Paulie Dery on Why Every Decision is a Brand Decision

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2:02We are in this great battle, right? Performance is short-term, brand is long-term. How do I survive short-term to build long-term? Every decision you make has to be for the next 200 years. And that's how I think about decisions.

2:22This week, I want to talk about the difference between a brand and a commodity. Understanding this difference is something every CEO and CFO should know, but too few do. The difference, of course, is value, or at least perceived value. Because when your customer is standing in a literal or metaphoric aisle, comparing literal or metaphoric ingredients, your chance of winning in that moment, The moment of truth depends on whether you've created value or destroyed it before the moment. And everything your company did or didn't do creates this outcome. In this episode, I'm sitting with Pauly Derry, who spent his career, one that's taken him from RGA, Uber, Yeti, and now a CMO of AG1, building value for companies whose products could easily be commoditized, but because they understood the value of brands, weren't.

3:08Pauly's conviction is that strong brand and creative are how value gets created, and that every decision a company makes from the ingredients in the product to the pride people feel walking through the door either compounds that value or quietly destroys it. All right, let's set the conversation up, right? Because, Pauly, like beauty, value's in the eye of the beholder, right? Customers may define value different than the enterprise. You and I may define value differently one from the next. You'd be wrong, by the way. And the enterprise oftentimes defines it differently than the capital markets might, right?

3:45But with this, I'm wondering from your perspective, right, how do you define value creation and destruction? And what forces are you thinking most readily contribute to one or the other at this point in time? well i think value creation for a brand is and this is a crazy metric but i have two metrics i really value for brand one kpi that my cfo hates and every cfo i talk to hate but it's the kpi of energy right and everyone's like what the hell is that but kpi of the energy is the energy of a brand meaning even little things when i turn up to an event are people excited i'm there uh people excited the brands there uh are other brands calling me to uh you know do collabs or talk to me pick my brain that that is energy and that is value creation to me uh for a brand and what that means is is the brand uh either cool or top of mind or relevant uh and and by doing that i think it really leads to the main goal of you never want to be a commodity, right, as a product or a brand.

4:59And what does that mean? It means that if people go to a shelf and they're weighing things up, oh, you haven't done your job. Yeah, yeah, yeah. That's not what you want. You want people coming into the shelf going, you know what, I'm definitely going to buy this thing. I love this brand. Which one am I going to get? That's it. And so value creation to me as a marketer is keeping that fire burning. And that's really what I focused on. All right. I want to ask you a question. Step out from being the marketer for a second, because I think a lot of times we marketers, we business people forget that, yeah, we're marketers, but so too are we consumers, customers, human beings who buy things and or don't.

5:42What do brands do that you find, what do businesses do that you find as a buyer create value or destroy it? I think I care. I care about a brand that I like, right? They make me feel a connection, right? Like, listen, I could buy anything at any price value, but how do I feel, right? Is it a statement about me? Does it say what I am? And I think that's the magic of what we do. And I think what we buy, what we wear, what we interact with is a statement on yourself. 100%. 100%. And I think, you know, one of the brands I was lucky to work on was Yeti. And listen, a Yeti is$300 more expensive than its competitor, right, for a piece of plastic.

6:40But if I don't pull a Yeti out at a tailgate, that says something about me. Yeah. It doesn't say something great about me, to be honest. If I pull a Yeti out, it does say something about me too, right? So I think that's really the key. Can I have a sentiment that bults what I think, what my beliefs are? And yes, the brands I interact with are absolute portrayals of that. So you've used three words, right? You've used energy in the beginning. You used how you feel. So feeling and now sentiment, right? So value creation, right, is for brands, certainly, and brand is a driver of purchase. Totally agree with.

7:24It is the greatest performance engine in the history of performance engine and the bifurcation between brand and performance is the stupidest fucking thing in the world. I mean it is the stupidest stupidest thing but Seth it is still today the biggest conversation and and we are in this doom loop of this conversation and I really think it comes to down to a CFO to be honest it does and I'm gonna I'm gonna ask you to stick a pin in that because we're gonna get to the CFO in a little bit and I also you know because because now they've come up twice, right? With, you know, they hate the energy KPI.

8:05I want to, I want to ask you then what destroys that feeling, that energy, that sentiment, not just from a marketing perspective, but what does a business do? What do companies do? The biggest ones in the world and the smallest ones in the world that can destroy that value, the value that that energy creates. I mean, look, whether we want to call it a shortcut or stress, I think stress is actually the biggest degrader of a brand inside the building. And what I will say there is pride, right? I actually think pride in the building allows marketers to do more things, right? Say more about that. What do you mean?

8:50Do I have pride in this product? Do I have pride in this business? Do I have pride with the people I'm working with? If I do, I am willing to do more things that validate that feeling for me in the building. And I think a big job actually of a marketer is to make people feel very proud about where they work. And I'll tell you why. If you can achieve that, you actually buy yourself a lot more room and air cover. Permission, yeah. Yes. Let me give you a live ammo example. When I joined Uber, the house was on fire, right? All this disaster was occurring and people were ashamed. What's that, 2018?

9:382017. 17, okay. Early 17. people are ashamed to tell their family they worked at uber yeah this is when hashtag delete uber was still a thing yeah yeah 100 yeah it was actually my first day uh i kid you not um and uh it's like a sign um but you know you uh i would take an uber to work and i'd tell them i worked at twitter because twitter was across the road you know and and i think think today well working at twitter that's fine compared to working in Uber. I mean, how bad were things? Yeah, hashtag Khalid X. Yes. You know, and so a couple of things I'll talk about there. One, I think it actually helped me do a lot at Uber because I think if everything was fine, they probably wouldn't listen to me.

10:27Listen, the valley and marketing, marketing is the last seat at the table in the valley, right? And they just don't trust marketers. They're not marketers, right? They're engineers, they're product people. So what the disaster actually allowed me to do was show them why brand's important and allow me to do things. And they were like, look, man, house is on fire. You do what you want to do. And that was a luxury to me. But the thing I really worked hard on was how do I build some pride back up for these people who work here? Because they're actually developing products that are changing how the world moves.

11:03And so getting that pride back in the building, well, all of a sudden, people are like, wow, this guy actually makes me feel pretty good because the board, your C-suite, they're humans. They want to feel great about where they work. And the one ticket that allows them to do that is great marketing. Yeah. Because people are like, did you do that? That's amazing. That's fantastic. Don't you work there? And what happened was the excitement of the product and what people were building got back into the building and they were like, listen, Polly, do more of that. Do more of that. And so I think the lack of pride in a building can really slip things in the wrong direction, meaning you're making bad decisions.

11:53Think about when you're in a product stance, do I want the best ingredients in here? Well, they're expensive. Well, okay. But if you have pride in your product and what you put out, that's a point of pride that we're so expensive, right? And we have the best ingredients. If you don't have that pride, well, you're making bad decisions. So Seth, in a very long winded, uh, poorly answer, I think, I think a lack of, um, pride in the building takes away a lot of the good work that you can do because it hurts products and it hurts the output, uh, across every front and every touch point. Yeah. You start managing for the wrong things.

12:32And I think it's actually, it's a great segue to, to something else I want to talk to you about because implicit to the show's premise, right? I mean, central to the show's premise is that every decision a company makes, not just the marketing decisions, not just the decisions you as CMO make, either contributes to value creation or value destruction. It's like what the late, great Charlie Munger said, right? Any one decision eliminates another, right? Every yes is a no somewhere else. And I'm wondering if you can share an example. Maybe it's building on the pride thing. Maybe it's going somewhere else.

13:07where, well, actually, before I ask you to share an example, do you agree with the premise that every decision either contributes to value creation or destruction? A hundred percent. I mean, thank God, because, you know, show's new. Got to make sure it works. You know, I mean, what did Hemingway say, right? How did all this go bad, you know, over a long period of time and all at once, right? Like it is every decision you make is a brand decision. And I think the quicker you can get everybody to understand that, the better. Whether that's someone in customer service, whether that's someone in ops, whether that's a C-suite, every decision matters, right?

13:52Because you are building trust with the customer and other corporations or whoever you deal with. tipping away at that takes forever to rebuild too forever to rebuild right a betrayal and trust um is super hard the other thing is every decision can be a a little bit different right i say brands are like your good friends they're not always funny they're not always serious they have different shades and that's why you love them right but the overall sentiment from this person or brand is in line with what you thought they were, right? And so if you start betraying anything that you thought they were, you diminish everything.

14:38You diminish the brand, you diminish the product, you diminish the pricing power, you diminish everything. So you need people. And this is why everyone's like, what's our purpose as a brand? I've got to tell you a secret. I'm not a huge purpose guy. I fucking hate the framing. Yeah. But I think what people are saying is, who the fuck are we? Yes. Right? And that is the biggest - What do we do? What do we stand for? Who are we for? Who are we not for? I mean, all of those. But purpose is one of those many words inside business, right? And it's just lost its context. And it means a thousand different things to 40 different people.

15:19Well, and a lot of people made money off it, right? Like, it's a great thing to sell. it's an easy premise to sell and it sounds great the thing and you touched on this i think the absolute one thing a brand or marketer should do if you take nothing else from my waffling um know who you are know who you're not you said it right that premise will dictate to your point every decision you make and will stop you from making tons of little ones right yeah yeah i i I love this about, you know, working at great brands over the world. It was who we were not and what we said no to that really held us strong.

15:58And the other secret, Seth, is people think, well, that's really shortening our tear, right? Like, oh, but shouldn't we reach more people? So if we say we're for more things, what a ridiculous sentiment. But we treat customers like morons, I think, a lot of the time. Yeah, often. You know, and I think people are smarter than that. They actually respect that you've put a stake in the ground. This is who you are and who you're not. The other thing I'll say about that is people are watching Game of Thrones. People are watching complex shows. And then an ad comes on and we're like, oh, dumb it down.

16:37They're idiots. Remember? They're idiots. It's like, are they? I don't agree with that, actually. I want to ask you a question about agreeing with you completely that the CEO is the chief brand officer, whether she knows it or not. And I don't care if that CEO is Fortune 10 or startup, right? You said it. Every decision you make is a brand decision, right? your example of commodifying, commoditizing, I don't know which word it is, ingredients, right, so that you can squeeze more margin out is a brand decision that has deleterious effects, potentially, oftentimes, often on product. Why do you think a CEO, a CFO, a C-suite colleague, or maybe somebody, Mudge Jr., who understands implicitly the power of brand in their own lives, right?

17:34They chose a brand to put on their feet, on their body, in their garage, in their pantry, yada, yada, yada, that brand they go to on vacation, but they don't understand it in the context of the businesses they run. That's an unbelievable question, Seth. Many answers. One that comes to mind is they don't have taste. and I think a big job of a marketer is to have taste and to help these people understand that taste matters. I think the great gift of many great CEOs I've worked with is like, look, they've said that's your job. That's not mine. Well, that's a permission. That's a gift indeed. It is.

18:20And I think what that means is that they are leveraging you to help them with taste, right? And I don't know why CEOs struggle sometimes. Understanding that taste in their business is just as important as taste in their life, right? And I think there are financial pressures. I think there are many things the CEO has to deal with. But one thing, they learn the hard way, Seth. And this is a thing I find. There are so many case studies of them losing the hard way, is that it all does come back to holding that element higher, right? And I look at past founders who lost their way or didn't build on great foundations of what they thought their business was.

19:20And it goes awry. I also look at great founders who actually have great vision. And then it's when the other people get involved that their vision gets cloudy. And that is a problem. But look, I do think it does come down to money. And that's a tragedy. in our business, right? That bad decisions are made financially for short-term gain. And I think you see that with public companies. It's a 12-week cycle of trying to deliver. I call it the tyranny of the public markets. It's just insane, right? It's counterintuitive to everything that anyone has built that made this company successful. All right.

20:06It's actually a perfect, it's a perfect segue to the next thing I want to ask you. Can you give the audience an example? And it doesn't have to be from anywhere you've worked, but what you've witnessed, right? Of an important decision that some company, some business has made that nobody in the room would have called a marketing decision, but was because it created and or usually destroyed value. yeah i mean so many right and i i do use personal examples because i think that's only fair right um look like i said i've been lucky to work in a couple of great places uber yeti ag1 that have always been kind of the market leader and the premium yeah in end of town but you've also worked on behalf of so many brands when you're on the agency side when you at RGH, right?

20:59You've seen more than the three. Sure, sure. That is true, probably more than I'd like to. But look, I think there are a ton of examples where just doing the right thing pays off in the long run. And let me think of a few. One, I thought Uber did very well. Uber had a real problem with the drivers, right? And I think this is interesting because when I joined and when every agency comes and pitches you an idea or two, but they're like, hey, I've got this great rider idea. Great rider idea. Right. And you sit there and you're like, rider? Fucking hell, you think people, we have a problem with riders?

21:43I got a supply problem, not a demand problem. Yes. And the fact, the fun, the fact the agencies didn't understand that was a problem, but we can get to that later. But, you know, it was with the drivers and we were calling drivers supply. What? How do you feel? How do you feel about being a driver? I call you supply. Thanks very much. So we, you know, it was a huge problem. And I think an amazing thing we did was like, look, what six things do the drivers want? And it was simple. They wanted paid toilet breaks. They wanted, you know, a ride in the direction of their home if they were going home.

22:24Like it was a ton of things that we could make happen on the product end, right? So do it, do it. It's the right thing by them. It's the right thing by the product. It's the right thing by the brand. Now, it wasn't easy. It took time. We had to reassess a ton of things, but that's a brand decision. You got to remember at the time people were getting in their Uber and the person representing Uber, the driver would turn around and say, I hate driving for Uber. Yeah. Yeah. Right? Like what? You know? Yeah. Imagine getting on an aircraft and your pilot's like, man, buckle up. I hate this. Well, it goes back to every decision and every person is a brand.

23:08Every decision's about brand. Every person is a brand marketer. Yes. Yes. And when those drivers, individual contractors, aren't the brand, that's a problem. Yeah. So it was really, okay, we're going to build a product that helps these guys because we think it's the right thing to do. But what did it do, Seth, that built the brand? Because every time I got in the car, okay, the sentiment changed from the driver, right? We got more drivers off Lyft. You could choose. You can drive for Lyft. You can drive for Uber. So we really, in that product moment, and we called the campaign 180 Days of Change.

23:42180 is a U-turn, and it took us 180 days to build the product. That moment there, I think, spurred the brand into what you see today, right? It is the leader. It acts like an adult. It is dominant. It's still premium. that is where small decisions on something that has nothing to do with marketing ends up becoming the brand and so powerful uh and so you know it goes back to compromise right in business everything's a compromise and the businesses i want to be with are the ones that understand that not all compromises are equal that's right yeah yeah some are going to cost me more money Some are going to cost me more time.

24:28But am I willing to invest in that compromise to be better at the end of it? And make more money as a consequence of it. And time is the gift in business. It's the one thing I ask for more than anything is time, right? When people say, well, you know, you join a new company, what do you want? I want time because I'm going to make decisions that you're not going to feel tomorrow. I'm going to make decisions that are going to take time. Give me that time and I'll give you a brand.

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27:10Again, a perfect segue to something you've said previously. And I think this is right. If I'm quoting you, if I'm misquoting you, you'll let me know. You said the hill I'll die on is that I believe strong brand work and strong creative will drive the business. Well, exactly to the point you were making about time, right? Most CFOs who are beholden to and CEOs who are beholden to that 12 week quarterly cycle are going to say, prove it, prove the value that this is creating today and is going to create tomorrow. Most boards will be like, how long do we have to wait for this to kick in, right? So I'm wondering how you, right, your personal experience have made the case for kind of that compounding effect, for the value of giving it that time to people who measure life and results in quarters.

28:01So I think back to an original question of yours, I always say, what brands do you like, guys? What do you like? Oh, I like this brand. I like that brand. Well, great. Are they making dumb short-term decisions? Why are they good brands? Are they good brands because they're 20 cents cheaper? No, they're not. They're good brands because they are brands. So many people. The case studies are out there, by the way. I actually love this about COVID. COVID was free money. Everyone just was easy for a lot of businesses, a lot of DTC businesses. Categories, yeah, yeah, yeah. Just was fantastic. I want you to know, and I think like the 50 shows I've done between my different shows, I think you might be the first person to say, this is what I love about COVID.

28:54I love many things about COVID. Not the death part. No, the death, the sadness, the illness. That was bad. Yeah. But did I enjoy being more connected with a smaller group of people? I did. But you come out of COVID and you see all these brands that were like, well, what's happened? Why isn't this working anymore? Right? And it's because, bozos. Everything changed. Everything changed and you didn't invest in brand. Right? You had free calories, all the taste. Right? And you performance-ed your way to the bottom. And that is the case study. right why are things going down why are you in this zoom loop oh what's the one missing factor here you invested in performance you didn't invest in brand right and it blows my mind that everyone to your point is a consumer everyone likes their brand you never hear the statement seth i love that brand they are so great oh they're bankrupt you don't hear that sentence you hear i love that brand.