Podcast Transcript

[00:00:00] Sean: G’day everyone, and welcome to the ScaleUps Podcast where we help first time Founders learn the secrets of scaling so they can fulfill the potential of their businesses, make bigger decisions with greater confidence and maximise the impact they can create in the world. I’m your host Sean Steele and my guest today is Mark McNally, Tech Innovator, World Traveller, by the looks of things, Mark, start-up to scale-up CEO, Founder, and Chief Nobody at Nobody Studios, list goes on. How are you, Mark?

[00:00:53] Mark: Fantastic. Thanks for having me.

[00:00:55] Sean: Mate, it's a pleasure. Welcome aboard. Do you get some blank looks when you introduce yourself as the Chief Nobody?

[00:01:04] Mark: I usually don't do it without some context and with the context, people love it. So, yeah, you got to prep the room. Always got to prep the room.

[00:01:12] Sean: I like it. It's a good conversation start. It's like; oh, what's Nobody? All right. Nobody, cheers. Okay. I'm with you. Well, look, for a bit of context for our audience today, regular listeners will know that I interviewed Barry O'Reilly on Episode 38, who hosts the Unlearned Podcast and does a lot of keynote speaking and faculty at Singularity University and very strong kind of innovation roots. And we dug into mega trends around future of work and the ownership economy and Web3 technologies like NFTs and DAOs, you know, decentralised autonomous organisations, always fall over those words, equity crowd funding, and a whole bunch of other things. Yeah, really, we were looking at what's coming down the pipeline. Okay, it's obviously here now for in many forms, but that Founders of 2 to 20 million businesses who make up a good chunk of our audience, what sorts of things do they need to pay attention to and to explore, so they can think about where they might be able to leverage those things or consider them as opportunities or otherwise. Barry, in that episode, we weren't really focused on Nobody Studios and these things always, we never have quite enough time, unless we're doing a Tim Ferris style three hour interview job, which is not the ScaleUps podcast, but Barry introduced you to me after that because you guys have Co-Founded Nobody Studios and your goal is to launch a hundred compelling businesses in five years. Very audacious and exciting, love that concept. And so maybe if I can just give a bit of context and please then feel free to correct and add some flavour to it, Mark. So, the purpose of the business is to, I guess sort of de-risk precede ideas by shortening the time and the capital required to validate repeatable, scalable business models before they then receive a sort of major investment. And so, if I'm correct, then Nobody Studios is, it's a group of ideas that turn into companies. I don’t know if they're all sort of subsidiaries, but you can talk to me about that. So, you are finding a Founder or identifying a Founder who might have idea or they bringing it to you, you're attracting talent to the idea, you're working with you and your team. And I assume probably some advisors in specialty areas from time to time to work through and validate the ideas and the ones that sort of come out the other side of your process, they have the opportunity, your equity crowd funding Nobody Studios, either the equity is a bet on all the businesses in the portfolio, not each individual business. And so, people are kind of investing at the top co if you like, as opposed to the subsidiaries, is that right? What have I missed? Sort of clarify for me.

[00:03:47] Mark: Sean, it's brilliant. What should we talk about next? You got it nailed. You got it a hundred percent. Yeah, no, you clearly understand, you know, the gist of what we're trying to accomplish. Yeah, it comes from, you know, I've been in the start-up game my entire career, so my first company, when I came out of the army, you know, in 1996, there was two guys in the back of a warehouse who said they had this idea that they could connect buyers and suppliers on this new thing called the Internet. And I joined them as employee 8 and we grew up to 800 employees and I wrote the S1, and did the road show and took it public on the NASDAQ in 1999. And you know, it was just one of those stories that you dreamt of your whole career. I was telling my parents at seven, I was going to be a start-up guy. So, you know, to have that go to full fruition and my first entrepreneurial journey was a dream. It wasn't as beautiful as that summary. There was lots of twists and turns and a lot of lucky breaks along the way. And some, twists and turns on the way down when the market corrected itself in 2000, 2001. But to be part of just a wealth creation event like that and see all of the elements that went into it was really radically powerful for me. So, it got me hooked, you know, when you're part of something that goes like that, you tell yourself things like, oh, I should just keep doing this for the rest of my life.

[00:05:07] Sean: Just do it again and again.

[00:05:08] Mark: Yeah. So, I've made my best attempt at that for the rest of my career. So, 14 start-ups, had three or four exits along the way, three or four companies that didn't work out, three or four companies that are out there in some form or fashion. And in this venture line of creating start-ups and swinging for the fences on irrational ideas, that's actually a pretty good ratio, unfortunately. But I kept feeling like it could be better. I felt like it was a different way to go about things. You know, going through a 25-year start-up career, you go through these, you know, dips and valleys, and you see the peaks of the markets. And you see when markets are really irrationally high and irrationally low and both make me uncomfortable. And you know, we started this, it was coming off a, you know, I was at a spot in my career where I was challenging what I was supposed to do in my life, to be honest. And I always just walked into the next start-up without giving it a whole lot of thought, there's always two or three competing for my time. And so, the biggest challenge for me was, which is the one I'm going to pick. Right? And I went through a different cycle this time and I said, okay, maybe a different part of my life. You know, my boys at a certain age, like, look in the eyes and say, “What do you do, dad, for a living? And how do you make the world a better place?” And you know, I think we all collectively, you know, I feel like I had my pandemic before the pandemic, you know, I had some other stuff going on in the family. I had some health stuff. And so, I was just coming off this moment of like, the rest of my life, whether it be a day or it be decades measured in decades, it's got to be put towards something that gets me out of bed and it's going to be put towards something that I feel is going to give me a chance to seal my legacy on this planet. And I feel like I was given some gifts and I feel like I have an obligation to fully pursue those things. And every step of my life, where I wasn't, there was a 10-or-15 year career, from my career where I was very focused on, you know, I was being a family man, I'm a provider, I'm a dad. Maybe I took more conservative swings versus what I was doing earlier in my career. And those things weren't getting me out of bed, you know, and that was to the detriment of everybody around me that I love and everybody else that I could impact in the world. So, when I did this soul searching, I discovered a few things. I discovered that I felt like this internet is a paradigm shift that I've lived through was such an amazing paradigm shift. It changed so many different companies and industries and created so much wealth and made so much good in the world happen. But I really believe on the scale of paradigm shifts that we're going to live through, hopefully, this is just kindergarten compared to the next 5 to 10. And so, I realised that what we'd just gone through, if we get it right, was training ground for folks like us to spend the next 20 years getting it right. And building really and compelling companies and proving things in the world that we want to. And in that soul searching, I found myself re-energised that the start-up vehicle is the best vehicle I know where you can point to something in the world and say, I want this to be different, except I need to attract really talented people and a whole bunch of capital. And that's the irrational. And you actually have a chance of pulling it off. And that gets me out of bed. So, that was the first starting point. The second starting point was, yeah, I've always absorbed energy from Founders, you know, so while I've done 14 companies where I was a CEO or Founder level person, I always, almost could never say no to any kind of start-up.
So, I'd find a way to say yes as an advisor or as an angel investor or something. So, I always had, two or three other companies going at once where I was trying to see where they could go. And something happened about four or five years ago where I started seeing the kinds of people who were being referred to me from my network or from other Founders and the language they were using, was no longer about improving the world or even building great products or having happy customers, they would almost exclusively talk about valuations. And I started to get this pit in my stomach the same way I got my pit in the stomach in 2007, right before 2008 happened, you know, and this was around when the taxi cab driver's telling me how he has four homes and he's about to buy a fifth, you know, the market crash. You know, there's things I've seen being the adult in the room now for 25 years. And I started looking at it and I said; okay, venture capital's getting it wrong. And we're going into this hyper valuation mentality where we're giving great possible Founders, we're messing them up because we're fighting for deal flow and we're giving them massive amounts of money too early. And we're giving them way too big of evaluation. And they don't understand that, that's just like a exit exercise. It's not actually creation of value. And if it's not creation of value, then it's not representative of what could actually be an exit. Right? And so, the real value for a Founder is to build a company and sell it. And I learned this hard way. We could spend 40 minutes on this lesson alone, but I watched people my career tell me, victory was not valuations. Victory was not things on Wall Street. Victory was cash in a suitcase. if best possible scenario, you build a good company, you impact the world positively and you walk away with cash and suitcase, because at the end of the day, you got to take care of you, and you got to take care of your family, the people around you. And if you've done that right, then all your investors, nobody else takes care of it. And you do this the rest of your life. And what happens when you raise too much money? I really don't think people understand if you raise 10 million on a 40 million Pre-money valuation, which is happening all day long at series a and Pre-seed companies right now in seed companies. Well, everybody on that board expects you to sell for 10X, well, your post money is 50 million, you guys sell for 500 million. You're only one year old. You just created yourself a 10-year job with a lot more risk, a lot more exposure to other disruptions in the world. And you're going to ultimately be managed by the board, whether you like it or not. You've actually sucked the soul out of most Founders.

[00:10:54] Sean: Mm-hmm

[00:10:54] Mark: And then you look at the actual stats and you say what's your most likely exit; being acquired or going IPO? Well, the stats will tell you. IPO is very, very, very, very, very rare. So, then you hoping to sell. Well, 80% of M&A transactions happen under 200 million. So, if you just raise 10 million on a 40 million pre, you're worth 50, that everyone on the board wants a 10X, you're shooting for a $500 million exit. Wait, you're only a year and a half old, someone comes along offers you 200 million, the board is going to say no.

[00:11:26] Sean: Yeah.

[00:11:27] Mark: And people just don't realise that this kind of machine is broken. And so that was a big thesis when we started the studio, is that we're going to build companies the way you used to build them; max out your credit cards, borrow money from grandma and build a company because when you do that, you're forced to build a product that people love and people will pay for. And you don't get too big with your giant roadmaps that are 20 years long. And trust me, guilty, as charged. I'm the guy that's the master roadmap guy, but I've learned over 25-30 years, I've learned, while I love to know where I'm going, I've become really, really good at understanding what can I prove now? What can I prove that justifies further investment in the next stage, gets me to the next level of valuation so that when the music stops, you always can find a chair, right? If you haven't raised too much money and the markets start to change and you have a viable business, you'll always be able to raise capital and you'll always be able to exit, you know, we're looking a little premise, and I guess, in some of the things we were saying in the last two years, because now the market's looking like it could go a little cold. Right? Who knows of what we're going through right now is permanent because who knows. Right? But I do think that, you know, bankers and venture capitalists will never lose the opportunity to take advantage of a little bit of news to change metrics and, you know, that's what they should do, it's profit taking. But if we do go through to adventure winter in the next year or two, which is very likely, or at least possible, then guess what? You got a whole bunch of companies that raise money at monster evaluations. And what they did was they increased their salaries. You know, they went from 200 employees to 2000, and they needed to raise just like they raised, you know, 400 million, six months ago, they need to raise 400 or 500 million in six months from now. But now they can't because no one's going to get an evaluation. And so, what they're getting up doing is slashing their workforce. They might have to raise money to lower valuation, which means the investors who are celebrating their deal six months ago are actually getting diluted. It's just a bunch of badness. And I've been through this cycle like three times. So, there is something to be said for just never getting too overinflated, never getting too hot, never getting too cold. And that is really what our business model is about. We think that the side effect of all that stuff I just complained, is that the people who are most likely to acquire you, private equity firms who have more capital than ever, publicly traded companies who have more capital than ever, and are hyper aware that they can't innovate, so their long-term longevity is dependent on acquire acquisitions. Those two people can't find companies they can afford. So that was another part of our thesis. Like, you know what, we're just going be really good at building early-stage companies that are not over capitalised but are fit right into the funnel of people who want to acquire these companies. And we're going to be completely comfortable with early to mid-stage exits because the scale of what we're doing means we don't have to fall in love with any one deal and people can trust that. And so, the investors that get involved in us to get a part of everything we do, they don't have to think about tenure horizons for some of our exits. We know some of our first exits will probably be in the next 12 months. And we just think it's a healthier business model, but it reflects a hell of a lot of scars over course of a lot of careers.

[00:14:44] Sean: Ah, geez. I love that. That is such a great setup market. You know, it reminds me of the, I've got some buyers agents who've helped me buy investment property over time. And like you they've been through at least three market cycles, and it's only with that level of wisdom that they go; Hey guys, stop getting excited about all these kind of ‘get rich quick’ schemes and you are going to make you get a thousand properties in the next two years and so on. They're like; nope, like there's a model here that works. It's about value. It's about fair value. It's tried and true principles that actually are the ones, that those are the investors who aren't going to be caught swimming naked when the tide goes out, because they're just taking their time, they're doing it properly. So, I love that kind of return to basics-101 and it probably… you know, I can only imagine the conversations that you might be having with Founders who then come into the Nobody Studios with this idea who for the first moment go; oh, well I was kind of expecting millions of dollars. But then in the next moment, I actually feel like a big sense of pressure come off their shoulders. Like I don't have to go through that path and I didn't maybe realise what that was actually going to create for me, but that's a much more exciting future, I expect.

[00:15:49] Mark: Yeah, look, I mean, I've met some Founders who are like, I'm taking this thing to the moon and I'm going to take this thing public. And I didn't remember that feeling and I understand it, right. So, I really think if they have the should spa and the character and the intelligence and the team around them, and that is their mission, they absolutely should do it because irrational goals is what makes start-up works. And it's what makes start-up Founders… you know, our naivety is our superpower, you know? So, you know, I always encourage that. I'm the last person to take that away. But a lot of times you find somebody who realises those big swings, they feel like a poser, right? Thinking they can take a cool idea to, wait, my only path is a 10 billion exit on Wall Street. A lot of people are like, wait, I'm good enough to get this thing off the ground. I don't have the experience to go there, which means they can already see new capitals that come in, new management is going to come in and they can already project that the fun of this thing that they really want to be doing is the creation side is going to change over time.

[00:16:46] Sean: Mm-hmm

[00:16:47] Mark: And then in this market, it's really hard to track Founders because there's so much money around and there's so many great start-ups. So, bringing together a core group of people who have the experience, you need to take your idea to life is harder than ever. And we bring that as turnkey. So, if we're involved, you know, you get me in your ideation sessions, your product sessions, your Biz dev sessions. You've got Barry leading all those same sessions and we really have a world class team and it's getting better by the day. And then the thing that we, one of the things we do really, really unique. And so I always tell people; Look, if you raise some professional capital, you're probably too late for us. But if you're early stage, we can make a really mean argument that coming with us is going to be a better outcome than any other thing you can dream of. Because one of the things we do is, if you're part of one of our companies, you are an equity across the whole studio just like an investor. So, you might be really focused on NewCo 12 within Nobody Studios, but we sell NewCo 47, you're going to get your piece of that. And we're doing that because we're really trying to be people first in our building of this organisation. And investors are used to this portfolio approach, right? You know, you invest in 10 companies, four don't work, three are okay, one is a Home-run. You know, you don't get that as an employee. As an employee, you go spend three years at a start-up and it doesn't work, and you do the next one for three years and it doesn't work. And you do the next one for three years, it doesn't work. You got the making of a crappy career. But the odds are against you. Not everybody gets the Instagram and the Facebook. And so we're saying is; no, come into a family of creators that are building companies. and you might be all in on one, but you're going to earn equity in all the rest, so you have that portfolio exposure and you know what? We don't believe that most people think in terms of only one idea. We're trying to embrace human nature. You know, grandpa's playbook was focus, focus, focus. You know, you wouldn't even tell your boss that you played in the garage band on the weekends because he'd think you didn't have focus. And now we're like; no, if I don't know that you're playing a garage bar on the weekends, I don't know you, therefore, I can't be a good colleague. We can't build companies together. So, if you've got passions for two or three companies, let's go build three companies. Maybe you're 70% on one, but you're dabbling in the other two. So, you've got exposure across the whole portfolio, but you have more depth of equity in a couple more. And that's just like, I created the playground for me. And then I said, if it makes sense, I'm going to attract the right people who see it as a playground themselves. And that's kind of exactly what's happened.

[00:19:05] Sean: Wow, it sounds like an amazing culture. Before we get into the detail on this, Mark, and I really appreciate your setup. For those listening, who are thinking, I'm not a tech Founder, I'm not a start-up, you know, guy or girl, I've got a traditional, you know, services business. It's got lots of issues in terms of scaling, I'm making money and so on. The whole point of this conversation today is if you think that this is like, I don't need to listen to this. You're absolutely wrong, because what I really want to do is challenge people's thinking and have them get inside your mind as to how you go through the process of validating these ideas and the business models and actually challenging them and pulling them apart because lots of Founders that I know, end up with some really interesting ideas, but lack...they have never been in that kind of environment. Never been in a start-up environment, never get challenged on those kinds of things and have maybe some desires to really scale their business, but haven't really had their thinking sort of stretch and challenged. So, I'd love to, you know, sort of get into the nuts and bolts about how you get from this, you know, I'm sure you don't think about it as the typical funnel, but you know, at the end of the day, you want to sort of produce a hundred successful companies out the other end. So, I'm sure you start with more ideas than the hundred, because probably not every one of them is going to be great. So, maybe you could just actually give us a quick insight, Mark, at the start as to where are you at on this journey? Because from when you started, you want to produce a hundred, like where's the business at in terms of, I guess, numbers of companies, where are the stages.

[00:20:28] Mark: Yeah. So yeah, we'll have, for of the market, this quarter we have 14 in development. My guess is we'll be around eight or nine launched by the end of the year, and you know, should be going into next year where they'll be our first full year where our kind of run rate to get to a hundred is you're kind of around doing, you know, 15 a year or something like that, you know, 17 a year. So, my guess is we'll be close to that run rate towards the end of next year. Probably the final year we're doing more like 20-25. You know, we've got a little bit of a mix. We are an idea lab. We put a lot of focus on our ability to create ideas. We invest a lot of energy into our focus groups, which are kind of vertical centric or sector centric. And a lot of those are made up by angel investors who just almost by happenstance. We started to see collections of; Hey, we got some really amazing angel investors that are part of the studio and six of these people are really great in hospitality and travel tech and they're Kings of their industry. And then we looked around like, wait, we got like four in wellness. Wait, we got eight that are really passionate about climate tech. And we started saying like, you almost can't make up that energy. So, we started creating advisory boards around them, where they get a little bit more equity incentives to help us create ideas, but they almost see it like an intellectual exercise, to just brain dump and talk about what they know and great ideas come out of it. And so that'll be something that'll always be a honey well for us in terms of just creation of new ideas. We expect to be good at it. That being said, we also expect two other areas to be key parts of our idea sourcing. So, we expect that young Founders will walk in the front door. And as that happens, there's some really cool things about that. We might be doing what we call mini acquisition. So, if they've spent some time or money spent some grandma's money in their credit cards, building a prototype, working at something on a, you know, well, they have the day job and they're doing this as a moonlighting for a year, year and a half, but they want to shift gears and go full-time into their start-up. The cool thing about us is we get a Founder, we get some tech, we might even have some market validation and it's something we can move faster than if we start from ground up. So, that's attractive for us. We can't do that one every company, but it's attractive when we find the right ones. And then the third category is, you know, we're having a lot of corporations approach us and even private equity firms saying; these are the kinds of things we want to acquire. Can you build them?

[00:22:48] Sean: All right.

[00:22:49] Mark: And that's really interesting Yeah. We call it made to order acquisition. Yeah. I'm in Hollywood right now so I'll use the metaphor, when someone does, most of the people in Hollywood are like working day jobs, you know, waiting tables to break out. But when you do something really good in Hollywood, then you write your own ticket and you tell people, I want my own studio. I want my own contracts. I want my own thing. And that's kind of how we approach those conversations. As we say, look, I actually spent a little bit of time trying to do corporate innovation. And I think it's fool’s goal, this idea that we think young scrappy, agile companies can teach big behemoth corporations to be agile. The actual opposite happens. The big companies make the small ones suck. So, we actually say; Hey, we can build companies you can buy, but we're not even going to sign a Christmas card. So, don't connect with your attorney. We're not doing NDAs. We're not doing anything. If you want to talk out loud about where your roadmap is going, where you'd like to acquire, you want to share knowledge with us. We may or may not go build a company that you may or may not be able to buy, but we're a better option than the current venture funnel that's creating companies, they all think they're unicorns.

[00:23:52] Sean: Yeah,

[00:23:53] Mark: And we're actually having a pretty high uptake on people sharing a lot of ideas.

[00:23:57] Sean: And so, then who's okay. So, you've either, you know, you've kind of been given the mandate and you think it's interesting from a private equity firm or a larger company or a Founder's come to you or you're in your ideal lab and you come with an idea, talk me through the process and also the teams that sort of get involved, like at least at a high level, what's the sort of process that you go through first and then who gets involved at what stages.

[00:24:21] Mark: Yeah, so we've kind of fairly regimented built out process that we've virtually called The Fruaggressive model, which is a combination of Frugal and Aggressive. And sometimes we call it progressivity. So, it's frugal aggressive and creative creativity. And it basically breaks it down into stages and we get past like fancy names. At the end of the day, there's like a idea stage, which we could be playing with like you said, lots of ideas that might just be you posted notes or napkins, but they're enough that we can capture. I think I know what we're trying to accomplish with that. Then we go through like a scoring process, you know, some of the things we green lit early on were because their ideas that were pretty fleshed out and some of the other Founders and myself ideas for years. So, there's some groundwork there, there's some assets. We also chose some early on because we knew that the companies that we did choose would be easily explainable to the crowd. Right? And I say that because I spent half my career doing stuff that I couldn't explain to my mom, right. An algorithm to optimise predictive analytics for hospital readmissions, doesn't mean anything to most people, right? So, if you look at a lot of the companies we're focused on now, they tend to be things that consumers can get their head around because consumers will be part of our funding source.

[00:25:35] Sean: Can you give us a couple of examples, Mark? Like what would be, so maybe, you know, two of the companies at the moment that are in that, the ones that are about to go live this quarter?

[00:25:43] Mark: Yeah. So, one is an organisation called Ovations, and Ovations was actually something I conceived of when I was working with an organisation in New Zealand years ago, and I was running sales and marketing and I'd get these people all around the world, joining these calls. And I knew after 15 minutes I was doing Zoom calls before it was popular. I realised that within 15, 20, 30 minutes people are tuning out and I'm trying to do a three-hour meeting about the goals for the sales quarter. And I remember thinking to myself, if I was in a physical room with these folks, I could spruce it up with some music, with a keynote speaker with different things. And I'm like, someone needs to find a way to spruce up Zoom calls. And so, I wrote down on my idea board and then the pandemic happened and I was like; Hey, this is a better idea than I thought, you know? And yeah, so that's being led by Ray Leonard Jr as you know, father sugar, Ray Leonard, world boxing champion. And Ray has grown up in celebrity's entire life, and we actually got introduced years ago and he was going to be one of our consultants around influence, which is a big part of our studio kind of approach and using influencers. But Ray, wouldn't stop asking me about this company we had on the idea board that had a different name at the time. But he kept asking me, about the third time you asked me, I'm like, Ray, why do you keep asking me about this? I mean, I love the passion, but tell me. And Ray was like; Mark, my dad has made more money speaking. He never did boxing. And in 2020 I was set to make seven figures speak. But 2020 came along and like 42 events got cancelled worldwide. And so, it just makes sense to me that we have to transition speakers to an online environment. And so, Ovations is think book online talent on demand for your Zoom call as early as tomorrow and as short of 15 minutes. So, instead of flying Barry O'Reilly halfway around the world for 10 grand to go speak for two hours at your event. Get him tomorrow morning for 500 bucks for 15 minutes, and I've done marketplaces my whole life. One of the marketplaces I love the most is what I call emerging marketplaces. So, we're not going towards the speaker bureau market. I actually want emerging speakers. You should be a speaker. I should be a speaker. Barry should be a speaker. And I want emerging bookers. So, the bookers of talent, like Ray and Barry of yesterday. They are the Oracle event planners and the IBM event planner stuff. What I love about Ovations, it could be Billy Bob, who is a sales force manager at a AAA plumbing in Texas, and he's got 82 people joining his sales meeting tomorrow morning and he's like; wait, I can have Ray Leonard join for 10 minutes and give a pep talk. That wasn't possible before. And we're going to make it possible with Ovations. We're really fired up about that.

[00:28:13] Sean: I got asked for one of those just the other day, company in Singapore is like; Hey, we're going to have, I was like, maybe yeah, 50, 60, 70, like channel sales people from Asia on this thing. And we want to talk to them about social selling, who do we get? And so, I gave them a referral to someone who could do that, but I didn't know that was a platform that could help us do that. I love that.

[00:28:31] Mark: Yeah. So, we've tied in the calendaring, the scheduling, the payments, the profiles. So yeah, we're really excited about that. That'll be full launch here this quarter. And yeah, we're doing stuff really across the board. You'll see collections of things and health and wellness. We're really passionate about with all due respect for the healthcare system worldwide, it's largely been tar tailored towards trauma, heart attacks, gunshots, car accidents. We're not good at wellness. And so, we're really passionate about everything from mental health to substance abuse treatment, which we think is archaic, to even some of the things that are emerging, like pharmaceuticals compared to psychedelic. You know, some of the emerging spaces, you know, plant medicine's been around for thousands of years, the science is breathtaking that it's a hundred times more effective than pharmaceuticals. So, we're doing a whole bunch of things around that that just affect normal human beings. And yeah, and on and on, we're looking at stuff from how you deal with your homeowners association, which homeowners association United States is 66 million homes live under a HOA, you pay a fee to the HOA. It says homeowner’s association, but really their job is to make homeowners miserable, and so we're actually creating a homeowner's association for the homeowners, which helps them negotiate and advocate against the homeowner’s associations, which have all the control according to state laws. And about half of all the net worth of property in the United States is locked up in HOAs. So, it's some of the more affluent folks that, and some of the fees you, you know, it started from a, you know, I was traveling a lot in Asia years, years and years ago, like 12 years ago. And I came back and had a letter from my HOA that my palm tree had to be cut and I'm like; oh, okay, got the palm tree cut. And a couple months later, I got this notice that I had a lien against my house for $6,000. And I had to do all the research and come to find. I was getting charged a hundred dollars a day after that first letter for not cutting that one palm tree, but I was in Asia for three months and had no idea. And that's like negotiating with the mafia, you know, to pay that kind of money for a single Palm tree. But I ended up paying half of that and there probably was a better way if there's an organisation that could've helped me, I would've paid them more.

[00:30:44] Sean: Mm-hmm

[00:30:44] Mark: So, there's lots of things that we are building where people resonate with and say, man, that should exist. And they usually tend to be. Big market opportunities, lots of users, they tend to be things where it doesn't require someone with a bag to be carrying it, knocking on a door and selling something. We tend to be focused on digital acquisition. You know, I've spent most of my career in, in some form or fashion and e-commerce, so while I've sold millions of dollars to people knocking on a door and taking them golfing and wine and dining, I've sold more to people I've never met online. And I prefer the latter. So, we tend to get attracted to businesses where we know we can at least get initial customer landing point digitally and we can scale digitally. Yeah.

[00:31:26] Sean: So, you're starting actually, it's a perfect segue, because I guess my next question is, and maybe it's part of the scoring matrix that you sort of alluded to before or maybe something else. But when you think about that, there's a set of ingredients where you are probably mentally or consciously or unconsciously thinking through going, these are the things we really want to see now. Okay. Maybe on some ideas, maybe we lack this one, but we've really doubled down on that one. It's super strong in this area. What's the handful of things that you think together, make the strongest case for an idea that's going to scale and that's going to sort of have impact and succed?

[00:32:00] Mark: Well, I think, and again, I'm guilty as charged when I talk to other people doing this wrong, because I did this wrong for half my career. And now I'm passionate on the opposite side, which is, I think you have to really understand this. For all your vision and all you're passionate about what something could be, you have to also enjoy the whole process of what is the thesis and what is the experiment, and think of it in those terms. And we're lucky to have Barry, a part of the team he’s a lien specialist and knows that, that language very well, but you have to get down to these things and say, you know, and I was just talking to a Founder this morning that we wanted to be part of the studio, and God bless her, her vision and passion for this big marketplace that she wanted to solve was resonating. But I'm like this 49-year-old man going through 14 start-ups and start venture capital start-ups, my entire life. It felt to me like you described 27 different companies that have their own 10-year roadmaps each. So, how do you boil it down into the single test that might be one week test or a two-week test or a one-month test that then unlocks the keys to the next test. And that's what we've tried to do in our structure. So, I said, progressive, you know, the first step starts an idea and that's just a scorecard, but then unlocks the next amount level investment, which is not a lot, but it's enough for us to build up business models, a product canvas, the first thesis, we're starting to invest more to start structuring that. And if we get past that, then it unlocks the next one and it says, okay, now we're actually going to invest real money to build this thing and put it out in the market, but what was our thesis? How will we know we succeeded or not? So, when you launch it, we're not all just blowing hot air up each other’s skirts.  We have to go back and say, we said one plus one equals two and it came out to 14. Is that good or bad? Was our thesis wrong? Was the product wrong? Was the product better than we thought? Do we build something completely different? What are the customers saying? And so, I just think that's something that frankly, I think we'll be doing our entire journey, I think 30 years from now, we'll still be getting good at that. So, it's something that you always have to force yourself to do, because again, one of the things we're really good at as Founders is being irrationally excited and naive and pursuing something that's big and dreamy. I think that that anchor even maybe may not be one you talk about a lot, figuring out that anchor in your body that says, yes, but I'm not going to go so far that I build an organisation where I look backwards and go shit. I just spent $4 million on the wrong. And I've been there before, and I'm sorry to those investors, because I've done it before. I'm never going to do it again. So, we are just making sure that every investment we make is bound the right thesis and experiment to unlock the next step. And at the end of the day, look, we are not an organisation that is going to fund our start-ups the entire distance. And we made a very concerted choice to do that. So, if you're funding your own start-ups the entire distance, you know, seeds, you know, pre-seed, series A, series B, whatever. It's almost like you can cover up your own mistakes. Right? And so, one of the things we loved early was that early on, we know that we're only going to take it to about a seed stage. And then we have to have external investors, albeit they may be friendly, external investors that'll look at the deal and decide on their own merits to continue to invest it. And that hurdle, that checks and balances is a really healthy check and balances. And if we had

[00:35:25] Sean: …for the Founder in terms of just the way that the, yeah.

[00:35:28] Mark: Work part of it, we're a large owner of the company, so it's us and the Founder, knowing that thing doesn't survive, if we can't convince external investors to keep supplying it.

[00:35:36] Sean: Yeah.

[00:35:38] Mark: Now, over time, we'll have our own resources and I'm sure we'll make some choices to fund certain companies that need more time, but we don't want to structurally make that part of what we do, because what you'll end up doing is covering up your own mistakes. And I love the tension. And we've said this often like, we're going to be very transparent about what our idea was from day one, what we got right, what we got wrong, where it eventually is, and we're not going to go out and take it for external capital until we believe it's met all the marks that we promised the market. Right? Because ultimately the most valuable thing we can do as a studio is have brand equity

[00:36:13] Sean: Yeah.

[00:36:13] Mark: That people know we build high quality companies. We either fall on our sword. Yep. We fall on our sword and kill the companies or we fund teem ourselves. But when we say it's ready, it's got to stand for something. And that's more valuable to us than anything else that any future Founders going to value that, that we have that reputation. And so therefore, you know, you got to follow your sword sometimes, we might have to kill some companies. We might have to fund them more at the expense of other companies we're excited about, but I'm very comfortable with that tension. And we've said it from day one and that's something we have to embrace.

[00:36:46] Sean: So, in the equity crowd funding then of the Nobody Studios model is, you know, in a typical equity crowdfunding model, and you're obviously far more expert than I am, but, you know, typically there's a campaign, you know, it seems to work very well with people who are going to have, you know, large numbers of sort of passionate fans or customers who might want to get behind the brand. And I've probably watched maybe 20 or 30 in the last six months come through one of the equity crowd funding platforms that I'm attached to. And it's been just fascinating to kind of watch the way the campaigns and all the rest are developed. If equity crowdfunding investors are coming in at the top co-level at the Nobody Studios level, how do you do the equity crowd funding? Like you've got kind of like a, is it every campaign's like; Hey, here's a really exciting business. You should get behind Nobody Studios come and invest at the top level. And every time there's a business, that's kind of ready. It's got its own kind of campaign. How do you manage that?

[00:37:37] Mark: So first and foremost, we're raising for the studio, and when you invest in the studio, every company we create, whatever your pro out of ownership of the studio is, you're getting the same in the New Co, So, it's not independent investment decision to be made, it's just kind of like, I like the way these guys are building companies. I like their thesis. I like their approach, the people, you don't have to believe in every company, you still get a piece of it. And that's, I think that's really attractive for the retail investor that the crowdfunding market represents, because it was never possibly before. right. Like you had to be a multimillion-dollar limited partner in a venture capital fund to have the same kind of exposure. And now you can write a $25 check or a thousand dollars check and have the same kind of exposure. And I'm thrilled to bring that to the market, because it's like a democratisation of that kind of exposure that used to be locked in the back room. So, I love that. And then, you know…

[00:38:33] Sean: Actually, just to put that in context, you know, I get to sit with my 17 and 14 year old and sit down and look at the IM that's on the equity crowd funding plan and go; you guys are getting to see stuff that no other 14 and 17 year old’s have ever seen before. And by the way, you guys have got enough money to invest in this thing. Like let's put our eye piece on. I think it's, yeah, it's incredible how it's changed the opportunity for the investment.

[00:38:53] Mark: Yeah, yeah. And I think there's a lot of people who enjoy going into the individual deals, I call it almost like the day traders, you know, who are like trying to make their own decisions of this is a winner or it's a not, people like that feeling. I get it. But for most people, picking a winner is a pretty scary thing. And so, we represent this idea that you don't actually have to pick a winner, you just have to pick that you want to be part of…

[00:39:19] Sean: Invests the team …

[00:39:20] Mark: … of everything we're doing. So, you still get this exposure of like professional management. We're validating our ideas. We're picking our ideas the right way, we're funding them the right way or we're killing them. We're building them the right way. Instead of looking at maybe getting sucked into some fancy marketing and going, oh my God, that's really cool, but it's going to be a dog. And so, I think for a lot of the retail investor who may not be that kind of stuck, picker, winner kind of person, it's really, really appealing to get exposure they wouldn't otherwise get, but also, really trust the team and the thesis and also the ethos of who we are. You know, our ethos is a really strong part of our branding. We're very people first, we're very diversive. we're only doing companies that'll make the world a better place. And so, I think there's a lot of things that are resonating with that kind of that core investor. Then beyond that, we'll use our muscle that we're building. And in crowdfunding, we won't be able to crowdfund the studio forever, whatever capital we need, because at some point we're going to start to look like an investment company, right?

[00:40:19] Sean: mm-hmm

[00:40:19] Mark: And that's not allowed in a crowdfunding rules, and we're aware of that. It's just right now, they're all subsidiaries, so we're completely legitimate to do crowdfunding, but you know, in a year time, two years’ time, we are completely expecting to close the door to crowdfunding to the studio. But then use that muscle for our portfolio companies. And one of the reasons why we really believe in crowdfunding is exactly what we're going through right now at this theoretical venture winter. Is that, whether the market is hot or the market is cold, you're always stuck in the echo chamber of the venture capital community. Whatever the current thesis is, 99% of the people are repeating the same thesis. And I always want to have some democracy to make sure that we're not dying on the buying because somebody said that's a bad business idea, that didn't work last year. Maybe it's a great idea. You know, if you can get the crowd to support it, you know, now you've got half the funding and you get the other half in professional. I mean, in perfect world, we're always getting half our capital from crowd and half our capital from professional. And I wouldn't take a hundred percent from either one. If I had my choice, I would just always kind of try to keep this balance.

[00:41:22] Sean: That's interesting. So, when does the, in that model, when does the investor realise their return through crowd funding?

[00:41:32] Mark: Yeah, so our only business model as a studio is to build and sell. which is important differentiation, because there's a lot of people out there who charge fees to their firms or their new cos. And I've seen that up close and personal, and I can tell you it's nothing but badness. You get a lot of conflicts of interest. You get a lot of confusion about what success is. When you say my only job is to build good companies and exit them, you're 100% aligned with investors and Founder. So, that's it. When we sell a company, as our fee structure is we essentially take our out of pocket back into the studio and we take around 30% back into the studio, and the rest goes out to stakeholders. So, someone who's investing into the studio when you start to model this out and we've got a really robust model, that's pretty compelling. But when you model this out, it's almost like our first rejected exit, people's principle is almost returned. And the second one's gravy, anything beyond that is just ongoing gravy. So, the astute investors will buy and hold their studio position and never sell again, because they'll just want to keep taking essentially dividends off of our exits. They won't be required to double down. They won't be required to invest more, but we're always going to go to our internal investors first. So, if we're raising more capital for the studio, they'd have a chance to up their position, if they like what they see. If one of our companies is leaving the nest and about to raise capital, we'll let our internal folks fund it first, so we're going to have some things that are rocket ships and before it goes out to external, you know, funded ourselves. And I think that's really exciting for a lot of people to have exposure to early-stage deal flow that they kind of have a little bit of exclusive exposure too.

[00:43:13] Sean: I love it. So, one of the things that jumps out to me is that. You know, you've built all these start-ups and you've been a professional CEO in larger organisations. And so, you are not only obviously supporting directly all these Founders to kind of work through these ideas and bring these companies to life. But then of course, you're also the CEO of Nobody Studios. And so, you would have a, you know, you've got a group of people there that you are leading, who are also then supporting all the Founders. How many people are in Nobody Studios by the way?

[00:43:44] Mark: So, I should have a perfect answer for this, but one reasons why we don't is because we really have a lot of folks that are doing like moonlighting, you know, some fantastic people, executives, product manager, or whatever, say AWS or Google, but they're giving us 10 hours a week. We call those folks that are Nobodies. So roughly, our ecosystem is around a hundred nobodies, but kind of the people who are putting a lot of day to day hours into the organisation, it's around 15-20.

[00:44:11] Sean: Got it. Cool.

[00:44:12] Mark: And we're growing, you know, we've got some really exciting key hires coming on in the next few weeks and you know, we'll continue that path.

[00:44:19] Sean: Yeah. So, I know we're kind of getting close to time, Mark and I feel like I could just talk to you all day. I'm interested in, you mentioned something earlier about, health and there was also a bit of a kind of, like as many of us do in our lifetimes that we have moments where we actually really take a big step back and look at the next chapter and think about what do we actually really want from life and what's important to us and so on. What have you learned about your physical and emotional and mental state and how to keep it optimised, so that you've actually got energy for this journey? Because you know, this is a high energy transfer kind of, world that you're in, you've found those exciting ideas and there's a lot of energy moving around. How do you keep yourself in the space where actually you can give appropriately and you can get what you need to sustain yourself?

[00:45:07] Mark: Yeah, it’s a great question. I guess, you know, for me, you know, part of when I was going through that soul searching, it was coming off of a moment in my life where I had a lot of folks that had gone through some dark moments. I've always been the person that people lean on and I'm the person that rises occasion and tries to help people through those moments. And I lost a few people during that time as well. And for me, I woke up at a moment that I never expected to be at. And I'm glad I did, which was a really dark spot for me. And I was able to find a way to be power out of it stronger than ever. And when I did, I said, okay, now every day from now on is going to be changing the world and be worthy of whatever I was supposed to do to impact this world. But it gave me this deep empathy, that being kind of a type, even the military background, you just talk about powering through things and getting shit done. And you know, you don't whine and you don't complain like, and there's strength in that. And I get that. That's still a part of me. But for me to have even glimpsed into kind of the pit of darkness, it gave me this really deep empathy that I'm so glad I have now, because I see the pain and suffering and struggle all around me, that people aren't able to articulate or aren't comfortable articulating. And I just know we got to have a better way to find help for folks. So, that is one of my ‘Whys’. It's one of my reasons, because I just know that the true underlying pain and struggle in this world, is more profound than we have any clue of. And I'm passionate about being a part of that and a part of that solution. You know, for me, I've certainly have realised over time that I have a hyper ability to work at a pace and a throughput and a bandwidth level that would not be healthy for a lot of people, but it's actually ironically healthy for me. It's operating at that level gives me my own energy. And yet I always have to sometimes remind myself that there are warning signs that I've gone too far. And those warning signs, I just have to become more and more acutely good at listening to. And maybe there are times that I had to learn it the hard way every other week. And maybe now it's every six months I learn it the hard way, but I still have to look for those signals and say; Hey, this is still something you have to get good at. You didn't see the warning signs here. You should have taken a day off for your own mental health, for your own family, for your own physicality, you should have taken this weekend off and not work. Like those are the things that I think I've gotten through my entire life being pretty good at listening to, but more than ever at this stage in my life, I have to be hyper good at it. And I always counsel people to do the same thing. I think nobody knows us better than ourselves. And if you're not willing to listen to that own coaching and work those things, then you're kind of doomed, repeat whatever your mistakes are.

[00:47:59] Sean: Yeah, our bodies are pretty good at giving us feedback until we listen. It tends to get louder and louder. You can ignore it all you like. And at some point it's just …

[00:48:06] Mark: There's no escaping.

[00:48:07] Sean: Well, I also imagine, Mark, and thank you for sharing that because I imagine also for the Founders of Nobody Studios and, you know, Founders go through a hell of a lot emotionally and mentally and physically having that level of anchoring and empathy because of your own experiences and I guess, the sort of maturity in the industry and the ability to kind of look back over numerous cycles is probably really helpful in grounding Founders and being able to kind of call things out and provide support where it's needed.

[00:48:33] Mark: Yeah. And look, and first and foremost I mean, this is about trying to have a healthy, happy journey, right? You could talk to me for months and never hear me talk about financial returns, you know, unless I'm forced to talk about investor kind of stuff. And I'm obviously very passionate about the model we're building, the financial returns of what we're creating, but you'll hear me talk only about impacting people's lives, improving their lives. And at the end of the day, it's being a good place to work, you know, enjoying working with each other, uplifting each other's and I can be demanding and excited, the same way I expect other people to be demanding, but we have a culture of like; Hey, if you need to say, you know, piece out, rough day, rough week, whatever, you're just going to get a warm hug and total understanding and let us know when you're back. You know, I always compare when I started my career, when you left the office at 5:00 PM, that was it. Like if you got a Page, you know, I had a Pager back then that was super important. If you got a Page, it was like a crisis, if someone left you a voicemail at home, like it was a crisis. But you basically had a chance to check out at 5:00 PM. Weekends were yours, you know, and now we work in a 24-hour cycle and we're an international organisation. So, we're 24 hours more than ever. The only way that works is if you give people permission and autonomy to manage their own schedules, where they can kind of make their breaks and push back and not feel that pressure to be on every damn call, and just know what they got to do to manage their own energy and their own physical health.

[00:50:02] Sean: Yeah. Wise words, Mark, wise words. Look, we're out of time today. I just want to say a huge thank you to you. I'd love to acknowledge, the way you guys are building Nobody Studios, the context you set up front was beautiful. I think it's such a fascinating organisation and I certainly look forward to continuing to getting involved, finding a ways to get involved and support the business as it goes forward. How do people, what would you recommend to people as the best source of information, follow along, get more involved, learn more about it. Where would you direct them to?

[00:50:33] Mark: Yeah, I appreciate that, Sean. And thank you again for having me on here. I love what you're doing and I always enjoy being interviewed by a great host because you made it an easy process for me. Look, we're really open. So, Nobodystudios.com is the best place to go, register for a newsletter, you'll get all the important information, follow us on social. LinkedIn is kind our primary, but we're also open market www.Nobodystudios.com. We love dialogue. So, reach out for anything.

[00:51:02] Sean: Beautiful. Well, Mark McNally, thank you very much for your time today. Folks, I really hope you enjoyed the show. Huge thanks to Mark McNally from Nobody Studios. Before you go, if you're on the socials and you want to find ScaleUps Podcast, it's at ScaleUps Podcast on all the usuals, except for Twitter, still can't cut my head around Twitter. Just don't love it. And you can also find us on the website. All the transcripts of the full episodes are also on the website. You can find us on YouTube. You've been listening to ScaleUps Podcast. I'm your host, Sean Steele. And look forward to speaking to you again next week. Thanks so much, Mark.