Rich Mavrogeanes – Founder, President & CEO, Discover Video

Rich Mavrogeanes has been a leader in the communication technology industry for more than forty years. Prior to starting Discover Video, Rich was the founder of VBrick Systems, Inc., where he served for twelve years as President and CEO, and later as Chief Technology Officer. He led VBrick from a start-up to a market leader. He was also founding executive at SNT and Avidia.

With modern technology for the education, corporate, government, and related spaces, Rich founded Discover Video in 2008 where he drives innovation and growth as President and CEO.

Tell me about your early career.
After serving my country in the Air Force in Europe, I stayed in Europe for a while and took various jobs in Germany, including as a bus driver and in radio repair. I decided to make a film and left for East Africa, where I stayed for many months in Kenya, Uganda, and Tanzania, mostly living out of my Land Rover. These are my young adventure days. Returning to the U.S., I got a job in my hometown as an electronics technician at a medium-sized company that sold to the Department of Defense. I had thought this would be for maybe six months, some time to make enough money and move on. I ended up working there for fifteen years.

During this time, I had almost every job that one could want: technician, design engineer, quality control manager, supervisor, customer service manager, salesman, and director of my own internal business. I became an “intrepreneur,” and learned about accounting and running a business. I traveled the world for the U.S. government, had an office in the Pentagon, and carried the highest security clearance. When that company changed and merged, I left and worked for a large telecom equipment company as director of product marketing. Again, I traveled the world and helped the company evolve from traditional, phone data technology to the new world of packet switching, ATM, and IP.

This was during the “dot-com bubble” days, and VCs were dropping bags of money into my type of tech, so I left and joined my first startup. We were making ATM switches, which if you believed the tech headlines, was going to cure for cancer and could win the war. Within a year, we were featured on the cover of the top tech magazines, so things were going well. But then I sensed ATM was losing its luster and we pivoted to build “DSL Mux” (which was based on the same technology) and partnered with PairGain Technologies. A few months later, we sold the company to them for $95 million, right at the tail of the bubble. Our investors did well, and the other guys did quite well too. I was not sophisticated enough to know any better and did not become wealthy, but I learned a lot for next time.

Next I joined another start-up, this time in Minnesota. Again, doing ATM technology but with a different spin. I formed a partnership with Microsoft, who had a new system called “Netshow Theater Server”, which delivered video on demand, but required a good network and ATM was the way to go. Spending a lot of time in Redmond, Washington, I saw how the market for such video systems could grow, but was lacking a means to deliver live video over the network. This was an important insight. The Minnesota company was sold to a large telecommunications firm that really just bought the engineers, so no one did well.

In late 1997, I started my own company called VBrick Systems. My experience allowed me to operate, as we were building both hardware and software. Initially funded by me, then scraping up money from suppliers and trading equity for services, we raised enough to hire a few people, working from my own home. You can imagine the stories!

We sold our first VBrick to Sprint in 1998. Then we raised our first $4 million venture round and we were off to a growth path. Another round a year or so later added $7 million to the war chest. By 2000, we had sales of over $5 million and were growing fast. The VCs turned out to be dysfunctional and insisted on unnatural acts. One even insisted on interviewing our engineers and wanted to fire some people based on their fingernails, which was crazy and stressful.

We hired a CEO to help me out, who became a life-long friend. Together, we raised another $21 million in another VC round, and brought in Morgan Stanley and other professional investors. This was hard because we closed the round in March 2002, during the “9/11 freeze.”

The VBrick board was still dysfunctional and consisted of money managers with no vision or interest in what we did. While we were growing at around 50%, they wanted more than 100% growth, and purged the CEO and brought in a “friend” of one of the investors. He turned out to be a disaster and revenue fell, people left, and I was watching my baby die. There was nothing I could do about it. Eventually, I left and they hired another overpaid friend of an investor as CEO. That did not work well either, and I was watching from the sidelines as they fired everyone with intuitional memory or experience, and the revenue fell to half of its peak. Eventually, another CEO was hired, and then another. While I’m still a major shareholder and wish they would do well, they were not heading in the right direction.

So I started Discover Video after my non-compete expired. With no VCs, Discover Video is able to do sensible things and keep focused on delivering the best visual communications platform for enterprises in the market. While it is more challenging to drive a business organically, we’ve managed to become one of the “fastest-growing companies” in the U.S., according to Inc. Magazine.

How did the concept for Discover Video come about?
The concept came from a confluence of technology, market knowledge, and experience. The competition did not really offer a complete video ecosystem, so we set out to remedy that. Underserved market segments in higher education, K-12, and corporate represents an opportunity.

How was the first year in business?
During the first year, we were restricted in the markets we could serve based on my non-compete agreement. So we served one market segment heavily and were profitable from the start.

What was your marketing strategy?
Leverage the name-brand of the founders, be 50% better and 50% cheaper, sell through channels and provide superior discounts.

How fast did the company grow during the first few years?
800%.

How do you define success?
Success is making a living by doing what you enjoy.

What is the key to success?
Make your customer a hero.

What is the greatest lesson you’ve ever learned?
When you buy a mutual fund, you probably have no idea what companies that mutual fund manager invests in, right? You only want money, and you are okay with that. Same with VCs or most investors. It’s normal. As Yogi Berra said, “It’s tough to make predictions, especially the future.”

What are some of your favorite books?
For nonfiction, I like reading Malcom Gladwell, Geoffrey More, and Fareed Zakaria’s books. I also like to read science fiction.

Tell me about one of the toughest days you’ve had as an entrepreneur.
Standing on the Interop Tradeshow floor in Atlanta, Georgia on Sept 11, 2001 at 9:00am and watching the world change in a few seconds. I had planned a major product launch, press briefings, etc. Also, knowing that we may not be able to pay the bills if we could not grow.

When faced with adversity, what pushes you to keep moving forward
Knowing that we all end up in the same place. Life is a journey, and it is overcoming obstacles that gives one joy.

What advice would you give to young entrepreneurs?
1) Don’t do it for the money. That’s only how we keep score.
2) Be kind to everyone. You never know who you will need in the future.
3) Karma is real.
4) Be sure there’s a market for your product. Everything else can be fixed.
5) The “Internet” is not the only thing. Mobile apps are not the only thing.
6) Plan for what you will be doing in ten years.
7) Hire sales professionals. Although this can be expensive, having a business without sales is not a business.

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