MJBizMag July 2020 - 63

MARK IWANOWSKI
Board member, Akerna, Denver
Mark Iwanowski, an IT veteran and
serial entrepreneur who sits on the
board of Denver-based regulatory
compliance technology firm Akerna,
and his companies seem to exit
recessions stronger than when they
entered them.
How?
* Offering products with multiple
uses.
* Finding the most friction-free
paths to revenue.
* Having an eye for opportunities
that yield big returns.
A Dual Strategy
Consider Applied Remote Technology,
an underwater robotics company where
Iwanowski served as executive vice
president of business development when
the 1990-91 recession hit. While fewer
companies from the oil industry were
buying the machines for underwater oil
exploration, more revenue was coming
in from the government and defense
companies that used underwater robots
for their own missions.
" The dual-use strategy was beneficial
for a variety of reasons, " Iwanowski
said. " On the defense side, there was
increased spending compared to what
was happening in the oil patch. So we
adjusted our efforts. "
When Iwanowski makes businessdevelopment
decisions, he considers
the relationships between customer
acquisition cost (CAC) and potential
revenue per customer.
" In a recession, you have to look at
that relationship very carefully, " he said.
The CAC can go up while the long-term
value goes down. " So you look where
that friction is least and look to adjust to
the markets. "
Deals for Tough Times
A few years later, Iwanowski was chief
operating officer of the telecom and IT
outsourcing business unit at Science
Applications International Corp., which
at the time was the largest privately held
defense research firm in the country and
primarily derived income from defense
spending. But Iwanowski led SAIC's
foray into the commercial sector with
deals that would provide the company
capital to get through tough times
later, including acquisitions of Bell
Communications Research (Bellcore),
the former research arm of the Baby
Bell companies, and Network Solutions,
the domain registrar. In the latter deal,
SAIC paid about $12 million; about
five years later, the company sold it for
billions of dollars, Iwanowski recounted.
" Those were crazy times when we
were literally inking deals ... on the
back of a napkin that turned out to
be a $1 billion contract, " Iwanowski
said, recounting a deal with Level 3
Communications, a telecom and IT
services provider. " In a way, you knew
it couldn't sustain itself, but you were
going to ride it. "
SAIC's consulting business was also
booming, but despite being flush with
cash, they still refused businesses that
offered to pay them in equity.
" We did not fall into that trap of
accepting equity, because we knew
whenever you have such a fast upside
to the market, gravity ultimately takes
over, " Iwanowski recalled. If companies
failed, their equity payments would turn
out to be worthless.
When the tech bubble burst and hurt
SAIC's commercial business, it was able
to pivot back to and ramp up defenseindustry
revenue.
Hunker Down
When the subprime mortgage crisis hit,
Iwanowski was managing partner at
Trident Capital, an investment firm, and
chair of one of the portfolio companies:
software services firm KSR. Trident
sensed credit tightening but went into
defense mode after Sequoia Capital,
with whom Iwanowski had worked,
issued a now-famous 2008 report,
" R.I.P. Good Times, " which forecast
the economic downturn and instructed
portfolio companies to cut costs and
brace for the looming storm.
" Revenue and income are going
to take a hit whenever you have that
serious of a downturn. So you have to
throttle everything back to align with
the conditions to conserve cash. Because
cash is absolutely king when you're
in those situations-whether it be to
conserve capital, go acquire other players
that are struggling maybe more to
survive the downturn, " Iwanowski said.
Akerna Applications
Iwanowski believes Akerna is well
positioned to weather the recession-in
large part because it has a product that's
wanted by companies that compete
against each other. He calls it the " Arms
Dealer Model. "
" Instead of fighting the war where
there's a winner and a loser, you're going
to win no matter who wins the war, "
Iwanowski said.
While cannabis companies such
as Akerna need to hunker down, he
also believes marijuana's essential
designation will improve legalization
chances in many states and create
opportunities for entrepreneurs.
July 2020 | mjbizdaily.com 61
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MJBizMag July 2020

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