#251: Peter Cuneo, Former CEO and Vice Chairman of Marvel Entertainment – Embrace the unfamiliar

0:00David Novak:Never assume you've seen it all before. This is one of the biggest contributors to leadership failure. You have to go in assuming there'll be surprises. We all have these prejudices that we build up based on success elsewhere, you know, and they may work in this new situation. They may be wrong. Welcome to How Leaders Lead. I'm David Novak, and every week I have conversations with the very best leaders in the world to help you become the best leader you can be. Today, I'm talking with Peter Cuneo, the former CEO and vice chairman of Marvel Entertainment, and the man behind one of the most remarkable turnarounds in recent years.

0:38When Peter stepped in as CEO, Marvel had just come out of bankruptcy. But under his leadership, it became one of the most valuable entertainment brands in the world. By the time it was sold to Disney, Marvel's stock had risen from 96 cents a share to over$50. In this conversation, you're going to see the leadership principles that drove those results. And let me tell you, a big reason is Peter's ability to embrace the unknown. See, for most people, uncertainty breeds fear. But for Peter, unfamiliar territory is an opportunity to innovate, to grow, and to find out what you and your team are really capable of.

1:17Great leaders develop that ability to embrace uncertain situations. And today, you'll see exactly what it looks like in action. So here's my conversation with my good friend and soon to be yours, Peter Koonian.

1:36I got to tell you, I'm happy to have you here. And one of the things that I got to ask you is that what's something that you learned about real leadership by being around fictional, iconic superheroes at Marvel every day?

1:50David Novak:Well, the nice thing about 4 ,700 characters that you own and control makes life in some ways much easier than if they were alive. You know, we were effectively their agents, except our fee was 100 % of what they earned. And they never talked back. So we never had to debate with them on how we were doing their movies or comic books or whatever. Yeah, one of the things I learned is if you're into the IP business, you want to own and control all your IP. Yeah, I can see that. You know, when I think about being the CEO of Marvel, that's such a cool business to be in. And I don't think people even think about it as a business.

2:40But how did you go about just attacking the business opportunity? Because I know when you went in there, a lot had to be done. You had to turn it around.

2:48David Novak:Well, Marvel had just emerged from bankruptcy when I came as CEO. It had been in bankruptcy for about two years. And I always tell people that the process of going through bankruptcy is you can relate to chemotherapy. You emerge from your treatment. You are hopefully cured or certainly in remission, but you've lost all your hair and you are very weak. And what happens for any company in bankruptcy is akin to that in that you are very weak. The financial way you are organized coming out of bankruptcy is not the best way for the business. It's only what the creditors would agree to. And there very often is a mismatch completely.

3:40And in Marvel's case, when we came out of bankruptcy, we had that mismatch.

3:45David Novak:It was what the creditors would buy into, not what we really needed. So I knew that that would be one of the early challenges. The other thing is, talk about being weak, lose your hair. Well, a lot of good people had left Marvel because they could and because there was a lot of uncertainty about the future. The bankruptcy lasted quite a long time and so on. So part of the challenge when I came was finding new people and in some cases re-energizing and attracting good people that left the company to believe in our future and to come back to the company. Not easy. You know, when you took the job at Marvel, as I understand it, you'd never made a comic, you'd never made a movie.

4:29You know, what was that? Oh, moment maybe you had when you realized just how much you didn't know. I mean, was that something that concerned you or, you know, how'd you go about learning a business that, you know, you weren't familiar with? You've done a lot of hard goods, a lot of different products, different, you know, turnarounds. So this is a whole new game.

4:50David Novak:Yeah. Well, of my seven turnarounds, five were new industries, completely different from anything that I had done before. So I was very used to going into environments where maybe I didn't have a background in the particular business. I do think that it's actually a turnaround, a positive to have some people come in that are completely learning a new business because they can see the craziness that may have existed and is the cause for the company being near bankruptcy or being weak and needing a lot of change. And so for me, it was very clear to me very quickly that we weren't going to compete the way other people did that made films or comic books.

5:40David Novak:We were going to change the rules of the game and we could see some of the flaws, the warts of those industries and avoid them and in fact do things quite differently. And I will tell you that the reason Marvel was successful was not just that we made very good films and comic books, but our culture was completely different from anyone else. The value system that we put in, myself and the board, we had a great board, was this, we're going to take risks, we're going to change the rules of the game and not like the other people. And needless to say, the rest is history. You know, a lot of people talk about culture and they get the values and they write them up on the wall, they laminate them, they put them up there.

6:29And, you know, that's what you're supposed to stand for. But, you know, it's another thing to really drive it deep in your company. So let's take this idea of being a risk-taking culture. You know, how'd you drive that? How'd you drive that in your organization so it wasn't just the board and the people in the corner office, believe it? So, David, I kind of, I got to say that I agree

6:52David Novak:with you on one thing. Putting something on a plaque and putting it up on the wall does nothing, does nothing for change. What we need is quality leadership to espouse what the culture will be and for that leadership to back it up with their actions. Talk is very cheap and nobody in the organizations are going to believe you until they see your own behavior. And in a turnaround, there are lots of opportunities to back up what you're saying, because you're going to need to make a lot of change. And for me, culture has two facets. One is how we're going to treat each other, flat and simple, how we're going to treat each other in the organization and how we're going to treat our business partners outside the organization?

7:47David Novak:You know, do we respect our customers? Believe it or not, a lot of the turnarounds I went to didn't respect the customer. I know it sounds wild, but are we going to work closely with our suppliers, you know, to do the best job we possibly can? What about our investors? What about, you know, and so on and so forth. equally important in every turnaround part of the that part of the culture was messed up was crazy actually in some cases the second part of culture to me is all right what do we have to do as a business to really prosper what do we need to get an a plus in we want to be a plus in everything but the reality is we're not because no one is ever a plus in any everything but what are the ones that we really want to have to be a plus is it is it new products the way we you know treat customers is is it our advertising that projects a company that you know customers will value um not just for the products or the services but for what we believe in you know it's all those things and amazingly a lot of these businesses what they had to be really good in they were just the opposite and didn't realize that they had to be good, which is, again, it's hard to believe.

9:16You know, Peter, one of the things that you obviously mentioned earlier was the fact that you wanted to change the game. You changed the game in the industry. Looking back, what was the biggest thing you changed in the industry and how difficult was it for you to take people with you to get that done?

9:38David Novak:Well, let me say, first of all, and I'll get into that. But first of all, I was not arrogant enough to think that I could walk through the door, read a script on a movie, make changes, and what have you. Okay. Weak leaders would have done that. They would assume as the leader, they would have to be all knowing and whatever. And I've never bought into that. and everyone knew that I had no background in things. So my role for the first six months was to ask a lot of questions of a lot of people. And I was in learning mode. In the case of film, I can't take credit for Marvel getting into the film business because the first film in the new era of Marvel was X-Men 1 and it was already being filmed when I joined the company And I actually went to set Toronto my second week or something on the job just to visit.

10:38And so the idea of Marvel getting into movies and building franchises was not mine. I will take credit for staying out of the way.

10:48David Novak:I'm not mucking up the creatives, both in comics and in movies, you know, making sure as best I could that we had the right people. Although, again, how much judgment could I bring to the table? But I did know that they already had part of this new culture, this change, the rules of the game. And if you get into some of the things we did, casting for the movies, OK, the Hollywood system would want you to find some big actor or actress that gets a lot of money up front and a big back end and would, quote, make your film. I always love that phrase. If you have so-and-so in the lead role in your film, automatically you're going to make money.

11:34David Novak:And we resisted that completely. We just wanted good actors and actresses. They would be behind a mask a lot of the time. And the heroes were going to make, our characters were going to be the stars that make the movies. So a lot of back and forth and unhappiness in Hollywood with Marvel because of that basic change. And we cast unknowns in a lot of the films. We also took chances on certain people. I mean, Robert Downey Jr., Mugshot, was all over the news three months before we cast him as Tony Stark. in Marvel's own, we formed our own studio eventually. This was the first film where we weren't partnering with a big studio and it had to be a hit.

12:25David Novak:We'd raised a lot of money and the company took a chance and the rest, again, this history. He's got himself together. He's been tremendous in that role, still is today.

12:42Do you know that I was the only one who believed in you?

12:45David Novak:Everyone else said I was crazy to recruit a 14-year-old kid. I just wanted to be like you. And I wanted you to be better. And who just won the award for Best Supporting Actor? I mean, it's Robert Downey Jr. So we were willing to take risks. He was toxic at the time. No one would hire him when we did. so we were we were out there and we were doing things differently and and what have you in comic books one of the big issues that i had when i came in uh was that trying to learn the characters in the comic books i had to start at like i don't even know the exact number but let's say spider man 456 you know what happened in the previous 455 comic books and the origin stories are very important to superheroes.

13:42David Novak:And this is something that attracts fans. And so we actually started doing comic books, still maintaining the ones in place, but now retelling the story of the characters from day one, from their origin, from what had been basically comic book number one. we made very few changes spider-man was bitten by a radioactive spider peter parker becomes spider-man by being bitten by a radioactive spider originally in 1961 or two when we started this this over which was around 2000 he was bitten by a genetically altered spider and in in 2000 he He had a cell phone. He didn't have a cell phone in 61. But, you know, these are not big changes in the origin stories.

14:42David Novak:And so, again, constantly looking for new ways to attract fans. Now, as you drove that need to look for new ways, was it challenging to get your people to think differently? And how did you deal with that? Or did you have to? They just automatically braced and said, hey, Peter, you're right on the money. We're all in. It's interesting. In creative businesses, as opposed to non-more, call it fixed asset businesses, okay? In creative businesses, you're dependent on the creativity of human beings, what's in their minds. and one of the things I had learned in other businesses that had creative elements, advertising, for example, you wanted to create a culture where every idea is worth talking about.

15:38There are no stupid ideas. This is the way you get to sift through when people feel comfortable

15:46David Novak:throwing out what may be viewed as completely nuts. But remember, we were changing the rules of the game. So we were, I was, but the whole organization, the board was interested in new ideas, new approaches. Once the organization sees, no one says, you're an idiot, what are you talking about? Or, you know, it brushes you off in a meeting or whatever, but want to talk through every idea. That's changing the culture and it gets around and it's infectious. It also gets outside the company and allows you to hire back some people or hire new people that you wouldn't have gotten unless they understood that the culture really had changed.

16:31David Novak:Hey everyone, it's Kula from How Leaders Lead. And a couple of years ago, we did a survey of all of you podcast listeners. And in it, you told us that you would like more of David's point of view on some of the topics that he talks about with the guests that he interviews. And in case you didn't know, we have an episode that does just that. Every Monday, we release an episode called Three More Questions with David Novak, where I put David in the hot seat and get his point of view and his take on some of the concepts that he talks about with the guests that he interviews. It's a great way to get learnings from David and to hear about his experience leading Yum Brands, a company of over 1.5 million employees.

17:10David Novak:So if you haven't subscribed to the How Leaders Lead feed wherever you get your podcasts, do that now so that you never miss an episode of Three More Questions and so that you can get coaching from David himself. You know, one of the things you also mentioned about the important, you know, it's key to a powerful culture is just the customer focus that you have. And, you know, one thing about Marvel movies, I'm sure, is that, you know, your customers are rabid fans. How did you tap into the loyalty of your customer base and leverage that as you, you know, continue to do movie after movie after movie?

17:42Because I can tell you, you know, it seems like this has got to be one of the most, you know, once you get a user, you've got to use her for a while if you treat them well.

17:52David Novak:You're totally right. A little bit of history on comic books. One of the assets or one of the advantages I thought that I had at Marvel versus other companies was that our Marvel characters are very different from most other competitors. The brilliance of Stan Lee from 1961 to 1965, he and some great editors created all these characters that you now think of as the A-list of Marvel. and what made them different. They created characters who were flawed, who human beings could identify with, who had the same problems you and I do and all the fans did. Okay. And, and this was the brilliance of what they did.

18:46David Novak:And so, yes, they had superpowers. Okay. But a lot of times they couldn't handle the superpowers. People were afraid of them because they didn't understand. The U.S. government passed laws against the X-Men because they were mutants. They had these powers and they couldn't understand them. By the way, do we not have that problem today in the world? I mean, it's worse than ever, actually. And every high school student thought of themselves as a mutant. Will people like me? Will I be popular? You know, will a girl look, you know, sitting across from me, like me, if I ask her for a date, you know, how do I balance my study?

19:30David Novak:You know, all of these things. Minority groups always loved the X-Men because they're mutants. Peter Parker can't get a date with Mary Jane in high school, who he loves, because he's a nebbish. He's a nerd. He can't handle his powers. He gets his uncle killed because he got, you know uh basically too arrogant about his para his his powers so that was the greatness of marvel characters so when we started making movies we had a simple a concept really it was a big action scene to start in the middle a modest action scene and then a big action scene at the end everything else in the movies was character development the viewer was learning about the character was learning their origin story was seeing that they had their own challenges and problems just like they did and it was very powerful the first film we did was x-men one and on friday night when it was premiering in the u.s the lines were around the block.

20:39David Novak:Now, not all those people on those lines were comic book fans. Most, you know, five or 10 % of the US are comic book fans. That's it. But the power of the comic book people in popular culture was much bigger than the number of people in the industry. And so, I want you to you see the newspaper, oh, this movie called, you know, X-Men just premiered and it's breaking box office records. I got to go see it. Knowing nothing. Most people walking through the, you know, into the theater, I had no idea X-Men was the most, you know, popular comic book in the world at the time. Speaking of stories, you know, one of the questions I always ask people is to just, when you think back about your upbringing, I mean, what's a story from your childhood that really impacted the kind of leader you are today?

21:41David Novak:Well, I certainly didn't think of it as leadership at the time, but I have something on my website called the 32 Essentials of Superhero Leadership. And the background is that about 20 years ago, I was asked to give a speech on leadership to a big group. And truth be told, I had thought very little, surprisingly to me now, looking back, about my own leadership, what I'd learned. It was all an adventure. I had this, you know, adventure gene. It was all an adventure. And I was more of a risk taker than most human beings, for whatever reason. I'm not sure. Probably the way I was raised. When I was very young, my father, who was a Navy officer, had been in World War II in the South Pacific.

22:27David Novak:He was a reserve officer. And when the Korean War started, he was called up. And so in a two-year period, we went from living in New York City to Pensacola, Florida, to Bremerton, Washington, to a mothball fleet, which is Bremerton is near Seattle. then down to San Diego, big Navy base, and then to Philadelphia. My father disobeyed the Philadelphia Naval Shipyard over a two-year period. So I did the fourth and fifth grades on the road, so to speak. And I saw, even as a young person, that there were even cultural differences in the United States. I didn't really think about it. It wasn't conscious.

23:16David Novak:It was just I had to make friends in four different places. And then we went back to New York City after the war was over. So I often cite the fact that very effective leaders are very comfortable being either making a decision to go into an alien environment or being thrown into an alien environment. We all have our cocoon, right, David? We're comfortable in our cocoon. We like ourselves usually in the cocoon and something happens to break us out. Maybe it's a job decision. We're going to a completely different city or country for a job. That's something we did ourselves. Maybe it's unfortunately a health thing comes in.

24:00David Novak:It's not a good thing. But generally, when I'm talking about alien environments here, I'm talking about different, not bad, but different. We'll be back with the rest of my conversation with Peter Cuneo in just a moment. As you can tell, Peter is a guy who isn't afraid of a new challenge. And his mentality reminds me of an insight Jenny Rometty shared with me. As the CEO of IBM, she regularly found ways to get out of her comfort zone so that she could learn. You will only grow when you're uncomfortable. And I've talked to so many people around the world that resonate with that. And I try to say to them, I actually got to the point where I love to feel uncomfortable.

24:40Because then I'm like, yes, I'm learning. I'm learning. And so I would even look to put myself as a CEO, particularly in those positions, right? You know, I'd be seeing a client that ran a railroad. I got to learn railroad business before I get there, you know, and it was like, if you start feeling like you're not, I would say to people, if you're feeling so comfortable in a role, you do need to change it because you are not learning. So growth and comfort never coexist. Go back and listen to my entire conversation with Jenny. Episode 66 here on How Leaders Lead. When you look at all these places where you've gone, you've turned around businesses, do you have a playbook for getting that done?

25:19David Novak:Actually, no, not really. One of my 32 essentials says, never assume you've seen it all before. That's a one-liner. okay and i think i after that on the same line i say this is one of the biggest contributors to leadership failure you have to go in assuming there'll be surprises in my case of course i was learning in many cases new industries certain things were the same you knew you were going to have to change the culture to what you weren't sure from the outside but you knew that the culture was bankrupt in these turnarounds and you knew to have that you knew there'd be some other obvious challenges.