Transcript

The new art and science of marketing, with Known’s Ross Martin and Kern Schireson

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0:53 Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. Last year, one of our biggest clients. was hours from bankruptcy went into administration in London.

1:39 And left us holding the bill. You're sitting on a more than ten million dollar hole. You have to stop production on a Super Bowl spot that you have to deliver in just days. And you're told Actually, the company's out of business.

1:56 And Everybody that you have that just moved to London. They probably have to come back pretty quick. That's how we started last year. What you do?

2:07 I think we cried for a second. This was a terrifying moment for known, the marketing agency co-founded by Ross Martin. But the abrupt loss of a major client refocused the team. And made them stronger. The fact that we've been able to grow as quickly as we have is

2:25 Ludicrous. And yet Still make stupid mistakes. And we still get punched in the gut. And

2:33 When that happens, how we respond, and how our people respond, and how we support one аналі. is our culture. You gotta have incredible talent at every position. Huge push. There are fires burning when you're going out. Can you believe it? Such an idiot. And then you go back to this is totally gonna be amazing. There are so many easy ways. So I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. Working out of a three-bedroom apartment. Just how you do it.

3:16 This is masters of scale. I'm Jeff Berman. Your host. This week on the show, Ross Martin and Kern Shearson take us inside their award winning rapidly scaling agency. It's called Known.

3:32 And it is changing the game in marketing by blending truly innovative AI powered data science with edgy creative work. In this episode, Ross and Kern reveal how their scrappy fast growing agency is able to punch way above its weight. Why focus on culture pays off big, and the advice they have for someone who needs to make a marketing dollar stretch as far as possible. Welcome to Masters of Scale. Thanks for having us.

4:03 I have known you guys a long time, Ross, a very long time in your case. I don't know how you two know each other. What's the backstory about how you two This is actually the question we were most worried of. This is the one that's the worst possible question. There were no gotcha. And here we are. Here we are. I'll give you the abridged Which is that My grandfather. dated Ross's wife's grandmother.

4:29 They ended up marrying different people. This is literally uh we're talking in late twenties. Nineteen twenties. Nineteen twenties for your for your younger listeners. And they stayed friends. And their kids grew up together, multi-generation family friends. Kern grew up good friends with the family that Ross eventually married into. And when Kern first moved to New York.

4:52 Ross's wife thought the two men would become fast friends. She couldn't have been more right. Ross was already a rising star at what was then MTV. And His wife

5:05 made him hang out with me. And befriend me. I was running like a like a sh little research company. What and little research. I but I didn't know anybody in New York and so Ross's wife generously made Ross take me out to dinner. And befriend me.

5:21 Kern's tall. And very strong. And so for someone who can be a wise ass like me, you need protection. So my body it was a my body bodyguard kind of situation. What it was. Yeah. Okay. And he just made me feel more safe and secure out here in the corporate world. So I took him everywhere. The first time we worked together, he was then running a entrepreneurial group at Viacom. Kind of an uh creative agency inside by MTV scratch. And they were doing really innovative consulting deals to amplify the impact of the cultural currency of MTV with some of ICOM's largest advertisers.

6:00 And it sometimes required research and insights. And I had this research and insights from so the first project I ever did with Ross and the way we started working together. And really started to identify the the symbiotic relationship. that we've really developed was

6:17 I did four focus groups for Sundrop. Which is a carbonated soda. It's a mountain dew competitor, mostly in the southern US. And they did a deal with Scratch and I did four focus groups to identify functional benefits of SunDrop. So you you're doing this work, Ross, you're working at Viacom, Kern, you have your own data and research agency deeply partnered with Viacom. There comes a point, Ross, where you leave Viacom, you launch your own business, and then not very long later, if I remember correctly, you guys come together to form a new company, which is known where you are now. How did that come about? So I think a lot of the magic that I felt like we were creating when we were partnering together with him inside Viacom and the outside.

7:03 continued after he left and he was running this brand strategy and business innovation firm that was really unlocking Huge. territories with brands. And then the question came, how do we actually capture the value. How do we really operationalize these insights and opportunities?

7:23 and push them out into the marketing activations and endpoints. I didn't have a complete solution. We were really doing analytics, we would identify areas of opportunity, but we didn't have a media agency. We didn't have a creative agency. We didn't make stuff. But We understood

7:43 The Potential energy. that was being created in the insight and the business strategy. So I think that the real reason why our companies was because

7:54 Our clients wanted it to happen. And All we did, as Kern likes to say when we combined these businesses in 2020, was use private equity to remove the structural impediments. Here's the thing, Jeff. If it wasn't us and our partners who put this together, it would have been some other Jabronies that did it.

8:13 We think that the model we have today was inevitable. І твоні твої Росхатив аженсі колбird. Kern was running the data sabby Shearson Associates. Those two alongside yet another agency called Stun Creative joined forces to form. No.

8:35 Over the last thirty years. All of the continents of marketing capabilities have been pulled apart. If you're a marketer today, you may have your media agency over here, your research teams all the way back there, your creative agencies over here, all of the part. are disconnected. And so much fidelity.

8:57 Is lost. And when the parts are not connected, it's the client who loses. So what we did, you can think about it as we combined these things back together because we believe that the only way to win. in the environment that we are in as a marketer today is for those parts to be unified and aligned. Look, Kern and I are different leaders with different styles that happen to be super complimentary. But I think if you look at my career, I think one of the things I'm known best for is building

9:26 Internal culture. and building cultures of creativity and innovation. I will tell you that this has been the absolute hardest part of the job. I'd known. Why?

9:38 Because we launched a company and and then hundreds of people didn't get to be in the same room together ever. In fact, we all were sent home. And we had to go we had to go live in our Spare bedroom or our closet or in our basement. and get to know each other through rectangles. And

9:54 Building a culture. when you're separated by so much time and space and the limitations of Zoom or whatever. It's like the hardest thing I've ever had to do. So how'd you do it? I think we started to look for What are the things that we actually

10:08 have in common and what are the values and characteristics of a successful known. What we did was we said, Hey, we've got some of the most brilliant people in the world in this company. What do we have in common? The two things. that rose to the top. This is from asking our own teams, but also our observations as leaders. One

10:26 They were all holding themselves and still do. to a standard that's higher. than anybody else could hold them too. And the second thing is when we surveyed our whole company and we said, What's the one word you'd use to describe your colleagues? I thought.

10:40 Innovative, brilliant, genius, whatever. Kind. Kind. The people who work at known are really super kind and they care about one another. They care about doing a great job, but they also care about making sure that the people to their right and left are also very successful. That's a unique thing. And it's something that uniquely happens in a company of our size and shape in this time. That's employee owned.

11:03 So this is our thing. If we mess it up. That would really suck. You know, Ross talked about the complementarity of of how we approach this differently.

11:13 And One way that we talk about this is Raw's building culture and really owning what we would think of as the known belief system And I really focus on the operating system. We needed to be accountable to our clients' business success. And

11:33 When we structure deals. We always put it. component of the fiat risk or uh called an incentive around real bottom line results for those clients. And Those

11:44 Incentives are essentially what fuel our bonus pool. At known. So the client success is the company success, is the individual success across every business unit. And І кріється систем. Where Nobody

12:02 gets to point the finger at anybody else. We either won or we lost. for our clients. They either got the ROI, grew their brand, grew their business, hit their targets, or they didn't. And if they don't We don't. And what that did was create a litmus test right away for the people who kind of got it.

12:21 and wanted to do marketing differently. And the people who said, wait a second, I like to stay in this lane right here. I am an expert at X, and that's all I want to do. Those aren't the right people for us. We are one team. We never stop learning. And that's become more important than ever before.

12:39 How do you institutionalize that? It's hard. So one thing we were just working on before we got over here. You've obviously heard about Skeptic, which is really the core technology that we've built over the last very many years and we've v invested a lot. It's called Skeptic because it's never satisfied with its own answers. In a nutshell, what is skeptic? Skeptic is known's proprietary operating system for modern marketing. It includes tools that cover all aspects of the marketing supply chain, from audience insights to the creation of assets and the delivery of those assets at scale across platforms in an optimized way.

13:15 No one is five and a half years old. The fact that we've been able to grow as quickly as we have is ludicrous and Yet we still make stupid mistakes. And we still get punched in the gut. And when that happens, how we respond and how our people respond and how we support one another

13:31 is our culture. And we've taken some big hits. Is there an example you can share? How about last year? Yeah. When one of our biggest clients was hours from bankruptcy, went into administration in London and left us holding the bill. You're sitting on a more than 10 million dollar hole. You have to stop production on a Super Bowl spot that you have to deliver in just days. And you're told actually the company's out of business. Well.

13:57 And Everybody that you have that just moved to London. They probably have to come back pretty quick. Wow. That's how we started last year. What'd you do?

14:05 I think we cried for a second. Yeah, right. You're entitled. I don't think that most companies our size would would have been able to survive that kind of hit. For lots of reasons. And again, we're independent. I think it catalyzed. probably the most interesting re-examination of our business model that we've had because We realize that scale can be your best friend or your worst enemy and that

14:29 We were in love with that client and that opportunity In part because of the size of it. So we ignored some signals. around risk. And we ignored some signals that should have been cautionary flags because we loved the scale of the Super Bowl spot. We loved the scale of the media investment we were managing. We loved the scale of being

14:55 in London with a native client there. And we started to ask ourselves, what is the highest best use of known? And are we missing opportunities to have an enormous Impact. without necessarily the exposure. And part of this was out of necessity, because we had a big hole to fill in the budget and the scaled media RFPs are slow and they come along every so often. So we said what are the kinds of things we could do

15:20 to bend the shape of the curve for some pretty big clients pretty quickly. And we came up with a new suite of products that we started pushing out into the market that allowed us to more rapidly impact our clients top and bottom lines And

15:40 We sold a ton of them. And it was I think without the necessity, without the kind of oh sh moment of we just lost what had become our biggest client. I don't know that we would have gone back to the drawing board that aggressively, but that set us up for what is now coming into twenty twenty five. is the best year in our history. Yeah, a ten million dollar hole can be quite a mother of innovation. There's actually a thirty million dollar hole. I'm just talking about the ten million that we had already spent. But think about this for a second, and you cover companies in lots of different categories who talk about scaling I think we realized a couple of years into known, we were playing other people's game. This you even though you would set yourselves up not to. We fell into the trap. Because that's just how the industry works. That's where the s center of gravity was. Yes. Yeah. We lost ourselves in that. And what we've realized since

16:27 Is that yes, we continue to scale revenue and we continue to scale profitability and impact. All those things are true, but we have stopped. Being confused about whether we are brains or bronze. We're not Braun. Right. So

16:42 And you could apply that to every industry that your listeners are working in today. We are rewarded by being smarter than our competition. And not by being Bigger. Go ahead, Ross and Kern give advice for founders who, like all of us, need to make their marketing dollars work harder.

17:14 Humans will never be more intelligent than AI. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Khalyubi. And on my podcast Pioneers of AI, we answer that question and so many more.

17:35 As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely. From Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find. Just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode.

18:31 I hope to see you there. Welcome back to Masters of Scale. You can find this conversation and more on our YouTube channel. Think about two different customers of yours. One that's a really established scaled company and what you're doing for them and one that's more of an insurgent challenger brand and and how you're helping them and and how those two are different. And how they work and how you work with them.

18:57 So Let's first talk about A company that we really admire in a space that we have worked in very successfully for almost two decades before known was even known. The entertainment industry, right? That's a space where you're just seeing so much disintermediation and so much chaos and confusion that, you know, it's like, well, who's gonna be left standing? We've been able to work with almost every business and brand in entertainment.

19:23 So we've launched nine of the last twelve streaming services. If you put a plus in front of Masters of Scale, you're doing the work. We'll turn you into a streaming service in 24 hours. We definitely know how to do that. our science, our media, our creative, our strategy team, we all do that. But One of the really impressive brands over time continues to be Disney.

19:43 And we have deep respect for them. And we work across the Disney portfolio in lots of different ways. And we share a lot of the same values and vision for where the industry is headed. In a world where it's difficult to know where to put your media dollars, they're a great bet. And they've also been able to invest for the last however many years in their own technology in a way that it's evolved to meet the needs of marketers and agencies. unlike really any of their competitors. So we are helping them tell that story. And Ross, that's because they touched

20:19 the customer across so many different theme park, physical retail stores, with the streaming service, with ESPN, et cetera. Like they're just so many touchpoints. The touch points they have the foundational asset that so many other platforms are Searching for which is really powerful stories. And they've become so sophisticated from a data science perspective that they are more and more able to deliver exactly what a viewer or a consumer or as they would say a guest. Wants

20:49 And they can surprise and delight. Everyone in a way that almost nobody really Can't keep up with it more. As a media agency, we are helping them tell that B2B story. We also, as a media agency, buy quite a bit of media. in the Disney ecosystem. From Disney on behalf of all their other clients.

21:08 We're also making a show. Right now for Hulu. For one of our clients. A Disney controlled asset. Right. Correct. Yeah. So here you have three major components of our relationship with one of the greatest entertainment companies of all time where we feel like real business partners with them.

21:27 And We have a deep trust and a relationship that enables us and our clients to do things in the Disney ecosystem that you want to be able to do. If you were to look at like A client of ours that's obviously much smaller and is more of a challenger brand. We also work with a company called Slate Auto. Slate, for those who don't know, is a new kind of electric vehicle. It's a truck.

21:51 It sells for a base of$20,000. Nobody can believe that price point for a new car of any kind. And it's totally customizable. You can make this thing look and act like anything you want it to look like. And the team that's behind it, they would describe themselves as a bunch of bandits and free radicals, and they are doing all the things you're not supposed to do in that category when you launch a car. Such as what? Such as

22:18 The reveal itself. When they revealed The EV for the first time. They didn't go to like an auto show and like there's no like curtain and ribbon and all that sh. They didn't make like a car commercial that looks like all the other car commercials. They just

22:32 put the cars on the street in LA. And people were like, What the f is that car? Like I've never seen anything. Like that. And then Thanks to their brilliant creative, what they came up with was they've wrapped each and every one of the demo cars as if it were a fake business.

22:51 So like A taxidermy my family business or a raw meat delivery business or a These may all seem like a fake Saturday Night Live commercial. That's what this whole thing was when we launched it. And so there actually was a fake commercial created. They put that fake commercial that was a real commercial for a fake business with a real car in the one place you would definitely want to put it. which is right after the monologue on Saturday Live, which is where Saturday Night Live puts fake. Because you don't know as a viewer, am I meant to fast forward through this because this is a real commercial. This is this is actually entertainment. That's right. That's what it is. So I get the art of that, right? There is a vision, there's creativity. Oh, I see it. Where does the science come into that? How do you get confidence, reasonable confidence that that's gonna actually perform?

23:38 So there are a couple of things. We are their media AOR and helping them sort of three sixty with media placement, science, modern scientific. So there are two ways that that comes to life. One is in the transactional side of picking spots, buying them, planning them. helping make sure that it aligns to audience goals, reaching frequency goals, and we have a bunch of tools and capabilities to do that. But Slate, like many modern companies, also has an internal team that handles some specific channels and platforms directly. So how do you engage and interact in that?

24:16 Well what we've done is deployed skeptic. Across our teams, meaning the technology platform that our data scientists and bioscientists and audience scientists use to identify and predict and then measure the Intended reach and frequency of the spot we're putting in Saturday Live, and make sure that that's balanced with the right kinds of spots in other shows and places. They also have hands on keyboards.

24:44 in that same platform. I don't think any other agency has ever done this before has ever actually opened up its operating system and said our planners and buyers are going to be in the same back end is

25:01 your internal planners and buyers there is no other platform. For people to jump in and see with absolute transparency and clarity, the decisions we're making, how we're making them, why we're making them. And the opportunity that creates for the piece of the puzzle that they still own in-house.

25:23 We think it's the business model of the future, which is not just saying we're transparent, but actually inviting you into the kitchen. And letting you examine it as closely as you want. So what I put in front of you, this is the first time. So there's about sixty five apps in here right now, and it looks like about two are added each week right now at minimum. And every one of these gets better the more you use it. Right. And so these are tools that are designed in response to client needs. Things that make us more predictive and precise. And There are agencies who have stuff like this, but you're never gonna see it. And you're definitely never gonna touch it as a client. We just believe that our clients wanna take agency.

26:02 They don't wanna give it up. They wanna be able to control their destiny. Wanna talk about one other element of how AI is gonna affect this world. One, we're already seeing share drop from search, drop from Google and go to GPTs, right? I mean chat GPT is literally taking search share from Google and GPT optimization. We haven't even been around long enough for that to be a a real thing yet, I don't think. You'll tell me if I'm wrong.

26:26 And then two, we're starting to see the social platforms, TikTok in particular, YouTube to a large extent be flooded with AI content. And that's only going to explode. How are you guys thinking about that? And how are you advising marketers how to prepare for that and engage with that? So we are very actively engaged with a bunch of clients looking at what I would call Zero click. Environments. for identifying brands and and companies that they want to engage with, right? There's not something above the break, but I am typing in a question, what's the best hotel for me to stay in in Amsterdam? And I'm getting an answer and that's what it's gonna be. And I think to your point, in the world of GPT,

27:07 While there is an opportunity and people are already working on optimizing the content of the internet to generate better placement in the large language models, that's a very early but active area of investment for a lot of folks, kind of the new version of SEO. The right answer For brands. We think is to Jump in front of that.

27:33 and start thinking about how do I create the right place in culture, the right place in organic conversation and the right image and ethos around my brand or product so that one Maybe that question's not getting asked. Maybe I already have an idea.

27:52 Of where I want to stay when I go to Amsterdam. Because there's a hotel brand that's found its way into my heart and into the conversation in my household. Or I'm a Bonvoy member or a Hyatt preferred, right? Yeah. That's right. So part of what I think we're gonna see is a retrenching from what has, I would say, become A real over reliance on search, but The question

28:14 that they were typing into the search box in the first place got created somewhere else. What we've seen in a lot of cases is an overallocation to search. That's the biggest piece of it. We may be in I'll call it general GPT world for a very short period of time because we may have agents that are specialized that are working on our behalf and where we're engaging with them in lots of different ways. So how are you guys trying to stay ahead and and help your clients stay ahead with what's coming next, given this pace of innovation? A little bit of everything old is new again. And if you were to

28:47 reframe the way you thought about meta. Reframe the way you think about Instagram. And if I told you that for the last 10 years Instagram is an ecentic AI creating a TV show for you about your life and your friends and what you should care about and think about. And it includes what products you should be aware of. That is a

29:12 Decade old. AI agent. Mm-hmm. Right? It really is. That's true. That algorithm is. Yep. And so again, how do you get there in that world? How do you get there in a world where there is a a really well-tuned optimized agent finding things for you to look at, care about, and buy. The answer is

29:34 You start your media team with a set of data scientists who understand, decode, and outsmart that algorithm. Learning mode is expensive. So we have been in a war of the algorithms with all of those platforms to try and outsmart them and out outnavigate those agents on behalf of our clients. We have a lot of early stage entrepreneurs and small business owners in our audience. They're going, This all sounds great. I have twelve dollars to spend on marketing this year. Like I I don't have the the cash to put into it. You're walking through an airport and one of these these small business owners, early stage entrepreneurs, comes up to you and says, What should I be doing? How should I be thinking about marketing?

30:18 before I'm ready to be a known client. What are you telling? I would start with, you know, we we like known because it goes in a few directions. It goes with the insight and the brand strategy and how you know yourself and what you have to to offer in the world. And then how do you make that known? I would start there. Really understanding

30:39 Who you are. what you have to offer. And what your clients want to buy from you. Anyone for zero dollars can figure out what their value prop is.

30:51 What matters. And how they deliver value. I hate the version of the successful entrepreneurial spiel of I saw this twenty years ago. And look how cleverly

31:05 I engineer my success and made this happen. Maybe that's true for some people. It's not true for me, I don't think it's true for No I think giving yourself some time to feel your way through it. to make some mistakes. And to continue refining as we had to.

31:23 What it was that the world needed from us, what it wanted from us, as opposed to just how we want it to come into it, is gonna be part of it. There's one more thing I want to add. All the chaos and confusion and uncertainty and all the acceleration of technology and innovation has completely leveled the playing field. So all the jokers you see standing up on stages in front of whatever audience and behind whatever mic. Who are telling you they know They figured it all out. They know what's coming. This is why I'm so successful.

31:58 You. They don't know. They're just as terrified as you are because the world just hit reset. And now it's anybody's game. But I will tell you one of the most interesting things to me. We see this rate of change with AI.

32:12 That is for sure the biggest reinvention of how our world works since the industrial revolution That's happening right now. Here's the thing. If you go back to the industrial revolution, all of the political upheaval was around the fundamental question of what happens to the capital. at the center of this. Do the means of production go to the people, or do the means of production go to the giant corporations? Right? Like that is that is a battle still being fought today.

32:44 Okay. We don't know the answer. There is a possibility that AI continues to evolve in a way that favors incredibly well funded companies at the center. and that mega scale. Trumps everything else.

33:00 There is also when you look at the ear success of something like Deep Seek the possibility That really massively powerful AI. is as available as electricity.

33:15 And that Your ability to innovate and accelerate on top of what is effectively a free broadly available public utility is infinite in that it explodes the means of production at a level never before seen into the hands of Everyone. That's why there's gonna be so many more masters of scale.

33:37 Next year than there were this year. What a perfect place to bring it to a close. Thank you so much for being on. I appreciate you guys. The way Ross and Kern and the team at Known are leveraging technology to break down old silos is a stunning example of how smart integration of AI into a business can create competitive. They also realize that technology alone is simply not enough, and a strong culture is still essential. Those combinations, art and science, technology and people, are a winning recipe for any creative business.

34:14 I'm Jeff Berman. Thank you for listening. Masters of Scales await what original. Our executive producer is Eve Tro. Our senior producer is Trisha Bobida. The production team includes Masha Makutunina and Brandon Klein.

34:37 Our senior talent executive is Stephanie Stern. Mixing and mastering by Aaron Bastanelli and Brian Pew. Original music by Ryan Holiday. Our head of podcasts is Le Tal Malad. Visit mastersofscale.com to find the transcript for this episode and to subscribe to our newsletter.