Episode 172: The Power of Culture: Unlocking High Performance in Your Company with Mark McNally, Chief Nobody at Nobody Studios
In this episode of the Product Thinking podcast, host Melissa Perri is joined by Mark McNally, a venture innovator who founded Nobody Studios, a startup incubator on the path to creating 100 compelling companies in the next 5 years. Join them as they discuss the fundamentals of building successful companies, the importance of culture, and the role of venture studios in supporting founders.
You’ll hear them talk about:
08:40 - Mark has a rich background in leading companies through IPOs and launching visionary products across industries. The key principle he’s learned for building a successful company is to start with the basics: Identify the market, build products to solve problems, and then figure out how to sell it. It may sound obvious but without it, you’re not going to build a successful company. For Mark, what comes after that is the culture.
18:51 - Passion and experience fit is critical. At Nobody Studios, Mark aims to create an environment where founders feel comfortable to fail and pivot when necessary. Mark emphasizes the importance of curating an environment that helps founders feel like they can fail or let go of a product. But finding founders who have a passion for the problem they are solving and the experience to back it up is number one. The venture studio actively recruits founders who have deep knowledge and expertise in specific areas and are looking for partners to help bring their ideas to life. Without the right passion and experience, it’s tough to get anything off the ground.
31:48 - What’s super important at scale is maintaining clear strategic intent and a shared understanding of goals and roles within an organization. Mark references Brian Chesky's experience at Airbnb to decipher what’s needed to adapt to changing landscapes: core strategies, ability to reorganize the management structure, and intent. This intent must be communicated effectively, even militaristically, throughout the organization to ensure a shared understanding among all team members.
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Intro - 00:00:01: Creating great products isn't just about product managers and their day-to-day interactions with developers. It's about how an organization supports products as a whole. The systems, the processes, and cultures in place that help companies deliver value to their customers. With the help of some boundary-pushing guests and inspiration from your most pressing product questions, we'll dive into this system from every angle and help you think like a great product leader. This is the Product Thinking Podcast. Here's your host, Melissa Perri.
Melissa - 00:00:36: Hello, and welcome to another episode of the Product Thinking Podcast. Today, we're joined by Mark McNally, a venture innovator who founded Nobody Studios, a startup incubator on the path to create 100 compelling companies in the next five years. Full disclosure, I'm an investor in Nobody Studios, and I am excited about the way they're incubating companies and providing founders with the resources needed to get them off the ground. Mark has had a wide array of experiences scaling companies from early stages through IPOs, and I can't wait to hear more about that today. But before we talk to Mark, it's time for Dear Melissa. This is a segment where you can ask me any of your burning product management questions and I answer them every single episode. If you have a question for me, go to dearmelissa.com and I'll answer them on an upcoming episode. Let's look at this week's question.
Dear Melissa, what advice do you have for PMs stuck in a SAFe process? How can we do more real product work and reconcile a product-centric framework with SAFe? First off... I am sorry. I'm sorry that you are stuck using SAFe. I have seen people be able to own their small parts of the product within SAFe and do that well. And that's what I would encourage you to focus on. It's really hard as a product manager to change an entire organization. And if your organization has decided to use SAFe, it does put you in a spot where you have to figure out what can I do within my control? So what can you do within your control when it comes to SAFe? I know there's a lot of processes and a lot of frameworks that have just been shoved into this model that I don't necessarily agree with. But there are some scope and area that you have control over. So what I would do is focus on really getting clarity about what are the outcomes that you can work towards, what are the goals of what you are trying to accomplish, and then making sure that you are creating features and prioritizing your backlogs and prioritizing what your developers are working on that will help your users the best you possibly can. Now, I know that you are a pigeonholed with whatever is getting handed down to you in that realm, but what I would do is if there is a lack of strategy coming to you or a lack of outcomes, one great way that you can get some clarity on this is to go back and start to ask questions. But for example, if your leaders are telling you what products to build, solutions, for example, and you're not really sold on them or you need to figure out what the outcomes are, go have a conversation with them. Say, hey, this sounds like a really exciting opportunity. I just want to understand a little bit better about how we came to this decision. Who's our user?
Who are we going after here? Why did we decide to do that? When we build this, what do you expect will change from user behavior or from data that we can actually measure? Is it adoption rates? Is it NPS like? What are we driving this towards? And usually you'll get some more clarifying answers that will help you then go back and evaluate the solutions or run your experiments or try to figure out how to best solve that problem. I know there's a lot of advocation here, though, no matter what, for people to be handed down problems, instead of solutions. Sometimes that's not how companies work. So that's a great way around that. Now, when it comes to the work about work, which is usually everybody's problem with SAFe, I know there's a lot of cadences, a lot of meanings that you get into. One of the biggest things that I hear from product managers that frustrate them with SAFe is when they get into big room planning, they do all this work to figure out what you're going to be building in that next quarter or the next release. And then you get out of it, and then we find that the strategies constantly change. So all the work that you just spent like a week putting together, it changes, or you feel like there's no flexibility in actually testing things and you're committing to stuff up front. In that case, how do you get ahead of some of the work before you go into big room planning and carve out those experiments or do some of that research before you get into that room? Can you push your discovery cadences earlier than big room planning so that you're not committing to things that are not validated? In this case, this is where you're going to have to balance your discovery and your delivery. Again, it's within your control, but I know that you do have a lot of work to do, and you need to show results with shipping.
But I'd really encourage you to try to figure out how do I create that space to be able to do that. And again, really just focus on trying to drive outcomes in your area within your control. That's the thing. If you try to go up against C-suite or the business and whatever they decided all at once as an individual product manager, you probably aren't going to get very far. But there is a lot that you can do with your team, right? So think about how do I make the best products? How do I de-risk it in any way that I possibly can? How do I just get a little bit ahead of these locked-in commitments to make sure I'm validating, to make sure I'm doing discovery, to make sure that I can actually prove that these things are going to work? Think about what's within your control and really concentrate on that. Ask clarifying questions. And then don't be afraid to go back to leadership and surface up ideas. I've worked with a lot of companies that adopted SAFe maybe like six, seven, eight years ago, and they're no longer really using it in the way that SAFe is out there. So that could be very well a possibility for you. What I've seen with the organizations that I work with is they take the parts of SAFe that worked for them, the parts that brought them to collaboration, the parts that got them thinking better, but they leave the rest behind if it's not serving them. And to me, that's what every organization should be doing. If we're gonna adopt these frameworks, we need to go back and actually reevaluate them and make sure they're working for us because they were intended to produce outcomes. And if you're not producing those outcomes, then why are we using that process anyway? So if SAFe is too burdensome for you, then reevaluate it as a company is what I encourage you to do.
And the way that these companies started to reevaluate it is because product managers on the ground floor started speaking up and saying, hey, I'm not getting the information I need, or here's the work that I went out and did discovery on, here's what we should be doing. And they were leading the conversations that got the leaders to think differently about how they should be working. So don't be afraid to speak up. Don't be afraid to go out there and just demonstrate great product management and then come back and show it to people. You might be held to certain check the box things when it comes to processes, but really think about. Hey, if I didn't do that exactly how they asked me to, or if I just went around those lines and did what I know I should be doing. Does it matter as long as I get the outcome? I'm like, I'm a pretty, I don't love a lot of rules. So I was always the person who liked to go around the rules or try things differently. If you could do that in a quiet way and seek forgiveness rather than permission, I'd really encourage you to do that. Try to just be proactive. Try to like stop the things that don't serve you if you're able to do that. I know that's not the case for a lot of people, but again, speak up, get ahead of the strategy, ask a lot of questions of your leadership to clarify, demonstrate good work, and people will start questioning the stuff that does not serve them when it comes to safe. That's the best way to deal with it. And I hope more organizations are gonna start to realize that this may not be the best process for them and they don't just blindly adopt it. But this is the world we live in currently. All right. Thank you for your question. And if you have questions for me, please go to dearmelissa.com and let me know what they are on a future episode. Now it's time to talk to Mark.
Advertisement - 00:07:53: Are you eager to dive into the world of angel investing? I was too, but I wasn't sure how to get started. I knew I could evaluate the early stage companies from a product standpoint, but I didn't know much about the financial side. This is why I joined Hustle Fund's Angel Squad. They don't just bring you opportunities to invest in early stage companies, they provide an entire education on how professional investors think about which companies to fund. Product leaders make fantastic angel investors. And if you're interested in joining me at Angel Squad, you can learn more at hustlefund.vc/mp. Find the link in our show notes. Welcome, Mark. It's great to have you on the podcast.
Mark - 00:08:31: Thanks. Once again, good to see you.
Melissa - 00:08:32: Good to see you too. So I'm excited to talk to you because I am an investor in Nobody Studios, your venture studio, and I'm really excited about all the things you're building. Can you tell us a little bit about your background and your career so far and why you decided to launch a venture studio?
Mark - 00:08:48: Yeah, sure. So first of all, it's like 25 years of therapy, I think, kind of coming into the current company. But I've done startups for 27 years now. My parents would tell you that was something I was dreaming of as a little kid. That I wanted to be the next Bill Gates when I grew up, whatever the hell that meant to me back then. I grew up not far outside of Silicon Valley, so Northern California, a town called Chico. So I was within, I guess, earshot of the Silicon Valley world more than most. I did the service thing first, so six years Army Special Ops. And when I came out, I was looking for my first chance to prove I could build a business. And it could have been anything, to be honest, Melissa. It could have been a taco shop. But I found two guys in the back of a warehouse that had this idea that could connect buyers and suppliers on this new thing called the internet. And that was in 96. And I was like, oh, that sounds really cool. I should join. And so I joined as employee eight and we went on this wild ride to figure out what the Internet was back when that was a 300 baud modem was like blazing speed. And we built a B2B trading platform that connected basically large buyers in the Fortune 2000 to their supply chain networks. So you did like electronic RFPs and bidding and negotiation, which now seems kind of easy or obvious. But back then it was just really trailblazing stuff. I joined as employee eight. We grew it to 800 employees. I rose to the number three person in that company. So I think it was product strategy and marketing was on my side of the house. I wrote the S1. We did the roadshow and took it public on the NASDAQ in 1999. And in 2000, we achieved a $4.5 billion market cap was our peak. So it was this like wild kind of dream entrepreneurial ride that, you know, a lot of your listeners probably think of.
And it just, you know, fortunately happened to me. And, you know, for me, there's a lot of lessons out of that. Thousands of lessons of something that goes that big. But I usually say that it marked my career and it certainly plays a lot into what I'm doing now. While there's thousands of lessons and I got a chance to see every aspect of watching that company scale large and build a product from literally a whiteboard into thousands of people using it at the highest levels of industry. Watching something go that big was a gift to me because I always think that like knowing that you can go big and demystifying that for me was a gift. I know brilliant people who are just locked in their own head and they think that going big is something like Elon Musk does or Steve Jobs or other folks you would idolize. But going big is just hardworking, smart people recognizing their opportunities, getting their why right and executing properly, you know. And so that was a gift to me. And then also I always people laugh at this one, but watching the market crash and being a part of both a wealth creation event and then a wealth de-creation event. Was an amazing gift for me as well, because I saw how profoundly that affects people. And it's really changed my compass in terms of the teams I build and the kind of people I try to surround myself around. Because while I love resumes and backgrounds, I also care a lot about people's integrity, their character, how they're going to deal with things when the chips go down, because the chips will always be down at a certain home point, especially in a startup. So I've been doing it ever since. Yeah, so I've done 14 startups since that IPO, where I was a founder or C-level or significant shareholder. And it started out in B2B commerce and it spread the gamut.
So I started doing consumer-facing e-commerce, building some of the largest e-commerce sites in the planet from ABC, CBS, Discovery Channel. In 2010, built FIFA World Cup's global e-commerce site, which is the largest e-commerce site in history back then. 8.5 billion page views in five weeks, if you can imagine that kind of volume. So we're selling millions of dollars a day. And people in 143 countries and nobody had done something like that in 2010, you know, pre-pandemic. And then I pivoted into AI and machine learning, did about 10 years where I built a couple of companies in that space, had a couple of exits. So across all the companies where I was like head in, I had about a third of my companies found exits. A third of them failed miserably and a third of them are still out there. And that's just been a whole career of scars and lessons. And you're going to ask me next why I decided to build the studio. When I was part of the organization public and for a brief period, money was no object. I got really, like fantasized and enamored with this idea of parallel entrepreneurship. And there's a gentleman named Bill Gross who created a company called Idealab in Pasadena in 1996. And he did companies like pets.com and a bunch of other companies that we use today. And he basically built the first really full scale incubator model. And they were investors, they were builders, they were ideators, they were marketers, they were technologists. But they could take something from a whiteboard and put it in the market. And there's a certain level they wanted to bring it to and then they get financing. You look back at Bill Gross today, and Idealab has created 50 IPOs from their portfolio. And they have 200 viable companies out of that effort in the last 20 something years. So I've been following him and watching them and trying to learn from them.
And anytime I came across somebody that worked there, I tried to pick their brain. And again, I guess my 27-year career led to a midlife moment four years ago. My boys were 9 and 10 years old. I've been working ADR weeks nonstop, probably focusing on the wrong things, to be honest. Numbers and dollars, which mean less to me today. And I was looking for a definition for the second half of my career. And I was asking big questions like, what's going to make me happy? How am I going to leave my mark on this world, how I make my boys proud. And that soul searching could have led anywhere. Like I could be an organic farmer in Africa right now if that's where that led me to. But it led me to a place where I found that I had more passion about the vehicle, which is a startup vehicle, than ever. Because I think it's the only thing I know of intimately where I can point at something that doesn't exist. It's probably irrational. It might be transformative industry-wise. Hopefully it makes the world a better place. And you actually have a rational chance of pulling together the capital and the people if you get things right. And I just don't know any other way to put that kind of power in the hands of people. They have dreams and ideas that are going to challenge status quo. So I decided to double down on that for the second half of my career. And I say second half intentionally, this is the last thing I'm ever doing. And we started to write a thesis around a lot of things that personally I had learned for the first 27 years and companies had gone right, companies had gone wrong, how that would translate to what we do moving forward. And then I was writing this thesis at a time that the market was in this really crazy valuation frenzy. I call it the unicorn party. Everybody thought they were going to be a unicorn.
I remember when there was like four unicorns and we're actually counting it, and they're like, hey, now there's five unicorns. Hey, now there's six. Well, there's like 1400 right now. So we like kind of went crazy. Right. And by the way, 1250 of them are trying to raise money or they're doing down rounds and they're laying people off. So if you look back at our very first thesis deck and you got involved early, Melissa, it said things like everybody's betting on a unicorn. Good luck with that. And that was at a time when unicorns were getting funded sight unseen. People were like, I hate to be the gray hair in the room, but this is not going to end well. And four years later, it's exactly where we're at. So yeah, there's a whole bunch of things that went into our thesis, but that became into like this passion project and writing down the things of, you know, how we do this, right. A super long story short that I went out to my best people. I knew smartest people. I knew people had careers as good or better than mine in terms of diversity and startups. And I begged them to tell me I was wrong. And it just turned into more and more people saying, Oh, this is great, but don't forget this. And I want to help. Hey, are you looking for money? And hey, I want to work for you. Like it just became something that was trying to invalidate my thinking. It became a movement.
Melissa - 00:16:08: When you look back and think about, you know, the principles of what makes a great company, right, and what makes a successful company throughout your career, what did you come up with in that thesis?
Mark - 00:16:18: A couple of things that stand out to me. So one, I think you have to go back to the basics. In fact, I'm doing a podcast, our podcast on Friday around going back to the basics, which you can spend a lot of time on lots of things. Purpose and why and your culture and all those things. And those things matter a lot to me. But your basics are still identify a cool market, build a product to solve that problem and figure out how to sell it. Sorry, sounds cutthroat and it sounds capitalist, but at the end of the day, that's what we do for a living, right? So I think that that's super important. And when I look at the companies that we've wasted time or money or didn't succeed at all, it was because while that was important, it just wasn't somehow the thread. It wasn't the thing that we were focusing on every day. So I truly believe that it's boring and it's obvious, but you just got to make the basics the basics. It's like table stakes. You don't understand your market. Are you building a product to solve a problem? Do you know how to sell it? Period. Then I truly believe that we, I hired our chief cultural officer when I was still in my garage and you could hear my dog barking, you know, in the backyard. We knew culture was going to be super important. And all my study of the companies I've been a part of, the culture was always the key when magic was happening. When just instead of people doing the bare minimum, it was like this thousand hours of like combined power coming out every single week because people were waking up thinking about it, going to bed, thinking about it, texting people in the middle of the night, like magic was happening. I just think that that comes down to culture, you know, people are really unified behind what they're trying to accomplish.
And we knew specifically the studio was going to go into hyperdrive or it wasn't going to succeed. Our plan was to grow relatively fast, do a lot of companies be quite international. And I've known, I've seen, I've studied other companies as well. There's this inflection point when growth exceeds the founder connection. So now you have a whole new wave of people who maybe only got glimpse of the founder. Where in the first couple of years, every person was hired, was heavily recruited and heavily touched by founders. And so you start to get this dilution of message, get this dilution of purpose. You get dilution of what you stand for, how you try to operate, all these things that really matter and allow you to work fast and be a high performing team. And I just knew at some point that growth would happen to us. And the only way wouldn't be that I could work harder to do more phone calls with people. The only way that would translate is that the culture was something in and of itself that was bigger than all of us. And it got translated, handed off, you know, person to person. So there's some things we've done exceptional there because we thought about it from the beginning. But as you'd expect, there's things every day that pop up and we're like, okay, that's a culture problem. We got that wrong. How do we change the system? How do we change the process? How do we change the onboarding? How do we, you know, maybe we need to add more touch to founders or at least someone who's one removed from a founder. Like those are all things that in order to support the growth, I'm convinced two things will kill a company most. Culture going wrong. Usually it's like allowing an asshole in or some kind of weird angle that the politics takes over. Or board management. In my study, those are the two biggest things that kill a promising company.
Melissa - 00:19:09: It's really interesting with those two factors to the asshole one. I've seen a lot. I work with a lot of companies too, where there was somebody, you know, the first engineer was their total asshole now. But everybody's afraid to fire them because they think they know everything. And that's never, to me, never worked out really well to keep those people around. You'd always learn.
Mark - 00:19:28: Yeah. You know, I think we met through Barry, you know, Barry's always great at reminding me and I believe it, but every time he says it, I feel like he's teaching me something, even though I believe it is like, it's okay that not everybody's going to make the journey from end to end. Like it's actually okay that people have really important stops in a company's journey. And it might be really important for them that they only had a few years or whatever in a journey and they move on. Like this isn't some, like, we're not trying to force some kind of long-term kumbaya and to leave that in life in general and try how I live my life and relationships and stuff. It's like, allow people to come into your journey with what they're supposed to bring in, accept them for what they bring in or don't. If they bring in something you don't like that's on you. Right. And it's okay that people come onto the journey for a little bit and flutter out. And, you know, maybe that later on it reconnects and it's, you know, longer term. Like I just try to have a more flow state kind of mentality about the stuff. But it requires you to, and this is a fault of mine because I'm very loyal. I like to give people lots of chances and I like to, I like to see people achieve the dream of the entire journey. And I've had to challenge that because I've realized it allows me to give, I do believe, and I guess this is going to sound cutthroat. I do believe you need to recruit great people and fire fast. And that's not something that naturally comes to me because I like the journey and I like the story. I like the people being a part of the entire ride. But it's okay to realize it may not be working for one or the other. And it's okay to create an environment that allows those conversations.
Melissa - 00:20:46: I think that's really wise advice for founders out there because I do see a lot of them who are like, oh, well, they've been with me for 16 years here. And they're afraid to, I see this a lot too with first-time CTOs. I don't know if you see this as well, but it's like the first engineer was made the CTO and they've been there for 16 years, but they've never been a CTO before, right? They actually don't know how to run a team. They don't know anything about architecture. They learned, a lot of times too, it was the only company they've ever worked for. And that's typically where it was. And I love the loyalty of founders and people. And I think you should be loyal to your people if they're providing what your company needs. But at the end of the day, you do have to look at how that affects other people. And typically a leader like that doesn't help the rest of the company, right? It's not actually leveling up the engineers. It's not leveling up the tech. So other people are suffering, but that person has just been around for a while.
Mark - 00:21:32: Yeah, I like to say that senior roles is not a result of seniority. So senior roles is a result of the right mindset, the right experience, the right. And, you know, I think there's a lot of startups that, you know, leaders that don't have appreciation for maybe the growth they have ahead or the growth that they should have ahead in order to achieve their dreams. But again, that's why I always say that, you know, being a part of something that went big when I was really young helped me because I remember what it was like to go from, you know, 12 employees to 50 and then 100. And then, you know, we're walking into the office that I built and the secretary is asking, you know, the receptionist is asking me if she could help me. I'm like, this is my company, you know. So, you know, I'd listen to a podcast from Brian Chesky from, you know, the CEO of Airbnb. And he was talking a lot of, just a lot of jewels in this one, but he was talking about how he said it as a side comment that he was a very efficient organization, was proud of it because they only have 7,000 employees compared to, you know, Uber that might have 22,000, right? And I understand the economics. I understand how you talk when you're publicly traded. I understand exactly where that came from. But what struck me was this was the guy that started with three people in an apartment and said, hey, we should rent out that couch. And now he's able to say those comments in a relatively short period of time. That's profound. That's really powerful. It's a testament to him and his ability to evolve and think. But I like repeating that now to other leaders to say, do you realize the growth could look like that? So we can't hold on so tight. Another part of his message was getting the details.
But I believe it's like getting the details so you know you're doing the right thing and you're executing the right way. But don't get into all the details. You have to move fast. I was talking to someone just yesterday about budget management. And we were rat holing on this one particular expense that was maybe it should have been $100, maybe it should have been $50. It ended up being $142. It was a big deal to this person. In the big scheme of things, we probably spent $1,000 debating it. But more importantly, the discussion that went back on the person that spent that $142 wasn't that they learned how to stay within budget. It probably disincentivized them to make decisions faster, bolder, gut decisions, etc., which has a much bigger impact on the organization than saving $42. And how to do that when frugality is core to us and we're a startup and we want to be very lean, how do you speak out of your mouth both messages? Yes, that's important, but this is more important. And you're asking people to understand the balance of those things. I just am fascinated about the personality and the psychology around supporting growth versus getting something off the ground.
Melissa - 00:23:58: When you're working with the founders who come into the venture studio and you're kind of preparing them for this journey, right? Obviously, you've got your first journey, which is find the product market fit. And then you're looking for scale. What are the biggest things that you have to work on with them? Like what do founders typically need help with when they come in?
Mark - 00:24:16: I think every founder is different. And I always say that I think of us as a studio as being like master chefs. And so you want to be able to dip your finger in the soup and go, oh, this one's missing salt. And then, oh, this one's missing paprika. And I'll add some jalapeno to this one. You want to be able to understand what every recipe needs. And I think startups are that way. You could have an amazing, fast-growing startup with a technical founder. But you know you're missing product and marketing and maybe a front-facing fundraiser. You could have an amazing, fast-growing startup that has a fundraiser, a front person. But needs a core technical founder. And so you have to just look at every company that way from a composition side. I think that from a studio perspective, probably the most consistent thing we're doing is making people feel comfortable to fail. Making them be willing to move at the speed we're looking to accomplish. And again, we have a studio mentality. One of the things that's beautiful about a studio model is... You're not married to any one idea. So if you thought this was making sense, but you're six months into it, and now all the data signals are telling you no, there may be a different thing you're excited about you need to pivot towards. I think it's easier to do in a studio model because in a venture model from the early stage, I mean, venture is a big part of our growth strategies, right?
We build the companies and they get funded. But in the earlier stages, venture is hard because you've got people who wrote a big check going on the board and they're sitting there going, okay, let's see how your plan worked out. And when you're really, really young, you still figure out your plan. And it's hard to go back to that board and go, hey, we were wrong. Hey, we pivoted. I know we're going to do blue jeans. Now we're doing coffee cups. That's a really hard conversation to have with an investor. And so we are trying to create that environment as much as possible. And I think that's one of the challenges we have a lot with people. I also think that because we're working with a lot of ideas and we recruit founders actively into our model, one of the things we've found, and I'm going to say it and it sounds obvious, but we believe passion and experience fit is critical. And we used to think, well, this is a product problem. We can see the idea. We need to have a good product come in person, come in here and solve this for us and start building it. And we thought of it as a little bit more portable. And there are skill sets that are portable, but to actually get something off the ground, if you don't have someone with a passion fit and experience fit, you're going to be spinning your wheels.
Melissa - 00:26:26: I totally agree with that. It's funny hearing you talk about this because I just had Paolo Lombardi on the podcast who ran the TechPeak startup accelerator that I was in 2013. And it feels like what they wanted to build was a venture studio model like you have where you come in and you iterate and you experiment and try to figure out what company you want to build. But instead, they did almost a venture model where they gave everybody like six weeks to figure that out, but then they funded them. And then if there was a pivot that was coming up, they weren't allowed to do it. Like we weren't allowed to pivot our companies because the government had written a check saying you're going to build this and that's what you had to build. So I really love the idea of what you're doing because I think that experimentation phase, right, is really important. And then the other thing that you just said too that resonated with me was that experience part and the passion part. We were a bunch of people looking for an idea, but nobody was really excited about, this is the, a couple of people were, but like, this is the thing that I want to do, right? Here's my experience. I see this problem. This is the problem I want to go after. We're all kind of like searching for problems. And what it sounds like for what you do is you take people who have great problems that they want to solve and you bring them in and you say, okay, let's solve them together. But now you've got that experience. You can help build a team around them. You can help them decide what kind of product or solution is actually going to be right for them. But it's not like they're locked into that solution at the beginning.
Mark - 00:27:45: Yeah, and I think part of that is we are heavily invested into ideation ourselves, right? So as a studio, we've done our canvas of here are the industries we care about. These are the sectors, the categories within the categories we care about. Here's some themes we think about. So we're actually pretty prolific with coming up with ideas. Like that would be a really cool company that fits our model. And I say fit our model because, you know, there's certain things that are going to be like deep tech or massive investments and stuff. Like that's not our model. We are building something that's optimizing companies for the early to mid-stage exit, which means we have a certain investment profile. We have a certain time horizon. But once we lock into an idea we're slightly excited about, maybe put it that way, we start to talk to founders. And we're starting to say, hey, we're doing this. We think this has got some momentum. What do you think? But we're not just looking for like an Entrepreneur in Residence list of people who are founder types. We're very specific. Who's got the passion fit? Who's already in this area? Who's doing a thesis for their PhD in this category? Who's already? Who's already blogging on this? We're trying to find people who believe in this, but maybe have not yet made the transition to build a company in it. And so we are recruiting people to an idea. And I think that that's starting to prove successful for us versus just waiting around for a founder to walk in or just believing you can have an idea and recruit a smart person. I think that this kind of proactive kind of now searching for experience, passion, fit. And I just had a great lunch yesterday with a group of founders that it's a very specific area in psychedelics.
And it takes a really deep passion and knowledge of the space to, I think believe or doing is going to make sense or trying to build, but they came to it from the space. They're medical doctors. They came to it from one perspective. And, you know, I probably was the investor in the room in their mind. But pretty quickly in the first, you know, 10, 20 minutes, they could realize I could build this company myself because of my passion and my experience on it and my knowledge of the space. And now I'm looking for partners and founders to help run with it. And so the conversation would became founderish versus, you know, here I'm an investor. I'm trying to find out. I have the right people. And we'll see if you hit your goals or not. They didn't feel that. And I don't think that that's one of the things I think fails with the accelerator models and other things. Like there's some things that work there. But I think that the founder we're all in and everything that we have, both our capital and our network and our experience as invested makes this work when those kind of conversations are playing out. Because we're not sitting across the table like Shark Tank. We're at the table as founders with passion and experience. I just think it's going to recruit. Let's just say our own share of people that will help us build cool companies.
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Melissa - 00:30:47: So how have you structured the venture studio to support people like that with partners? Like what do you provide to the founders who come in? You identify these people, you say you're really smart, you work in this area that we want to explore more. Would you be interested in coming in here and working on this idea? What else do you provide for them besides just money?
Mark - 00:31:06: Money is probably the smallest piece, right? So we're builders, we're founders. And so we look at everything it takes to build something. So you got your finance, you got your product, you got technology, you got your legal. We're going to take all that off their plate. We take it off their plate as a founder. And also, we don't charge any of our company's fees or consulting because we're founders. Like, we are all in on making this thing work. We'll provide the initial capital to get it off the ground. And if we hit our goals, we'll go find that additional capital to grow. So again, we take all that stuff off of founders' plates and let them hopefully focus on the fun stuff. But again, when you look at the venture world, we have leaned into and we're completely comfortable defending this when we go out to raise capital or talk to folks that want to partner with us. Like, we've invested heavily in the studio model. Like, we're studio heavy in terms of talent because we believe that's how we de-risk the early stages of a company. If you think you have to find a good founding team to bring an idea to life, which is a great model, it's just incredibly inefficient. Because you'll find someone you think they're right, but it takes three to six months down the road and you're like, oh, they weren't right. So this idea you liked is getting stale. It might be missing the market.
Whereas we think when you find an idea, a market opportunity you want to go into and you've got the right team around the studio, you go all in. And by doing so, you not only just build momentum and validate your idea, which means we get to kill a bunch. But the universe of people who can take something from a whiteboard and bring it to full scale versus people who can jump into something that's moving in scale, the universe is much smaller on the first part. So we're also de-risking the recruiting and the momentum and the growth of these companies. We've seen plenty of companies that were a little bit too early, brought in some smart people. And the original concept was well validated. However, we still wandered for 6, 9, 12 months trying to figure out, what we're going to be when we grow up. And you can miss opportunities, markets can close. Competitors can come into the market. And so we said, hey, if we come from a research and kind of industry driven focus that this is something we want to build, then we dive headfirst and start building it. We might completely invalidate somewhere along the way. But if we continue to build confidence and conviction, then that thing's got some momentum. It might even have a mini MVP. It should have some traction. It's going to have some metrics. And now the people you can recruit to that, who can look at that thing moving and say, oh, I get that. I can run with that. Again, the universe is immensely larger than the people can start from zero.
Melissa - 00:33:24 I think it's what you're talking about right now with the MVPs and just go out and build it. To me, so much has changed too in the ability for us to actually do that in the past, even like 10 years, 5 years even, to be able to put code down, to get it out there, to not invest millions and millions of dollars in something to actually test an idea where that used to be impossible before. And I've been talking for almost like 15 years about the process of experimentation and lightweight experimentation. And there's been this debate back and forth about, do we actually code or do we use other methods first, prototypes, things like that? What I found is that over the last like 10 years, it's been easier to code, right? Sometimes it's faster to actually code it up and put it out there than it is to build it in a prototype or do some other types of things. And iterating on it is much easier as well. That doesn't mean go spend, you know, 14 months building the wrong thing. But how do you kind of approach those lightweight, you know, MVPs within the venture studio? And how do you instill in the founders and the teams that you work with, like a culture of experimentation where they don't go too far too fast, but still get something out there into market?
Mark - 00:34:33: So, I mean, we have the group called the Idea Lab, which we play with all our early ideas before we go into like build. And it's probably even preceding a founder. But the culture in the Idea Lab is to do just that. The lightest way, rapidest way to verify or validate basically an experiment. But what I tell people is like, we're not doing experiments for the hell of it. So you look at an idea you're excited about, we're not trying to brainstorm 22 experiments for that idea. We're asking ourselves, what is the number one thing that's holding us back on that idea? Is it the technology's risky? Or we're not even sure it's possible. Hey, what is a great idea you want to connect your tennis shoe to Bluetooth. Not sure if that's possible. Let's see if we can prove that in some way. Or there might be a market experiment. We believe this is an opportunity. We've heard it once. We have a strong hunch here. What would we do to validate this in an experiment? So you could have market or you could have product experiments. But I just want to focus on the highest risk things. The things that if I prove that, velocity starts moving into the idea. Conviction starts going up. And so hopefully what we're doing, we bring in founders that we actually are showing them something that's got a multiple experience. And they're raw, they're rough, and they're imperfect. But they did something to accomplish the velocity. So they're already inheriting something that has that kind of DNA built into it. And anytime somebody says, hey, I think this would be a cool idea, even if I don't agree, I'll try to say, that's got some merit. That's interesting. How would you validate it in a lightweight, unrisky way? That way, people are able to say, okay, that's cool. I'm going to have a chance to prove that. And if the signals tell us that's on target, then we get to explore it and double down.
Melissa - 00:36:08: I like that philosophy. I think too, like scaling companies need more of that philosophy as well. What I've seen is we talk about that in startups a lot and then the company starts scaling and everybody forgets about those scrappy moments that you tested things and getting them out there because we're just so focused on building the next thing somebody's asking for instead of saying, hey, how can we do this in a lightweight way and actually test it before we commit to it? Or how do we do it in a scrappier way or de-scoping way so that we can get it out faster because we know it's going to work.
Mark - 00:36:38: I'll come back to this podcast I heard from Brian Chesky, but they went through this hyper growth and they went down a kind of obvious path, paraphrasing his words, of going into like structures and divisional structures and layers of management over layers of management. And 15 years into their success, they had to go back and like try to renovate this. And a lot of management layers went really flat compared to complex. And you've got a C-level person talking to engineers and, you know, people doing the work. And, you know, I just think that's super important because I don't think there's ever a time you should that experimenting or validating something rapidly is obsolete or, you know, only the thing for young people versus established companies. If anything, you want that more and more as you get bigger. I also like the saying, like, keep the main thing, the main thing. And I think when you get really big, it's hard to understand what the main thing is. And you have different groups that have their own main thing and their own purpose and their own. Fiefdoms chasing for their own glory. And I think a success of a company that goes long-term, and it sounds again, outside looking in, Airbnb has been going through that kind of evolution to get back to that. What is the main thing we're all focusing on? And the leadership books that I've probably read too many times and forgotten, the things that I always come back to is a book by Norman Schwarzkopf who led the first Gulf War. And at the time, it was something that we hadn't lived through most of us in our career. This generation was just like gathering a whole bunch of resources across the world to fight a battle. You know, it was a new concept. And again, politics aside or whatever, at the end of the day, they successfully pulled off admission in six months.
But a lot of those people were reservists and other things six months earlier. And they asked him, how did you pull this off? And I've always keep coming back to what he said. He's like, look, at the end of the day, everybody's coming from all over the world, different backgrounds, different narratives, different perspectives, different fears, different excitements, different whatever. But everybody knew this is what we're trying to accomplish. And this is your role. So even though there are people on the front, there are people on tanks, there are people on aircraft, and they had a certain mission, even if you're the person driving the gas truck, you knew that if you didn't show up at a time, somebody's going to run out of gas and they weren't going to be able to do their mission. And again, that's just something that I think militaristically, they take that out of it. From a leadership perspective, people need to know what they're trying to accomplish. And they need to know who plays what role in it. And as leaders, a lot of leaders, and I'm as guilty as anybody, it's very easy to get really complex with your thoughts. It's really complex to, oh, this is stage one and two, year two, and year 19. And you can already think five, you know, higher is ahead. That's great. And that's probably why you're in the role that you have. However, you need to be able to take that out of your head or whatever the phrasing is. And you have to focus on what is the main thing and how do I make sure this is the drumbeat? And how do I make sure everybody's able to map their goals to making that thing happen? And I just think that's super important at scale.
Melissa - 00:39:25: That to me is the number one issue I see in every single company is they have lost their way of knowing their strategy and their focus. And I just had Steven Bungay on the podcast too, to talk about art of strategy. And in there, like there's a lot of the philosophy that I teach and help founders with, especially founders at scale or companies that are scaling is just resetting what we call strategic intents of like, what are we going to go after? And why are we here to do it? And how does everybody rally around the same thing instead of everybody working on 500 different pet projects that won't amount to anything? It's so important. When thinking about your venture studio companies out there, we talked a little bit about the days of raising money are over. What's keeping you up at night, right? Like what are the things that you're worried about as you look at building and scaling new companies?
Mark - 00:40:14: It's a really fascinating time to be a product person. You know, one of our early theses of the studio, and again, it wasn't overly popular at the time, but now it's just making a lot of sense to people, is I used to say that I'd lived through this internet age, this paradigm shift that was so profound and it went from 96 to today, but it took 30 years to literally go from changing how we date, to how we bank, to how we elect our leaders on a global level, right? That's a 30-year paradigm shift. And there's no doubt that if you had that figured out as a career, you did okay in the last 30 years, right? But it's affected everybody. It's gone. It's affected your mom, your parents. It's affected every single person. And now we watch a generation grow up in a completely different world than at least I grew up. But we believe that kind of a paradigm shift, that size of monumental paradigm shift, we're dealing with like 10 of those in the next 20 years. And that was one of our theses, that that was going to mean the speed of innovation was about to go into hyperdrive. And the way you used to calculate product opportunities and business opportunities was predictable and safe given the speed of things. My first company that we took public, we spent $8 million building a data center with a raised floor and Halon extinguishers and stuff. You'd just put $1,000 in AWS today, right? But that was what you did back then. That was what was required. But that also had a certain amount of defensibility. There weren't a lot of people who could do that. And so you were able to take a perspective, especially in product and business building, that you can think of 10 to 20 years and building emotes and building insurmountable challenges for competitors. I don't think we live in that world today. I believe the technology is moving incredibly fast.
And we've had this thesis for a while. ChatGPT is probably the best example that most people have been like, wow. I mean, every day my mind's blown, and I live in this space. My mind's blown at what's happening. But also they become building blocks for that next growth. So you actually are tapping on the door of exponential growth that you almost can't fathom, even though you're thinking about it all the time. And what that translates into, so what keeps me up at night to come back to your question, is as a product person, I think it's harder than ever for somebody to be mediocre or average at product. I think it's harder than ever for that person to be successful. I think you have to be exceptional at product. And I think you have to be exceptional at trying to figure out what you can defend. And is that defense going to be technology? Is that defense going to be enabling technology that you took hyper niche and did some of the connections and hard work and last mile stuff that gives you defensibility? I think it's ironic brand is going to become more important than ever. So relationship to customers and those kinds of things are going to become more defensible than the whims of technology. So I just think it's a really complex time that you don't just say, oh, that would be cool. We should build that.A lot of great companies started that way, you actually have to start and end with. Can i own that or defend that? A couple years or is it going to be open sourced? Or is that thing that I worked really, really hard to pull off going to be magical by one of the big, you know, four or five, six technology companies in a matter of years and make me obsolete. And all those things are realities today. And I think it's changing how we think about building companies, products, vesting and things. I think the market's barely aware of it right now. But I think about this stuff a lot.
Melissa - 00:43:34: How do you prepare founders for that too? Or product people? As product people, since that's who we got listening to this podcast, what do you do to make sure you're staying ahead of those changes? Biggest thing I get from product people is I have no time to like think big, which is scary, right? Because that's your job is to think big and then scope it down so that it actually gets done. How do you encourage them to like get started figuring out where are we going to get disrupted or what should we be worried about?
Mark - 00:44:01: Yeah, I mean, I'll say it comes down to some leadership. I think you have to set the tone. What do they say? It's like you could put a frog in water and turn up the temperature and they'd boil. They wouldn't know it, right? I think there's a lot of people who have a mentality of they could just sit in the boiling water and never see that they're going to boil. You have to stop people and go, no, the water's going to be boiling in two minutes. It's going to be life or death. You have to, as a leader, get people focused on that. Or you can't shake them out of their narrative. You can't shake them out of their frame of reference, right? And again, not everybody's going to rise to the occasion, but the ones that can then can be having the meaningful conversations. And I remember being a part of the internet. I built a B2B commerce company. We got a chance to meet with some of the biggest retailers in the world back then. And I distinctly remember talking to the president of, I'm sorry, Gap. I think he retired by now. The president of some really big companies because we had similar bankers. We had other connections. And being in these rooms and these corporate suites and saying, hey, we're part of this internet. You guys, the future is going to be people buying your products online. And the smartest people in the room in this multi-billion dollar firm, were like, we got the internet figured out. This is going to be a place that people go buy, download coupons to come into our stores. And everybody else in the room nodding their head. That's exactly the business. So I think you have to get yourself into this disruption mindset and recognize the people who are going to protect the castle as is versus the people who understand that castle is already long gone, whether you realize it or not. And we have to be constantly reinventing the new castle. Like, you have to shift that mindset and you almost have to be so bold to figure out who can be on that ride or who can't. Because I think if your organization, large or small, is not in that, holy crap, everything is changing right now. And we don't even know what's changing. Even the smart people don't know what's changing. If that doesn't scare the crap out of you and make you challenge everything you're doing, I don't know. I wouldn't be betting on you as an investor. I think that you have to embrace that mindset or people are going to be in trouble.
Melissa - 00:45:57: Definitely great advice there for founders and for investors and product managers. Thank you so much, Mark, for being on the show. If people want to learn more about Nobody Studios, where can they go?
Mark - 00:46:06: We're an open book. You know, nobody's named that way for a reason. We are, you know, check the ego out the door. So I'm Mark at Nobody Studios and all my executives are the same first name at. And we always do open forums and round tables with, you know, potential talent. So we love engaging with anybody who's got an idea or wants to join the journey.
Melissa - 00:46:24: Great. And we'll put all those links in our show notes at productthinkingpodcast.com.
Mark - 00:46:28: Thanks, Melissa.
Melissa - 00:46:29: Thank you so much for listening to the Product Thinking Podcast. If you enjoyed this episode, make sure you like it and then also subscribe so you never miss an episode again. We'll be back next Wednesday with another amazing guest.