When Mark Penn assumed the role of CEO at MDC Partners in 2019, the company was collapsing. A marketing holding company once valued at $1.5 billion had plummeted to a market cap of just $90 million, weighed down by poor governance, fractured culture and mounting debt. “It was an archipelago,” Penn says now, “a collection of separate islands.”
But Penn didn’t see chaos—he saw opportunity. Having spent decades building companies, running billion-dollar marketing budgets at Microsoft and guiding political campaigns at the highest level, he brought to the task a rare combination of strategic clarity and tactical discipline. Backed by his own company, Stagwell, and $100 million from his key investor, he drafted a 48-page turnaround plan, won the confidence of a divided board and ultimately took the reins of both MDC and Stagwell.
What followed was an aggressive restructuring, a pandemic-era survival strategy and a bold reverse merger that brought the two entities together under one roof. Today, Stagwell is a publicly traded challenger to the industry giants, with Penn at the helm. In the following Q&A, he talks candidly about the early days of the turnaround, the art of integrating fractured agencies and what it takes to lead with both vision and execution.
Take us back to 2019 when you became CEO of MDC and the company’s market cap had fallen from $1.5 billion to $90 million. What was your assessment in the first 90 days of what was broken here beyond just finances?
Let me give you a little pre-context. I had 30 to 40 years of experience as a founder, a grower, a seller, a client and a manager of bigger properties like Burson-Marsteller, and then on the client side with Microsoft and a $2 billion budget. I had experience across the industry in all of these different disciplines and business and practitioner roles, plus two books and two presidential campaigns.
In 2015, when Steve Ballmer exited Microsoft, where I was chief strategy officer, he came back to me and said, “Well, that idea you have for a new marketing company—I like working with you. I’ll be your core funder.” So on September 15th, 2015, I opened Stagwell with one employee and the goal of growing the next great marketing company with $250 million of investment between me and Steve. We took in another investor, ALP Invest, and we began building—digital first. We brought in Code and Theory, Forward 3D, great performance marketing, great digital transformation. We were right into what I call ‘the modern marketer economy.’
MDC was a company we observed that had a lot of particularly creative properties. But when I said we wanted to merge with MDC, the SPAC that wanted to take us public said, “We don’t want to take on fuzz like that.” But in my view, it wasn’t fuzz—it was the other half of the peach. A lot of these marketing companies take a slice, have a period of growth and then get leaned on by the majors who have the bigger relationships across different services. What I decided was we need to be able to do the spectrum of activities that includes creative with a big ‘C’ as well as digital with a big ‘D.’ If you could do both, you could begin to chip away at the monopoly that the others had.
MDC appeared to have great properties with great brands like 72andSunny, but total central financial mismanagement and issues with their CEO and the SEC—a lot of fuzz. We did an analysis of it. I met with their CEO and directors twice, and they basically told me to get lost.
How did you get to yes?
My new investor, ALP Invest, was wary, so they put a limit on the investment—they okayed $100 million. I wrote a 48-page plan for all the things that were wrong and how we would fix it. Then I went to see the lead director, Irwin Simon, in his apartment. I explained our plan, and he thought it was terrific. He’d been with the company many years and really hadn’t seen anything like it.
The interim CEO they had thought he was going to make this his life occupation while he actually lived in Los Angeles and was sort of part-time—it was really bizarre. Irwin took it forward to what I gather was a very divided board. They came back and said, “We’ll take your $100 million, Mark, only if you’ll be CEO.” I didn’t actually propose that—they proposed that to me.
Somewhere in the interim, their CEO resigned or was fired. So they had no CEO, they were running out of money. We could offer them about half what we offered much earlier when they said no. So we got a lot more of the property than had they done something earlier. I agreed to be CEO of both MDC Partners and Stagwell.
I parachuted into what was a very luxurious office at 745 Fifth Avenue with a rooftop garden. One of my first acts was to get rid of that office. It was a lot of money for a showplace, and the CEO had this enormous office while everybody else had like a two-by-two cubicle. The previous CEO had collected a lot of talent, and then got into some problems with the way he handled the finances.
There were like 50 different deals of all sorts of shapes, sizes and flavors. He’d set up a washing machine where he was giving out dividends, paying big earnouts—hundreds of millions of dollars in some of these deals that had no caps. The various people in the agencies never met each other. There were zero synergies in operation.
I remember the first time I convened a bunch of them, I said, “I don’t know how it was done here before, but this is the way we’re going to do it.” And somebody interrupted and said, “Mark, this wasn’t done at all.” I always described it as an archipelago with a whole bunch of separate islands, and we were going to bring it together as a collective group.
I went about recutting a lot of the deals, getting rid of the ones that could never be paid or could be incredibly destructive financially, and putting in more sensible deals. People were amenable to it. Since I liked creativity and talent and had experience, I really didn’t lose anybody—nobody walked out. The whole fear was that everybody was going to leave, but none of that happened. I think they saw that I was being constructive, and they liked working where they were working.
The thesis was that if you could fix the coordination and fix the center and get the deals under control so that it wasn’t a washing machine, get rid of the dividend, you could bring it back to sanity and then implement the broader strategy.
That’s a lot. In what order did you tackle all that?
I believe that first you have to have a plan, then you have to have a team, and then you have to execute the plan with the team. Sounds simple, but you can’t really take it out of order.
First, I took my 48-page plan and decided how I could implement the various elements of it. Second, I had to evaluate the management within 90 days and decide which I would keep, which I would replace. I had to construct a new team with a new CFO. Then we focused on getting the deals under control so they wouldn’t bankrupt the company. Those were probably the most important things to do first. Then we had to bring the groups together—what I referred to as “you now have brothers and sisters”—to meet each other, to understand what pieces of the marketing puzzle they all had, so we could begin the process of collaboration.
You said talent stayed because they understood your plan and believed you had a good strategy. How did you communicate that to them? How did you create that stickiness? Because that’s where a lot of leaders get tripped up in M&A.
I brought them together in Washington, D.C., in their first-ever meeting, and presented the plan. I said, “Look, this is the plan. There’s no secret plan for investors and another plan for you and some other plan that I really have. This is the plan.” Then I met with each of them individually and got a better sense of where they were.
By and large, while I made significant changes in the corporate team, I didn’t make significant changes in the agency heads, with the exception of media. I had lunch with that guy, and it was not happening. He had a view that the creative companies were going to be out of business and that only the media company mattered. I needed the creative companies and the media companies to work together. It was quite clear that he thought there was no point in working together with the creative companies. Philosophically he was never going to be able to execute on the plan I had in mind. I had to change him, and everybody was kind of stunned.
That made them nervous?
Yeah. He was well known in the industry, but I couldn’t—there was just zero alignment. He had a completely different plan.
It sounds like a big part of this communication with employees and their belief in you is partly that you’re not a B.S. kind of person—it’s, this is what we’re doing and I’m telling you exactly what I’m telling investors.
That plus the fact that I was an actual practitioner in the industry as opposed to a lawyer or accountant that ran a lot of these other things. I knew what it was like. I was a founder. I used to joke that I knew what it was like when corporate came—”hide everything!” I understood that. I think it was very important that they knew I had designed great ads, I’d run campaigns, I had worked for big corporate clients—that I was just not a suit, but somebody they could relate to in a different way.
Sounds like a great start. Then what happened?
Just as we began to show growth, the pandemic hit. Every client called to cancel everything. What we did was—thank God I had already created collaboration—I created what I call the BLT, the Business Leadership Team, and got all the members of the key agencies together on a regular basis. We had meetings every single morning, which gave us the visibility and coordination needed to make rapid staffing decisions. We could not have done that if we did not have coordinated central operations. So we were able to survive the pandemic.
If you looked at your TV set, there were no ads. People talk about AI and this and that, and Google’s going to do this—the pandemic was the single worst event you could possibly imagine in marketing. We had to go into a semi-hibernation stage. The stock got down to a dollar, and I bought more of it. I actually would have bought a lot more, but there was some Canadian restriction so I was limited. But it was a great investment.
During the pandemic, when our stock was at a dollar, I actually convinced my investors that we should launch and buy the whole thing. So we came to the board and said, “Okay, we now want to buy everything rather than just the $100 million.” Because I was CEO, that was a conflict transaction, so you needed a committee from the board. The board had a separate committee and a bunch of advisors, and Stagwell had a bunch of advisors. It took a year to complete the transaction.
Pre-pandemic, I felt we had cleaned out a lot of the problems, we’d gotten back on a reasonable footing, we’d introduced people to their brothers and sisters. I convinced the investors to make this offer to buy the rest of it—or actually to reverse merge. Stagwell would come in, and we would get the listing on the market. What we needed was a vote of the MDC shareholders to approve that. We needed an opinion, we needed a price, we needed bondholder approval and we needed a shareholder vote.
Considering that MDC was near terminal when we took it over, I was working against myself because having restored it to some stability, it was worth more. Then the MDC investors wanted more. One of the investors led a campaign to stop the transaction.
It all comes down to one day. I realized I don’t have the investors, I don’t have the bondholders, I don’t have the board of directors—I got nothing. I’m sitting in this motel because my daughter, who was on the high school basketball team, had an away game. And I said, “You don’t get credit for two-thirds of a deal that then falls apart.”
Three hours later, I had every one of the players. I dealt with my investors first, and they just wanted some tax assurance on certain issues. I dealt with the bondholders, and they wanted their point. Then I dealt with the board in terms of the price they wanted. By eight o’clock it was done.
How did you actually get everybody on board?
The trick was to give everybody a piece. What really was underlying this was that everybody knew it was a good deal—they just wanted their piece. They wanted to make sure that I didn’t get all of the sweetness of it. So I just gave everybody a little bit of what they wanted, and they all said yes. And I made a judgment that I won’t worry about the 5 percent that I distribute now because I’m going to make this two, three, four times more valuable. A hundred percent of nothing is nothing. So if you can get 50 percent of something, you have to do it.
How do you maintain an entrepreneurial culture when you’re scaling to thousands of employees?
You come up with bigger ideas. Part of what I did when I was at WPP was to learn how to run bigger assets. You have to keep scaling the ideas you have, because the main problem I see is that people have the same size ideas when those same size ideas won’t work anymore.
How do you come up with those bigger ideas?
Well, luckily they don’t have to all be mine. That’s why we host an annual “Shark Tank” competition where everyone across the network can present an idea or invention, and then we fund the winning idea and give them some running room.
I tried to take the philosophy of management that I don’t decide things on email. Don’t even bother. We decide things at meetings with stakeholders, where people who want stuff or do stuff or have ideas or make a presentation. The first couple of times that was very new for people. Their presentations would sort of get destroyed, but they’d get to come back a second time or sometimes a third time until they got the presentation to a standard where they really had developed their ideas. After a while they learned that’s the standard they needed to meet. So they weren’t going to bother to come with poorly thought-out stuff that was then going to get dumped on.
We have two levels of teams: the corporate team, which includes a Senior Leadership Team, and then we have the Business Leadership Team, the people who run the agencies in the Stagwell network. Every one of those slots has to be filled with a really good, competent person. Anytime you don’t do that, or you leave a hole, or you have somebody who’s not great, you pay a remarkably high price for that.
A lot of where I learned scale-up was from Ballmer. Martin Sorrell was very good at financial management, but I wouldn’t give him as high a rating on people management. Steve was really good at time management because he had an impossible job with 110,000 people, and he’d go home at 5:30. He gave me an office outside his. What I realized was that anytime we would have a new project, he’d spend the first three meetings on who was going to be there and how we were going to do it, and how much time we were going to devote to it.
I think that was really instructive in terms of when something comes up here: Who’s on the team? Are we going to meet weekly, biweekly, monthly? What’s going to be our agenda going forward? Get all that up front. Don’t launch into it and start to do stuff before you really have organized what you’re going to have to do. That’s part and parcel of trying to grapple with bigger scale.
What’s your talent strategy to recruit and retain those key people?
We have a really great recruiting department. And because I was in the industry itself, I had a lot of access to existing talent or talent that would come over. We generally try to present the case that we’re the challenger on the way up. The biggest companies here are shedding thousands or tens of thousands of jobs and are in a more precarious place. Generally, people who come here learn that it’s a high-performing culture. That’s the goal. If you’re not comfortable with a high-performing culture, then you’re not going to be comfortable here.
What is your comfort level with new technology?
I was always an early adopter. In 1977, I was doing punch cards at university computers, and I got frustrated, so I bought a computer kit, built it, programmed it myself and had overnight polling. I was always into the combination of technology and what we did.
A survey originally took 63 people, with most of them being interviewers. Over time we moved online. I was always deeply knowledgeable about the application of technology because I hated repetitive tasks.
That was a key element of philosophy. After WPP, I went to Microsoft really with the purpose of making sure that I knew what was going on and that I wasn’t out of date. There I got to understand the engineering cultures. People in big companies and technology can get far removed from what consumers actually need. I started with a SWAT team, and then they gave me basically a $2 billion budget in marketing. Then Satya made me chief strategy officer evaluating all the different proposals.
The marketing space is really a tech-oriented space today. We’re now working with Palantir on advanced targeting, we’re working with Adobe on advanced content management. We’re making these high-level partnerships because one of the best ways for us to compete against companies that are three or four times our size is to compete with better technology.
You cannot be a CEO today who doesn’t understand technology. Today, if AI is something that a bunch of other people are going to figure out the applications of for your industry, and you don’t really understand it, that’s going to be a problem. You’ve got to have vision, never see walls and believe in what you can do. You also have to get along with people and like who you work with. If you’re a CEO and you have these teams and you don’t really like them, you’re never going to have the kind of company that you could or should have.
