one of those moments in time that there was this incredible investment opportunity, but you couldn't tap into it. And so we created a platform where people could participate and it worked out fantastically for everyone.
Josh King:
So most recently, Mark, Capital Investment Corp five, this 300 million SPAC listed on the New York stocks exchange on Wednesday, December 2nd. And much like other companies going public last year, you had to ring the bell remotely. How did it go? And what's the ambition for five?
Mark Ein:
Well, it was great to get back. And we spent most of 2020, as I've mentioned, working with our companies, rolling up our sleeves and helping them get through COVID. We didn't feel like it was right to raise the next SPAC until our companies were in the position that we felt comfortable, which they were by the fall. It was great to get back, talk to our investors, get the kind of support that we got. We ended up ... the shoe was exercise greenshoe, so it's 345 million and we're off to the races.
Mark Ein:
I mean, as I mentioned, we've ever had more opportunities of a high quality as we do today. Companies that we've talked to in our previous searches are now coming to us saying, now we really want to think about is SPAC transaction. Other companies through our network of relationships are coming to us.I mean, it's extraordinary, not just the number of conversations we have, but the quality of them. So to me, I'm incredibly enthusiastic about capital five, our prospects and what we're seeing. And I think it just validates what really the big theme in the capital markets were in 2020, which are SPACs are here, they're important, and they're here to stay.
Josh King:
As we wrap up, Mark, you've been involved in the founding or early stages of six companies, I think, that have been worth over a billion dollars. As you reflect back on these 30 years and all the accomplishments achieved so far with still more to go, what are some of the most important lessons you've learned?
Mark Ein:
I'm a huge believer in a couple things, but continuous improvement. I just think always getting better is the engine that just keeps me going. And it's not just on an individual basis. Our teams, our companies is just always getting better, always learning from your mistakes, getting better, raising your ambitions, working collaboratively. To do that, you need to have really good communication, you need to be aligned. And then you just need to be relentless to always get better, just always, always get better. And you talk about the six companies I've been involved with at the seed stage or founding stage that were worth a billion dollars. Virtually all of them had a point in time where their very survival was in question, but people didn't give up. They learned from their mistakes, they were agile. They worked together with their teams and they found a path to creating extraordinary enterprises.
Mark Ein:
And so that is the beautiful thing about America, not to sound too corny, but my family or my parents were immigrants and they landed on Ellis Island, not far from the New York Stock Exchange and came here because of the opportunity of America. And the New York Stock Exchange is a core part of that legacy of free enterprise in the United States and our economic system. And it's those fundamental principles that's propelled our country, our economy, entrepreneurs like me and so many others. And as long as you set high goals and you work together and you're willing to learn from your mistakes, by the way, also learn from the things you're doing well and do more of them, there's no limits. And that was what makes life so exciting, makes my career so exciting. It's what motivates me all the time to work with the great people I get to work with.
Josh King:
No limits. Mark Ein, I can't wait to have you back on the show when Capital Six launches. Hope that's not too long from now. But for now, thanks so much for sharing some of your insights with us and joining us, our first episode of the year inside the ICE House.
Mark Ein:
Thank you, Josh. It's been great being with you.
Josh King:
And that's our conversation for this week. Our guest was investor, entrepreneur, philanthropist and civic leader, Mark Ein. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at ICE House at theice.com. Or tweet at us at ICE House Podcast. Our show is produced by Kearney Ferguson with production assistance from Ian Wolf and Ken Abel. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Announcer:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information. And do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or training practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
